US-China Reaches Phase One Deal

• US-China Reaches a Phase One Deal

President Trump on Friday said the US and China have reached a phase one trade deal following months of meetings and disagreements.

The partial deal requires China to address intellectual property and financial services issues and buy between $40 billion and $50 billion worth of U.S agricultural products.

While Trump has described the deal as ‘very substantial’, analysts are saying its more of a ‘temporary truce’ than a true deal.

According to them, the deal did not address key issues like technology transfer and intellectual property theft.

“We think the ‘substantial’ first-stage trade deal made by Trump with China looks more like a truce than a genuine deal,” said Christiaan Tuntono, senior economist for Asia Pacific at Allianz Global Investors.

Economists at Macquarie Capital also echoed the same view. While Vishnu Varathan, the head of Economics and Strategy at Mizuho Bank, said China “wants more agricultural goods … anyway.”

“It doesn’t look like a huge stretch on either side, and I think China’s harder stance, and hunkering down on its position hasn’t really changed either,” he continued.

“In terms of the real thorny issues, none of that is thrashed out.”

“So the ‘substantial’ is for the low hanging fruits — it’s a bit lower than the low hanging fruits actually. And we haven’t seen anything of real material yet,” he added.

The US will now suspend tariff increase on at least $250 billion worth of Chinese goods planned for Tuesday.