The USA and China have agreed on the elaboration of a partial agreement in the trade dispute. U.S. President Trump spoke of a “substantial phase one deal”. According to Trump, it will be documented in the coming weeks.
The two countries moved closer together in recent talks: for the time being, the U.S. government has suspended the planned increase in existing punitive tariffs on Chinese imports from 25% to 30%, originally set for 15 October. In return, China has agreed to purchase agricultural goods worth 40 to 50 billion US dollars. This will make American farmers in particular breathe a sigh of relief as they suffer from the Chinese punitive tariffs on soya, beef and maize.
Experts see first step towards agreement
Experts see the partial trade agreement as a first step towards settling the protracted trade dispute between the USA and China. According to the latest media reports, China, on the other hand, still seems sceptical: the news agency Bloomberg learnt that China would like to hold further talks before the deal is signed. According to this, details are to be clarified at the end of October before China’s President Xi Jinping can sign the agreement.
However, the markets reacted positively to Trump’s announcement. The stock exchanges in Shanghai and Hong Kong gained on Monday. Experts also see an upswing for the economy: Jin Zhang, senior portfolio manager at Vontobel Asset Management, says the agreement will slow down the slide of the Chinese and U.S. economies into recession.
“The markets will need some time to recognize the positive effects. But Europe should also be able to benefit from the reduction in downside risks. For the emerging markets, reducing the downside of the renminbi should be a relief,” says Zhang.
China exports collapse
It is clear that there is a lot at stake economically, especially for the second-largest economy in the world. Chinese foreign trade is suffering greatly from the trade dispute that has been going on for more than a year. China’s exports slumped by 3.2% in September compared with the same period last year. Imports fell by 8.5%. Analysts had not expected such a sharp slump. China’s exports to the USA even dropped by 21.9% in September, while imports saw a 15.2% drop.