You’ve read the headlines – the first phase of the US-China Trade pact has been signed between the two largest economies in the world after they first slapped tariffs on each other in July 2018.
Was the phase I trade deal significant? I explore deeper.
What the phase I deal is
China to commit an additional US$200b purchase program from the US over the next two years (till Dec 2021)
Both countries affirm the importance of voluntary, market-based transfers of technology instead of forced transfers
Currency enforcement of the Chinese Yuan on market-based principles
China will allow US financial institutions to apply for asset management licenses
China shall eliminate foreign equity limits which will allow banks and insurers to gain more access to the Chinese market
Issues with the phase I deal
US$200b of imports is a really significantly difficult target to reach – to put things in perspective, China imported US$185b of US goods in 2017