Global shares jump on US-China trade truce
|bbc.com 03 Dec 2018 at 08:47|
It remains uncertain how the two sides will resolve underlying US concerns over trade barriers, subsidies and alleged technology theft.
Despite the questions, US President Donald Trump was in an ebullient mood, promising benefits to US farmers and car companies.
On Twitter, he said farmers would be a "very BIG and FAST beneficiary" and described the meeting with Chinese President Xi Jinping as "extraordinary".
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!
Both farmers and the auto industry have been struck in the trade war, as the US and China hit each other with escalating tariffs.
Since July, the US has imposed tariffs on $250bn (£195.9bn) worth of Chinese goods. China has retaliated with duties on some $110bn of US goods over the same period.
The US agreed to postpone further tariffs on Chinese goods - a halt that applies to its plans to raise tariffs from 10% to 25% on almost 6,000 items, starting 1 January.
In exchange, the two countries agreed to re-start talks on the US concerns that triggered the dispute, including "forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft", according to the White House.
In addition, the US said China agreed to "purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the United States".
Mr Trump later wrote on Twitter that China would "reduce and remove" tariffs on US-made cars, which had been raised to 40% over the summer as tensions escalated.
He did not provide a new level for the Chinese tariffs, and Beijing did not immediately confirm the statement.
Zhaoyin Feng, US Correspondent, BBC Chinese Service
Beijing has offered limited details regarding the truce deal made during the Trump-Xi meeting in Buenos Aires, a move to downplay China s compromises in the negotiation and to save face in front of its own people.
China s official statement underlines that no higher tariffs will be imposed on January 1, 2019, but it does not mention the 90-day deadline.
The US statement also lays out major issues for discussion in the coming 90 days and types of American products that China promises to purchase, while the details are not disclosed by the Chinese government and barely reported by the heavily regulated Chinese domestic media outlets.
The not-so-subtle disparities between the US and Chinese official statements highlight how much a gap needs to closed in the three-month trade war time-out.
Also, Beijing has neither echoed nor rebutted Trump s claim about China agreeing to "reduce and remove" tariffs on American vehicles. China s silence indicates that the two leaders likely discussed the issue and reached a tentative agreement during their dinner meeting.
On the non-trade issues, Beijing was more open, announcing that China will tighten supervision of Fentanyl and review rules on the drug. Pledging to crack down Fentanyl is considered a low-hanging fruit in the Trump-Xi meeting, as China has previously pledged to work with the US to stop opioid imports.
China had previously offered to increase its purchases of US products, only to have Mr Trump reject the deal.
However, he has faced fierce criticism from US business groups, as the tariffs lead to reduced exports of crops such as soybeans, while raising costs for businesses that rely on Chinese imports.
Worries about the economic impact of the tariffs have pushed stock markets lower in recent months.
In China, tariffs have weighed on the economy.
On Monday, China s foreign ministry said economic teams in both countries had been instructed to "intensify talks" towards removing all tariffs following the G20 meeting.
However, it did not indicate if that was a plan with specific goals or something that was merely desirable.
Andrew Hunter, US economist for Capital Economics, said he is optimistic that the apparent "ceasefire" will hold, even though on the surface it would seem the two sides have been in similar positions before.
"With Trump himself having personally negotiated the latest deal, this one has a much greater chance of leading to a lasting truce," he wrote.
"Trump s latest tweets this morning, which touted the benefits of the agreement for US farmers and his own prowess as a dealmaker, suggest he will be reluctant to walk away from negotiations for a second time," he added.
US markets initially gained more than 1% on Monday, but the enthusiasm dimmed a bit later, as it remained unclear how the two countries will resolve their underlying differences.
"There should be no wishful thinking that the truce would end the trade war between the world s two largest economies," DBS strategist Philip Wee wrote in a research note.
He said it "remains to be seen if real progress could be achieved during this narrow window to resolve the contentious issues, not just on trade, but also intellectual property".