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U.S. top trade negotiator praises deal, China remains cautious

Published 12/16/2019, 04:48 AM
Updated 12/16/2019, 04:48 AM
© Reuters. FILE PHOTO: U.S. Treasury Secretary Steve Mnuchin greets China's Vice Premier Liu He

© Reuters. FILE PHOTO: U.S. Treasury Secretary Steve Mnuchin greets China's Vice Premier Liu He

By David Lawder and Kevin Yao

WASHINGTON/BEIJING (Reuters) - U.S. President Donald Trump's top trade negotiator praised a "phase one" U.S.-China trade deal which is expected to nearly double U.S. exports to China over the next two years, while China remained cautious ahead of the signing of the agreement.

U.S. Trade Representative Robert Lighthizer, speaking on CBS' "Face the Nation" program on Sunday, said there would be some routine "scrubs" to the text, but "this is totally done, absolutely."

The deal, announced on Friday after more than two and a half years of on-and-off negotiations between Washington and Beijing, will reduce some U.S. tariffs on Chinese goods in exchange for increased Chinese purchases of U.S. agricultural, manufactured and energy products by some $200 billion over the next two years.

China has also pledged in the agreement to better protect U.S. intellectual property, to curb the coerced transfer of American technology to Chinese firms, to open its financial services market to U.S. firms and to avoid manipulation of its currency.

Asian shares rose on Monday, with the MSCI's broadest index of Asia-Pacific shares outside Japan hitting a near eight-month high although investor caution over a lack of details capped gains.

A date for senior U.S. and Chinese officials to formally sign the agreement is being determined, Lighthizer said.

Chinese purchases of agricultural goods were expected to increase to $40 billion to $50 billion annually over the next two years, Lighthizer said.

The United States exported about $24 billion in farm products to China in 2017, the last full year before the world's two largest economies launched a tariff war on each others' goods in July 2018.

Soybeans were the biggest U.S. farm products shipped to China in 2017, with cargoes totaling $12 billion in value. China has said it would buy more grains from the United States as part of the deal.

While China's trade delegation has expressed optimism about the deal, some government officials are cautious.

"(The deal) is a phased achievement, and does not mean that the trade dispute is settled once and for all," said a source in Beijing with knowledge of the situation. That source said signing and implementing the pact remained the main priority for success.

Several Chinese officials told Reuters the wording of the agreement remained a delicate issue and care was needed to ensure expressions used in text did not re-escalate tensions and deepen differences.

China faces huge pressure to fulfil the phase one deal, said Shi Yinhong, a professor at Renmin University and an adviser to the cabinet.

Shi suggested imports of some U.S. agricultural goods like soybeans would be far above China's demand.

"Trump will also force China to buy a lot of U.S. energy and manufacturing products at this stage or the next stage," Shi told a forum in Beijing on Monday.

"Look at Trump and Lighthizer, they are very happy. But our government only reported facts, we did not cheer."

TARIFF REDUCTION OFFERS

The deal suspended a threatened round of U.S. tariffs on a $160 billion list of Chinese imports that was scheduled to take effect on Sunday. The United States also agreed to halve the tariff rate, to 7.5%, on a $120 billion list of Chinese goods including Bluetooth headphones, smart speakers and flat-panel televisions.

USTR and the U.S. Treasury said reports that U.S. negotiators had offered to cut the tariff rate by half on all $360 billion worth of goods hit by tariffs were "utterly false".

"No such offer was ever made to China by the United States. There is not a single knowledgeable American negotiator who would support this falsehood," the agencies said in a joint statement.

The deal ultimately left 25% U.S. tariffs on $250 billion worth of Chinese imports, limiting stock market gains on Friday.

Lighthizer said the success of the deal will be up to decisions by officials in Beijing.

"Ultimately, whether this whole agreement works is going to be determined by who's making the decisions in China, not in the United States," Lighthizer said.

"If the hard-liners are making the decisions we're going to get one outcome, if the reformers are making the decisions - which is what we hope - then we're going to get another outcome."

© Reuters. FILE PHOTO: U.S. Treasury Secretary Steve Mnuchin greets China's Vice Premier Liu He

He said it would not solve all of the problems between the United States and China, because integrating China's state-dominated economic system with America's private-sector led system will take years.

Latest comments

"Ultimately, whether this whole agreement works is going to be determined by who's making the decisions in China, not in the United States," Lighthizer said. . "If the hard-liners are making the decisions we're going to get one outcome, if the reformers are making the decisions - which is what we hope - then we're going to get another outcome.". So basically no deal has been done, contrary to what the Trump team are saying if they are also saying the above - it's a take it or leave it, that makes the Chinese look weak and buying loads of stuff they don't need or want - I can't see this being agreed to by the hardliners - The Chinese are already diversifying as much as possible away from the USA and they're just playing for time, whilst planning with the EU, Putin and much of Asia to set up a gold backed payments clearing system that will bypass SWIFT and the USD - leaving the USA out in the cold.
“China has also pledged in the agreement to better protect U.S. intellectual property, to curb the coerced transfer of American technology to Chinese firms, to open its financial services market to U.S. firms and to avoid manipulation of its currency.” If you really believe any of this you need psychological help.
I totally believed them. They have Confucius values so I will take their words as truthful.
It may be a never ending story...
I have faith in Lighthizer, but I still don't see this lasting long. President Trump and his negotiators have worked very hard to make a deal that will be good for America, the world, and if adhered to, the Chinese people. I don't think it will take China's leadership, with their inability to put China's future ahead of their own political survival, long to scr ew it up like they always do.
 . . Xi is not in as strong a position as you might like to believe. China's credit crunch is mammoth, their economy is not serving their young at all, not one other country holds their debt, their neighbors literally hate them, they're losing control of infectious diseases in country, and these are just a few issues. The world has zero faith in their currency, and never will. Once Russia gets their hooks in China through gas pipelines, they're going to squeeze China like a pimple. The reality is that China, in terms of geography, resources, energy, food production and sustainable cooperation internally, is possibly the least blessed country on the planet. If national unity is maintained with guns, you're never in a strong position.
Buzzy - you're living on a different planet - it's the trump administration that is fighting for survival - as stated above, the Chinese government is a ruthless dictatorship. Trump is being impeached. neither government gives a monkeys about the population of their countries, except how to milk them for every last ounce of breath.
 . . Clearly we disagree.
Trump continues to prove hinself to be one helluva con man. There is no deal, or they would release the tect if it!
Seriously, would you expect anything different from the same people in charge? It’s been like that for nearly 3 years. The deal of the century, phenomenal, perfect.. but then nothing spectacular of course
 . . That's on China.
This is nothing but a one sided proposal by the U.S. Lighthizer said the success of the proposal depends on who makes the decisions in China!!! I'm quoting this story!!! They have nothing yet!!
indeed - not a deal at all - as you say, a take it or leave it proposal! The Chinese don't even have all the pigs now to feed all that ******GM soy rubbish to anyway - what are they going to do with it all? store it in the empty office blocks in the empty cities for years?
The details of the deal were promised Saturday or today, yet nothing released. Sounds exactly like October when the detail or the deal never happened. 50/50 if there is actually a deal or just hype by both sides.
I told you guys ... China and US are intertwined together in a global market place. They will fight eachother but at the end of the day, we will always need eachother for economic advancement. If not, we can all go back being a farmer like in the old days.
Actually not. If there was no china the U.S. would still be the world leader. If there was no U.S. then china would not be where it is today.
Neither would the US as our economy relies on the Chinese trade, as domestically we cannot produce all we need at reasonable prices.
Trust me, without China's help building and manufacturing for decades help driving economic expansion, we would all be farmers today.
This is a lot of the same
nearly double, that means US needs China, so a deal will really going to happen, if there's No deal purchase will surely drop massively that will surely affect the farmers...trump needs to make a deal if he wants to win on Nov..
there is still no deal
Well.. commodities/soy may pick up and cheap junk may stay cheap. It’s a win for everybody that likes tofu I guess.
they feed it to their pigs that have all been decimated by swine flu - so I guess theyre going to now have to feed it to their population, but it aint going to go down well
A date for senior U.S. and Chinese officials to formally sign the agreement is still being determined, Lighthizer said. Am i the one to explain that a deal is done, when signing took place? Lets please call things what the are. For the sake of all the people investing their hard earned money into the market. This is not yet a deal.  All the news about the US China trade War/ Deal is misleading. Taking profit and leaving market be, till this trade war nonsence is over. O m g.
The Big Orange Fiddle continues to get played.
Total destruction
good. done. finished. complete. now, we never want to hear again that "trade negotiations going well" again. Let's move on if this is finished... but why do I get the feeling that this deal doesn't hold water? China will take care of China with or without "negotiations"
because they own debt and US controls the sea around the China at this moment.
Why would China buy American when everything America sells is made in China.
The rude awakening when China knows the balance has shifted and completely cuts America off. Just remember to thank your Boomer parents for being so desperate.
as we easily backed out of NAFTA, CHINA can and will back out of this.
We didn't "easily" back out of NAFTA. We remained committed to it until an improved agreement was reached. That's just a nutty thing to say.
The only thing needed is for Trump and Xi to sit down and drink some beer.
Or eat two scoops of ice cream. Might be more productive, actually.
yahoo! We are selling almost as much farm products. as we were before all this started.
yada yada yada  Read this if you want a balanced view:. . . https://www.theguardian.com/business/2019/dec/15/amazing-deal-or-capitulation-why-the-us-china-trade-truce-may-not-last
So far the news has been a dud.
On one hand, US is turning into a raw material appendage of China. On the other hand, tariffs are still pretty much intact. Overall, it looks like it is a bad deal for China economically but strategically US did not get any political change. It is a Meh..
Will gap up huge also holiday shoppings -store are full of people.
I've been out and about. The stores in Charlotte look pretty empty to me. Maybe heavy for a Sunday on its own, but considering Christmas is close, they are empty
While retail sales are down so far this season. hmmm
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