WASHINGTON, BEIJING WRAP UP TRUCE DEAL
China to buy another US$200b worth of US goods in exchange for the rolling back tariffs
CHINA will boost purchases of United States goods and services by US$200 billion over two years in exchange for the rolling back of some tariffs under an initial trade deal signed by the world’s two largest economies, defusing an 18-month row that has hit global growth.
Key world stock market indexes climbed to record highs after the deal was signed on Wednesday in Washington, but later stalled on concerns it might not ease trade tensions for long, with numerous thorny issues still unresolved.
While acknowledging the need for further negotiations with China to solve a host of other problems, President Donald Trump hailed the agreement as a win for the US economy and his administration’s trade policies.
“Together, we are righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers and families,” said Trump in rambling remarks at the White House alongside US and Chinese officials.
Chinese Vice-Premier Liu He read a letter from President Xi Jinping in which the Chinese leader praised the deal as a sign the two countries could resolve their differences with dialogue.
The centrepiece of the deal was a pledge by China to purchase at least an additional US$200 billion worth of US farm products and other goods and services over two years, above a baseline of US$186 billion in purchases in 2017, said the White House.
Commitments include US$54 billion in additional energy purchases, US$78 billion in additional manufacturing purchases, US$32 billion more in farm products, and US$38 billion in services, according to documents released by the White House and China’s Finance Ministry.
Liu said Chinese companies would buy US$40 billion in US agricultural products annually over the next two years “based on market conditions”.
Beijing had balked at committing to buy set amounts of US farm goods earlier, and has inked new soyabean contracts with Brazil since the trade war started.
Liu later said the deal would not affect “third parties’ interests”, apparently in reference to deals made with other suppliers.
Chinese companies would import US agricultural goods according to consumers’ need, and demand and supply in the market, said Liu, according to CCTV.
Earlier, top White House economic adviser Larry Kudlow told Fox News the agreement would add 0.5 percentage point to US gross domestic product growth this year and next.
The Phase 1 deal cancelled planned US tariffs on Chinesemade cellphones, toys and laptop computers and halved the tariff rate to 7.5 per cent on about US$120 billion worth of other Chinese goods, including flat-panel televisions, Bluetooth headphones and footwear.
But it will leave in place 25 per cent tariffs on a US$250-billion array of Chinese industrial goods and components used by US manufacturers, and China’s retaliatory tariffs on over US$100 billion in US goods.