US and China reach partial trade agreement
Negotiators for the US and China appeared to make some headway in their trade talks on Friday, agreeing on the outlines of a preliminary deal that addressed some of Washington's grievances.
The agreement, which could be signed by the leaders of the two powers in mid-November, at the Asia-Pacific Economic Cooperation summit in Chile, envisaged an increase in Chinese purchases of US agricultural products, alongside some measures to boost protection for intellectual property in the Asian giant and concessions relating to financial services and on foreign exchange matters.
The White House said that China had committed to scaling its purchases of US farm goods to reach between $40.0-50.0bn per year over two years.
In exchange, the US agreed to postpone the hike in the trade tariff on $250.0bn-worth of Chinese exports, from 25.0% to 30.0%, that had been scheduled to go into effect on 15 October, but a separate increase in American levies on Chinese goods was, at least for the moment, still due to kick-in come 15 December.
According to some reports, Washington's calls for measures to stop the forced transfer of technology to Chinese firms and complaints about Beijing's industrial subsidies were not addressed in the deal.
Yet China's state-owned Xinhua cited Chinese vice-premier, Liu He, as saying that: "Substantial progress was made in such areas as agriculture, intellectual property rights protection, exchange rate, financial services, expansion of trade cooperation, technology transfer and dispute settlement."
Liu reportedly also said that "arrangements for future consultations had also been discussed."
Earlier, multiple analysts had displayed caution in their assessments of the likelihood that any deal would stick.
The run-up to the 13th round of US-China trade talks had been tense, especially after Washington, with curious timing, announced a decision to blacklist 28 Chinese entities alongside visa restrictions on multiple Chinese officials, amid speculation that measures could be imposed to curb capital flows to China.
That followed the apparent withdrawal earlier in the week by Beijing of industrial policy from the agenda for talks.
In a research note sent to clients, analysts at Danske Bank said: "Financial markets will breathe a sigh of a relief as the deal removes some of the tail risk of a full-blown trade war between the two sides.
"[...] Moreover, the deal just avoids next week's tariff hikes but does not reduce any of the tariffs put in place over the last 18 months, let alone cancel the US tariff hikes planned for December.
"While we are cautiously optimistic that the two sides can agree on putting the deal together on paper, there are risks of negotiations stalling again in the next four to five weeks with possible tensions escalating again."
And for his part, the editor of China's state-owned Global Times, Hu Xijin, official Chinese sources had made no reference to a deal being signed in November.
On Capitol Hill, top US Congressmen were also cautious in their responses.
Ronald Wyden, the ranking Democrat on the Senate Finance Committee reportedly told Bloomberg that: "Donald Trump should know that any meaningful trade deal is only legitimate because of the authority granted to him by Congress, and that authority can be taken away."
The Republican chairman of the same committee, Chuck Grassley from Iowa, said: "After so much has been sacrificed, Americans will settle for nothing less than a full, enforceable and fair deal with China."
Nonetheless, some sort of understanding appeared to be in place between the leaders of the two countries.
In a letter sent to the US President and published by the White House, Chinese leader, Xi Jinping, reportedly said: "I hope the two sides will act in the principle and direction you and I have agreed to, and work to advance China-U.S. relations based on coordination, cooperation and stability."