US, China reset trade relations

US, China finally sign ‘Phase 1’ deal, but would do little to make major economic changes

Phase 1 of the deal is signed giving some relief to international markets

washington — The United States and China are taking a step toward trade peace after 18 months of economic skirmishing.

President Donald Trump and China’s chief trade negotiator, Liu He, signed a modest agreement on Wednesday that would ease some US economic sanctions on China and have Beijing step up purchases of American farm products and other goods. The deal would lower tensions in a fight that has slowed global growth, hurt American manufacturers and weighed on the Chinese economy.

But the “Phase 1” agreement would do little to force China to make the major economic changes such as reducing unfair subsidies for its own companies that the Trump administration sought when it started the trade war by imposing tariffs on Chinese imports in July 2018.

Details of the agreement were due to be released later on Wednesday.

Larry Kudlow, Trump’s chief economic adviser, said the agreement vindicated the president’s strategy of using tariffs in trade negotiations, though not in every instance. “I think with China he was exactly right,” Kudlow said. “I think the tough tariffs hurt their economy and made them much more amenable to a good deal.”

Most analysts say any meaningful resolution of the main US allegation — that Beijing uses predatory tactics in its drive to supplant America’s technological supremacy — could require years of contentious talks. Sceptics say a satisfactory resolution may be next to impossible given China’s ambitions to become the global leader in such advanced technologies as driverless cars and artificial intelligence.