President Donald Trump receives a letter presented to him by Chinese Vice Premier Liu He, left, in the Oval Office of the White House in Washington, Friday, Oct. 11, 2019. (AP Photo/Andrew Harnik)
business

Companies welcome U.S.-China trade truce, warn disputes remain

11 Comments
By JOE McDONALD

Companies have welcomed a U.S.-Chinese trade truce as a possible step toward breaking a deadlock in a 15-month-old tariff war, while economists caution there was little progress toward settling core disputes including technology that threaten global growth.

President Donald Trump said Washington will suspend a tariff hike planned for Tuesday on $250 billion of Chinese goods. In exchange, Trump said China agreed to buy as much as $50 billion of American farm goods. Details of other possible agreements weren't immediately released.

The bruising battle over China's trade surplus and technology ambitions has disrupted global trade. Economists warn a final settlement might take years to negotiate. Despite that, financial markets rise ahead of each round of talks and fall back when no progress is reported.

Companies acknowledged Friday's agreement was a modest step and appealed to both governments to step up efforts to end the fight that is battering manufacturers and farmers.

Washington still is planning a Dec 15 tariff hike on $160 billion of smartphones and other imports. Before then, Trump and Chinese President Xi Jinping are due to attend an economic conference in Chile in mid-November. That is raising hopes a face-to-face meeting might produce progress.

"Taking tariffs out of the equation for at last the next two months will give space for substantive negotiations," said Jake Parker, senior vice president of the U.S.-China Business Council, an industry group.

Trump said Friday's deal has yet to be put down on paper but said, "We should be able to get that done over the next four weeks."

China's government welcomed "substantial progress" but gave no details of possible agreements.

"I don't think it's a victory, but it eases the situation," said economist Yu Chunhai at Renmin University in Beijing. He said both sides want to restore business and consumer confidence.

There was no word of agreements on the core issues that sparked the dispute. Those include U.S. pressure on Beijing to roll back plans for government-led creation of global competitors in robotics, electric cars and other technologies.

"There remains significant work ahead to address many of the most important U.S. trade and investment priorities," Myron Brilliant, executive vice president of the U.S. Chamber of Commerce, said in a statement. Still, he called Friday's announcement a "ray of hope."

Washington, Europe, Japan and other trading partners say China's plans violate its market-opening obligations and are based on stealing or pressuring companies to hand over technology. Chinese leaders see those tactics as the surest path to prosperity and global influence.

"With the key structural issues no closer to being resolved, we suspect that a mini deal would, at best, simply delay a breakdown in the negotiations," said Julian Evans-Pritchard and Martin Lynge Rasmussen of Capital Economics.

Friday's announcement also made no mention of commitments by Beijing in sensitive areas including subsidies to industry and cyber security, or the status of telecom equipment giant Huawei, which faces damaging U.S. sanctions.

Trump imposed curbs in May on sales of American components and technology to Huawei Technologies Ltd., China's first global tech brand. Trump has said he is willing to use Huawei, one of the biggest global makers of smartphones and network switching gear, as a bargaining chip in the trade talks.

"The two sides will now return to a 'muddle through' strategy that avoids further tariff escalation but may not substantially reduce tensions," Michael Hirson and Kelsey Broderick of Eurasia Group wrote in a report. "Both the U.S. and China are likely to continue targeting each other through non-tariff measures, such as investment restrictions and regulatory barriers, which will be highly disruptive."

Tit-for-tat tariff hikes by both sides have raised costs for producers and consumers. Some companies are shifting production and supply lines out of China to avoid the U.S. tariffs, suggesting they expect the sanctions to stay in place for an extended period.

China's exports to the United States, its biggest foreign market, have plunged, adding to pressure on Xi's government to shore up cooling economic growth and avoid politically dangerous job losses.

The looming Dec 15 tariff hike leaves a "black cloud" over Apple Inc. and other tech companies with factories or customers in China, said Dan Ives of Wedbush Securities in a report. He said it would be a "gut punch" if it goes ahead.

U.S. complaints about Chinese technology policies, cyber spying and protection of patents and other intellectual property "will be the focus of tech investors," said Ives.

Another potential stumbling block is how to enforce any agreement.

Talks broke down in May over Beijing's insistence that Trump's punitive tariffs had to be lifted once a deal took effect. Washington says some must remain in place to ensure Chinese compliance. Trump and Xi agreed in June to resume negotiations but there have been no breakthroughs.

Despite that, Beijing has gone ahead with other industry-opening initiatives aimed at making China's economy more competitive and productive. None, however, addresses Trump's complaints and business groups say they have had little impact on foreign companies.

On Friday, regulators announced a timetable for an initiative announced in 2017 to abolish limits on foreign ownership of some financial businesses. That starts with futures traders Jan. 1 and extends to securities firms and mutual fund managers later in the year.

"Even if it is not a new liberalization or something that hasn't been announced before, it is still positive to have a date on the horizon for when companies can apply," said Parker of the USCBC.

© Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

©2019 GPlusMedia Inc.


11 Comments
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This 'Deal' achieves nothing in terms of righting of grievances aired by Americans, I wonder what it achieved for Trump. This is proof Trump is desperate for anything to save his political bacon. I consider my comment as being kind here, it could be worse, eg the exPM of Malaysia, totally sold out Malaysia for billions of personal gains. Surely Trump is not all about personal gains and crynism?

China must (like Japan has) think all their Christmas'es have come at once, they have axtraordinary pork price rises, and the deal involves buying more AND cheap pork from USA. Oh and hog feed (soy) from USA.

-2 ( +0 / -2 )

The picture shows the ignorance of Trumps knowledge of culture regarding receiving something from a Chinese diplomat in this case vice premier Liu. VP Liu presents a letter with two hands , something normal in this part of the world, but Trump just sticks out one hand to receive. Showing a lack of manner is not only a sign of indifference but ignorance.

-1 ( +1 / -2 )

Yeah, Trump cements his upper hand over China. The country's economy is highly trade dependent and slowing down, including industrial production, hitting a 17 year low. US economy remains strong and is winning.

Time for China's reckoning. Too many years reneging on WTO commitments and stealing our IP. And yes, the globalization-loving Democrats are finally - finally - recognizing this. Yesterday's headline was, "Warren is trying to be even tougher than Trump on China." Good luck. But we saw how Obama got in bed with the greedy billionaires and fraudulent bankers.

-3 ( +1 / -4 )

US economy remains strong and is winning.

You know when someone is too far gone when they echo what Trump says.

1 ( +3 / -2 )

Everyone is happy that Trump's lose-lose trade war shows signs of possibly winding down.

0 ( +1 / -1 )

Trump actually had a good point about Chinese theft of IP.

But of course that’s not the problem he’s solved. He’s simply somewhat retreated on a situation he caused.

And the Chinese still are stealing IP.

Once again even when trump has the inkling of something good, he does it with incompetence.

-2 ( +2 / -4 )

Another potential stumbling block is how to enforce any agreement.

No that's THE stumbling block; otherwise, you're relying on wishes to achieve success. As been said about wishes, you can try to wish in one hand and **** in another, then tell me which one fills up first. Also, I think it's a bit premature for anyone to make claim that either the US or China have to some sort of economic ceasefire. At best what you've got is some Wall Street rumor that something would be resolved or postponed to support the US' Christmas retail shopping season that unofficially starts November 29th. Guess this is what passes for news these days - both high school rumors and wishes.

1 ( +1 / -0 )

@Pbot

...when they echo what Trump says.

My post is based on official economic data. It must be a drag when the facts undermine your world view.

0 ( +1 / -1 )

My post is based on official economic data. It must be a drag when the facts undermine your world view

Alternative facts?

0 ( +1 / -1 )

Well this turned out to just be another Trump attempt at distracting the people from his impending impeachment.

There has been no advancement in the trade war. This story was a big nothing burger.

0 ( +0 / -0 )

Washington, Europe, Japan and other trading partners say China's plans violate its market-opening obligations and are based on stealing or pressuring companies to hand over technology. Chinese leaders see those tactics as the surest path to prosperity and global influence.

The Chinese Government must give up and cancel the law which force foreign Company to transfer its technology to a Chinese Company. It's unfair and unlawful practice by Communist China.

0 ( +0 / -0 )

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