US, China open new Era signing trade agreement

8 years ago - Published in Finance, Fundamental Analysis

The US and China have reached a 10-point trade deal that opens the Chinese market to US credit rating agencies and credit card companies. Under the deal, China will also lift its ban on US beef imports; in return, Chinese cooked chicken will be allowed into the US market and Chinese banks can enter the US market. And there were numerous other parts of the preliminary agreement. This included language that appears to pave the way for U.S. firms to export liquid natural gas to China, the expediting of Chinese safety reviews for U.S. biotechnology applications, and cooperation between Chinese and U.S. regulators over financial transactions.The deals are the first tangible results of trade talks that began in April after US President Donald Trump and Chinese President Xi Jinping met in Florida.

Commerce Secretary Wilbur Ross hailed the agreement as "a herculean accomplishment" forged in record time. “This is more than has been done in the whole history of US-China relations on trade.” America's trade deficit in goods and services with China totaled $310 billion last year, by far the largest imbalance with any country. The deficit with China represented about 60 percent of the country's total deficit last year of $500.6 billion.

The deal is seen as an indication that US President Donald Trump is adopting a less confrontational approach with Beijing than he promised during last year's election campaign.
Trump spent months on the campaign trail berating China for its trade practices, but he has softened his approach since winning office. He has initiated reviews of China’s support of its steel and aluminum industries and its impact on U.S. trade, but the outcome of those reviews is unclear. 

In Beijing, Vice Finance Minister Zhu Guangyao told reporters that the early results of the agreement showed that economic collaboration between the two sides "couldn't be closer."

However, he said economic issues should not be politicised. "On the connection between the North Korean nuclear issue and our economic '100 days' plan' negotiations, I can tell you frankly that our economy team focused all their efforts on economic issues," he told journalists.

Under the agreement rolled out on Friday the US announced that it would send a delegation to Beijing’s upcoming “One Belt, One Road” summit, offering its symbolic endorsement of Mr Xi’s pet strategic project to revive the ancient Silk Road to Europe.

In return, China would send a delegation to a US meeting for foreign investors in July with the Trump administration promising equal treatment for China despite a push in some circles in Washington for it to take a tougher line on Chinese investment, particularly in strategic sectors.