Peace in sight? The United States announced on Friday (December 13th) that it had managed to find an early agreement with China to put an end to a trade dispute that has lasted eighteen months and destabilized the world economy.

Washington said Beijing has agreed to significantly increase imports of some US products, mostly agricultural, in 2020. China should also improve the protection of intellectual property to better fight counterfeits.

In exchange, the United States is expected to halve customs duties on Chinese exports over the past year. They also give up imposing new tariffs on a wide range of products so far spared from this conflict, such as iPhone and toys made in China. These last sanctions were to come into effect on Sunday, December 15th.

Chinese caution

This is not the first time that negotiations between the two countries are moving forward. In June 2019, they had concluded a truce to give a new chance to the talks and, in December 2018, Washington and Beijing had been on the verge of burying the hatchet before resuming hostilities after the end of the war. years.

But this time, the negotiations would be better. This is at least the opinion of US President Donald Trump, who was delighted on Twitter to be "VERY close to a VERY IMPORTANT agreement with China". Financial markets seemed to share this optimism as Asian stock markets all moved up Friday.

Getting VERY close to a BIG DEAL with China. They want it, and so do we!

- Donald J. Trump (@realDonaldTrump) December 12, 2019

Others, however, called for caution. First because of the restraint displayed by China. Beijing confirmed Friday that an agreement had been negotiated, but nothing was signed yet. "Without a signed document from Beijing, there is no real deal," Derek Scissors, a specialist in international trade, told The Wall Street Journal.

If Beijing prefers to keep a low profile, this is "because after the two US resolutions hostile to China on Hong Kong and the Uyghurs of Xinjiang, the power remains behind to not give the impression to bend under the American pressure ", notes Jean-François Dufour, director of the consulting firm DCA Chine Analyze.

Advantage to China?

Donald Trump would also be good not to brag, because the agreement, as it stands, represents "a failure of the arm wrestling by Washington," says the French expert. China has indeed obtained a partial lifting of sanctions without conceding anything on the main American claims. Since the beginning of the trade conflict, the US president has called on China to fundamentally reform its economy in order to put an end to public aid generously granted by Beijing to its companies. He also calls for the end of the technology transfers imposed on American groups wishing to do business in China. Two points that are not on the menu of the agreement that has just been concluded.

The big deal touted by the White House tenant on Twitter is actually only Phase 1 of the negotiations to sign the commercial armistice. After this mouthing, the negotiators will have to tackle the dish of resistance, that is to say the famous structural reforms that China has for the moment always refused to do. Beijing can hardly satisfy Washington on this ground because "it would be tantamount to calling into question the whole model of Chinese economic development which relies on the financial support of the State with the sectors considered as priorities", recalls Jean-François Dufour.

US policymakers fear that this first agreement, far from being a victory, actually places the United States in a weak position for further negotiations. "The risk of this agreement is that by agreeing to go back on some of the tariffs, we are depriving ourselves of our main means of lobbying for concessions on the issues that really matter, such as technology transfers and public subsidies. "Florida Republican Senator Marco Rubio warned on Friday.

Sword of Damocles

While it is true that Donald Trump is giving up a major asset, he has written a clause to the agreement stating that the United States reserves the right to reinstate tariffs if China "does not respect its commitments ". This sword of Damocles over the heads of the Chinese prevents them from leaving the negotiating table with the feeling of having won the game, said Jean-Francois Dufour.

But will that be enough to push Beijing to more concessions? The main problem of the Americans is the time, which plays in favor of China. "The Chinese authorities have begun to take steps to depend less on the US economy, and this agreement allows them to get a stay to continue on this path," said Jean-Francois Dufour.

Thus, last week, Beijing announced its intention to replace "all Western software with national solutions" on the computers of the administration. The measure may seem symbolic, but it shows very concretely that China is trying to deprive Washington of ammunition in this trade war. It also proves that peace may not yet be on the agenda and that Beijing is ready for a war of attrition.

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