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Commercial War: Beijing and Washington settle their dispute at "no baby"

2019-10-12T08:16:16.356Z

Commercial War: Beijing and Washington settle their dispute at "no baby"



Beijing (AFP)

Few details and thorny issues unresolved: the agreement in principle wrested Friday by China and the United States on the front of the trade war is fragile and more like a truce, provide several analysts interviewed by AFP.

Targeted by an explosive procedure of impeachment in the United States, the US president has claimed a partial agreement "very important" with Beijing without dwelling on its content and referring next month a possible signature.

"It's not much and it does not go far on big issues," warns Barry Naughton of the University of California.

After a meeting in Washington with the main Chinese negotiator, Donald Trump assured that a text could be signed "over the next four weeks". For its part, China spoke of "constructive" talks.

This posture allows the two countries, committed since March 2018 in a merciless trade war, to avoid an escalation that could be detrimental to their economy.

Beijing has pledged to buy more agricultural products from the United States, a move long sought by the US president seeking a second term. It should benefit a part of its electorate: farmers.

- A "no baby" -

In return, China has obtained that Mr. Trump waives the 25-30% increase in punitive tariffs on $ 250 billion of Chinese imports into the United States, which was to take effect on Tuesday.

"The lack of details and the fact that it took weeks to achieve this + no baby + quickly showered optimism" around the talks, notes Stephen Innes analyst at AxiTrader.

"This is an important step, not so much on the content but on the method that, with much uncertainty, can lead to a series of progressive agreements," wants to believe Mr. Naughton.

The agreement also concerns intellectual property - a right often violated in China -, a greater openness of the Chinese financial services sector and a component on exchange rates.

"Substantial progress has been made" in these areas, commented on Saturday the official agency China New without specifying the progress in question. The country's media, tightly controlled by the ruling communist party, provided minimalist coverage of the talks.

The trade war, which poisons relations between Beijing and Washington, has been reflected since last year by reciprocal customs surcharges on hundreds of billions of dollars in annual trade. And this standoff is now threatening the growth of the world's two largest economies and the rest of the world.

- "Thorny issues" -

China's GDP reached 6.2% in the second quarter of 2019 year-on-year, its lowest performance in at least 27 years. On Friday, Beijing will release the figures for the 3rd quarter.

"The truce (...) is essential to stabilize China's short-term growth," said Song Houze, a MacroPolo think tank specializing in the Chinese economy.

"The slowdown in growth in the United States forces Washington to restraint and an intensification of the trade war seems unlikely," he notes.

However, a real step forward in the negotiations is "unrealistic" because of unresolved "thorny issues" such as the massive subsidies granted to Chinese state enterprises or the question of technologies.

The fate of the Chinese telecoms group Huawei, accused by the United States of collaborating with the Beijing-based intelligence services and heavily sanctioned, is not included in the agreement.

No decision has been taken on the 15% customs surcharges that will come into force in December in the United States on Chinese consumer products.

© 2019 AFP

Source: france24

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