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Why China-US trade deal will be limited in scope

After two years of trade war, Americans and Chinese will sign this Wednesday in Washington a first agreement to rebalance their trade. Will this agreement really reshuffle the cards between the two super powers?

The two capitals are doing a lot to demonstrate this. Beijing is multiplying friendly gestures towards American companies . With the opening of the oil sector to foreign companies, a welcome gift for American companies in the sector. With the green light given to American Express to finally enter the juicy Chinese bank card market. For its part Washington has given up classifying China in the category of countries manipulating money. And Donald Trump plays Donald Trump. Declaring who wants to hear it is a great deal. All these words, these symbolic gestures, however, leave us hungry, because for the moment we have very little information on the real content of this bilateral agreement known as phase 1.

The Americans have committed to partially reduce their tariffs on Chinese products. What will be the scope of this relief?

Seen from Beijing, in the context of its economic slowdown, this partial lifting is welcome. But it is far from the real expectations of the Chinese authorities. Today almost all Chinese products imported into the United States are surcharged. With this agreement, two-thirds of Chinese exports to the American market will remain subject to additional duties. Washington is categorical: no question of doing more before the presidential election. The agreement therefore leads to an armed truce, all relative, and the American consumer will feel the effects very little. Ditto for American companies, which remain on the alert for their supply dependent on Chinese factories as for their possible investment projects in China .

Will China import more American products like Donald Trump trumpets?

The American president talks about an additional $ 200 billion in imports over two years. In aeronautics, industrial products, services, and especially agricultural products. The American president already presents the agricultural bill: 80 billion dollars. These figures seem totally extravagant. First, because Beijing has not officially confirmed its intention to buy such an amount of products made in the USA . Then because it seems unrealistic in light of Chinese needs. In 2017, before the outbreak of the trade war, China imported $ 23 billion in agricultural products from around the world; how can we imagine that this year it will be able to import 40 billion from a single country? If it does, it will be good for American farmers, very hard on Chinese finances and also for other large agricultural producers such as Brazilians or Argentines, traditional suppliers of the Chinese market.

Donald Trump said he wanted to start the second phase of the negotiations as soon as possible

And there is plenty to do, because for the moment, the biggest bone of contention with Beijing, technological products, everything related to 5G or artificial intelligence has absolutely not been addressed. Neither industry subsidies nor intellectual property issues. The American president estimates that all this will take a long time, probably beyond the month of November, that is to say beyond the American presidential election. The agreement signed this Wednesday reinforces the stature of the candidate for his re-election, able to win the wars he unleashes, and it offers him respite to campaign. If the content of the agreement is limited, it remains worrying about the form: now it is the States, or rather the United States, which decide the volume of trade. Not reassuring for Europeans, negotiating with the Americans.

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