After months of tense negotiations and tit-for-tat tariff escalations, China and America have finally inked the first phase of a trade agreement. The agreement represents a significant milestone in the ongoing trade war, which has rocked markets and impacted businesses around the globe.
Under the terms of the deal, China has pledged to increase purchases of American goods and services by at least $200 billion over the next two years. This includes everything from agricultural products to energy exports and manufactured goods. In return, America has agreed to roll back some of the tariffs it had imposed on Chinese goods, including the 15% tariff on $160 billion worth of mostly consumer goods that was set to take effect in December.
Beyond these tangible commitments, the agreement also includes provisions on intellectual property protection, forced technology transfer, and currency manipulation. China has agreed to crack down on intellectual property theft and technological espionage, while America has promised to work with China to avoid currency manipulation and promote transparency.
While the agreement is undoubtedly a step forward, some experts have raised concerns about the specifics of the deal. For example, the agreement is heavily weighted towards increased purchases of American goods, with no concrete commitment from China to open its markets to American companies. Moreover, the phase one deal does not address many of the underlying structural issues in the US-China relationship, such as the role of state-owned enterprises and subsidies.
Moreover, it is unclear whether either side will be able to fully deliver on its commitments. The $200 billion target is a lofty one, and some analysts have suggested that China may struggle to meet its purchasing goals. Similarly, there are questions about whether American businesses can capitalize on China`s commitment to purchase more goods and services.
Despite these concerns, the agreement is being widely viewed as a positive development. The de-escalation of the trade war and the removal of some of the uncertainty it has caused should help to boost business confidence and investment. Additionally, the agreement represents a much-needed bit of good news at a time when the global economy is facing a range of challenges, from the coronavirus outbreak to the ongoing Brexit saga.
Of course, the road ahead remains uncertain. The phase one deal is, as its name suggests, just the first step in a longer process of negotiating a comprehensive trade agreement. Whether China and America will be able to work together to tackle the thornier issues that lie ahead remains to be seen. Nevertheless, the agreement is a positive step that could help to lay the groundwork for a more productive and stable relationship between the world`s two largest economies.