China and the United States took a big step forward in relations to reach a trade war truce, US President Donald Trump said on Monday, as China prepared to send a big delegation to America for further talks.
In a series of tweets, Trump said his meeting with Chinese President Xi Jinping in Buenos Aires on the weekend was “an extraordinary one”.
“Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!” Trump said in the tweet, adding that he and Xi had “a very strong and personal relationship”.
“He and I are the only two people that can bring about massive and very positive change, on trade and far beyond, between our two great Nations. A solution for North Korea is a great thing for China and ALL!”
Trump also said US farmers would benefit from China’s agreement to buy more American agricultural products, and Beijing had agreed to “reduce and remove” tariffs on US cars.
Beijing raised tariffs on American cars to 40 per cent over the summer as the tit-for-tat trade war escalated. But the Chinese ministries of foreign affairs, commerce and finance offered no comment on whether China had agreed to cut the duties.
Trump’s tweets followed an agreement between the US and China on the weekend to hold off on imposing new tariffs for 90 days.
A source familiar with the trade talks said China was expected to send about 30 officials to Washington for discussions next but it was not known who would be in the delegation.
US news outlet NPR also reported that White House adviser Peter Navarro said US Trade Representative Robert Lighthizer would be in charge of negotiations with China over the next 90 days.
My meeting in Argentina with President Xi of China was an extraordinary one. Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!
— Donald J. Trump (@realDonaldTrump) December 3, 2018
Chinese foreign ministry spokesman Geng Shuang said on Monday that officials from both sides were working hard towards the goals set out by the presidents of China and the US in their meeting.
“As the next step, both sides will speed up negotiations based on the consensus reached between the two countries’ leaders,” Geng said.
“China is willing to open up its market and expand imports according to the progress of its new round of reform and opening up, as well as the needs of its people and domestic market, and to ease concerns on issues surrounding China-US trade relations.”
The two sides have three months to tackle their differences over forced technology transfer, intellectual property protection, non-tariffs barriers and cyber intrusions. If there is no progress, the US will go ahead with increases in duties that it had threatened to apply from January 1.
The agreement was a shot in the arm for markets, with the benchmark Shanghai Composite Index rising 2.57 per cent to end Monday at 2654.8, and Hong Kong’s Hang Seng Index closing up 2.44 per cent at 27,182.04.
But US business executives and analysts warned that the overall momentum may be short-lived because the weekend meeting did not address fundamental or structural trade issues.
Jake Parker, US-China Business Council vice-president for China operations, said the ceasefire delayed further escalation “but this is where the hard work begins”.
“It is unreasonable to assume that all challenges in the relationship can be resolved in 90 days. Both sides should instead aim for substantive, measurable and commercially meaningful outcomes and a long-term engagement framework,” Parker said.
“Setting targets that can be fully implemented by the end of 90 days, medium-term goals by the end of 2019, and longer-term goals that can be realised in the following three-to-five years would be ideal.”
He said China should fully deliver on the commitments to opening up it made earlier, including to allow foreign majority control of life insurance joint ventures and to start taking applications for foreign bank card clearing institutions and credit rating agencies.
“There should also be an ongoing dialogue to ensure any gains achieved are not one-time, but instead are permanent, positive changes in how foreign companies are treated in China,” Parker said.
US Treasury Secretary Steven Mnuchin also warned that Beijing should avoid “soft commitments” in talks, according to the Financial Times. “There is a 100 per cent unanimous view on our economic team that this needs to be a real agreement,” Mnuchin was quoted as saying.
The White House said in a statement that both countries would talk to address non-tariff market barriers, cyber theft and forced technology transfer – the latter two of which Beijing denies take place.
Chinese exporters breathe sigh of relief on tariff truce but do not expect a quick end to US trade war
It also said China agreed to buy US agricultural and energy products – after suspending purchases of US soybeans and crude oil for months.
James Zimmerman, a former chairman of the American Chamber of Commerce in China, said China’s agreement to buy more US goods was non-binding and based upon market demand.
“And Xi knows that Trump is anxious for a deal, any deal. We’ll see what happens in 90 days,” Zimmerman said.
“China is keenly watching the political environment in Washington, with all its toxicity and gloom, and for a lot of reasons they know that Trump needs a deal to brag about. Any resolution with China will have more to do with Trump’s political fortunes than something intended to support American business, workers, and consumers.”
He expected that China would offer the US essentially what was in the Bilateral Investment Treaty negotiated by the previous US administration but abandoned by Trump.
“[There] maybe a bit more to sweeten the pot but not much more,” Zimmerman said.
“The deal will be superficial and packed with imprecision and distant deadlines, but enough to allow Trump to run a victory lap. Then, once the dust settles and pundits pick apart the deal, we will all realise that the deliverables were drivel and the mighty trade war was for naught.”
Everbright Sun Hung Kai, a Hong Kong-based financial services agency, said the outcome on Sunday was “short-term positive” and it remained to be seen what the lasting impact would be.
Goldman Sachs warned that the pause would prolong the period of uncertainty of bilateral trade tensions and the three-month negotiation period would mean there would be limited concrete outcomes to address thorny issues.
Additional reporting by Catherine Wong and Teddy Ng