China both optimistic and cautious about new trade deal with US

Chinese President Xi Jinping welcomed the partial trade deal between China and the US signed in Washington on Wednesday in a brief letter to counterpart Donald Trump.

That aside, the Chinese reaction to the deal, which is being interpreted as a ceasefire and not a truce, from analysts and official media in Beijing, have been calibrated -- optimistic but certainly cautious.

Optimistic because after 22 months of a tit-for-tat trade dispute, there’s definitely some movement forward, seemingly a temporary cessation of economic hostilities.

Cautious because much more needs to be done to smoothen the economic mistrust that both Washington and Beijing have for each other.

Trade between China and the US is expected to pick up after the deal and the easing of trade frictions.

According to the People’s Daily website, between November and December, the growth of China’s imports from the US recovered some. US shipments to China rose by 9.1 percent year-on-year to reach 78.83 billion yuan ($11.46 billion) in December.

Exports of US agricultural products to China reached 14.1 billion yuan last month, climbing 200 percent year-on-year. In the same month, China imported 23,000 automobiles from the US, up 150 percent from the same period a year earlier.

Misgivings remain.

Neither the Chinese foreign nor the commerce ministries had come out with a statement on the deal hours after it had been signed between Trump and Vice-premier, Liu He.

“The deal will stabilise global expectations. The two parties in the trade war, which jointly contribute 60 percent of global growth, are too crucial to the world. The world needs a truce,” Zhang Yansheng, chief research fellow with the China Centre for International Economic Exchanges wrote in an analysis.

“If China agrees to specific purchases including semiconductor in the phase one trade deal, it will involve companies like Huawei - whether the US allows suppliers to sell devices to Huawei? If the US does not, how could the specific purchases be reached?”

Zhang asked: “Purchases of US products must follow the WTO’s principles and market economy principles. China cannot force the US to sell. If the US refuses to sell, and China fails to buy enough to meet the target figure, who should we blame?”

“That China and the US have signed the phase one deal shows they can manage, if not altogether settle, their differences through negotiations based on equality and mutual respect. But we should not expect too much from the deal, as it was relatively easy for both sides to fruitfully conclude the phase one talks. By contrast, the issues likely to be discussed at the phase two negotiations would be much more difficult,” Tao Wenzhao, a researcher in US studies at the Chinese Academy of Social Sciences, analysed for the state-controlled China Daily newspaper.

An editorial in the nationalistic tabloid Global Times was more optimistic.

“Both sides definitely have some regrets about the phase one agreement and are not so satisfied. This is precisely the type of response to a relatively fair agreement. Debating about who had lost or gained is shallow. Such debates are often exaggerated for certain political goals,” the tabloid said in an editorial.

“Huge uncertainty remains. It may be more difficult for China and the US to reach a comprehensive trade deal, but we hope the preliminary agreement will enlighten both sides’ further efforts. There have been twists and turns in the past 22 months, but neither side has given up contacts and negotiations and the desire to reach a consensus. This is one of the most profound experiences,” the editorial said.