US & China Sign Phase 1 of Trade Deal

The US & China on January 15 signed the first phase of a trade deal after 18-months of tough negotiations including several months of suspension of talks between the two largest economies of the world. The agreement was signed by US President Donald Trump and Chinese Vice Premier Liu He.

Crux of the Matter
  • The first phase of the trade deal includes Intellectual Property (IP) Protection and Enforcement, ending forced technology transfer, the dramatic expansion of American agriculture, removing barriers to American financial services, ending currency manipulation, rebalancing the US-China trade relationship and effective dispute resolution.
  • Punitive tariffs on China would remain in place till the time the second phase of the trade deal is agreed.
  • Presently the US has imposed tariffs on more than $360 billion of Chinese goods, and China has retaliated with tariffs on more than $110 billion of US products.
  • China has pledged to increase purchases of US products worth $200 billion over the next two years and the US commitment to roll back tariffs in phases on Chinese goods.
  • The trade deal is expected to help revitalise the global value chain disrupted by the trade war and remedy at least some of loss.
  • Liu He said, “economic and trade cooperation is the propeller of the overall bilateral relationship”
  • Chinese President Xi Jinping, in his letter to Donald Trump, said the phase one deal was good for China and the US and it needed to be earnestly implemented by both sides.
  • Donald Trump called the trade agreement a momentous step to a future of fair and reciprocal trade and said, “this is a transformative deal that will bring great benefits for the two countries.”

The China-United States trade war is an ongoing economic conflict between the world’s two largest national economies, China and the United States. President Donald Trump in 2018 began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. says are “unfair trade practices”. In the United States, the trade war has brought struggles for farmers and manufacturers and higher prices for consumers. In other countries, it has also caused economic damage. The trade war has been criticized internationally, including by U.S. businesses and agricultural organizations, though most farmers continued to support Trump. More Info

Sigh of Relief For Global Markets as First Bus Easing US-China Trade War Arrives

Easing the 20-month long US-China Trade War, US and China are set to sign Phase 1 of the trade agreement that will focus on withdrawing spiking tariffs and making purchase commitments. US and China will withdraw $250 bn and $110 bn tariffs imposed respectively in phases.

Crux of the Matter
  • Global Market has taken a sigh of relief as the largest trade war has received a pause and seen ointments being spread over on the tariffs that were imposed by both the nations, namely USA and China.
  • USA will start rolling back the $370 bn tariffs imposed on China, while China will commit to gradually lifting up the 5-25% tariffs and to make certain purchase agreements. The deal also has detailed terms for technology transfer and intellectual property rights, on which USA has condemned China by alleging it of facilitating its agencies in stealing IPRs.
  • The largest US tariff is on manufacturing goods, 25% on $250 bm worth of goods. That remaining intact, China has also not made any specific commitments of buying agricultural products. However, an approximate number was released by US’ Dept. of Agri that said China has agreed to buy 585,000 tons of US soybeans.
  • USA’s Chief Trade Negotiator, Robert Lighthizer, agreed that there is a setback to this deal as it does not address China’s systemic methods of conducting business like subsidizing trade and other industrial policies.
  • China has taken the deal with a pinch of salt. A Minister in China’s Commerce Chamber has warned China to be prepared for any sudden changes in the deal.
  • “The phase one deal is temporary reconciliation, not complete ceasefire, between China and the US. It’s difficult for the two countries’ relations to return to where they were before the trade war broke,” said Deputy Director of Info at CCIEE, Wang Jun.

The China–United States trade war is an ongoing economic conflict between the world’s two largest national economies, China and the United States. President Donald Trump in 2018 began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. says are “unfair trade practices”. Among those trade practices and their effects are the growing trade deficit, the theft of intellectual property, and the forced transfer of American technology to China. More Info

Donald Trump Signs “Hong Kong Human Rights & Democracy Act” Bill

US President Donald Trump signed into law a bill ‘The Human Rights and Democracy Act‘ that supports pro-democracy protesters in Hong Kong and mandates an annual review, to check if Hong Kong has sufficient autonomy to justify its special status with the US.

Crux of the Matter
  • The US decision is seen as a serious interference in internal matters of Hong Kong.
  • President Trump said that has he signed the law out of respect for President Xi Jinping, China, and the people of Hong Kong.
  • Hong Kong government reacted by saying that the bill would send the wrong signal and would not help to ease the situation.
  • China’s foreign ministry said it will take firm countermeasures.
  • Trump also signed a second bill that prohibits the export of crowd-control ammunition to the Hong Kong police including tear gas, rubber bullets and stuns guns.
  • 2019 Hong Kong protests, also called as the Anti-Extradition Law Amendment Bill movement is an ongoing series of demonstrations in Hong Kong which were triggered by the introduction of the Fugitive Offenders amendment bill by the Hong Kong government. If enacted, the bill would have let local authorities detain and extradite criminal fugitives who are wanted in territories with which Hong Kong does not currently have extradition agreements. Protesters laid out five key demands, which include the withdrawal of the bill, an investigation into alleged police brutality, the release of arrested protesters, a complete retraction of the official characterisation of the protests as “riots”, and Chief Executive Carrie Lam’s resignation. More Info

US-China Trade War: India’s Export Pie Bigger by $755mn

US-China trade war, in the first half of 2019, has benefitted India of $755 million in exports as China’s share of exports to the US is dissipating between European Union, Mexico, Canada, Korea, India, and others. The UN trade and investment body had concerns regarding the global economy on account of such lose-lose trade wars.

Crux of the Matter
  • China’s Exports to the USA worth $35 bn, 25% of total exports, has been hit due to US-China Trade War. Communication Equipment and Office Machinery exports fared the worst, fell by 55%, among reduced Chinese exports.
  • Of the total export loss of China, around $21 bn worth exports have been routed to other countries, whereas of $14 bn some has been soaked by US manufacturers and some lost.
  • In exports to the US, India gained $243 mn in Chemicals, $181 mn in Metals and Ore, $83 mn in Electricity Machinery, $68 mn in Misc. Machinery, and in Textiles, Office Machinery, Precision Instruments, Agri-Food, Transport Equipment as well.
  • “We hope a potential trade agreement between the US and China can de-escalate trade tensions. …it [trade war] also compromises the stability of the global economy and future growth” said UNCTAD.

The China–United States trade war is an ongoing economic conflict between the world’s two largest national economies, China and the United States. Analysis conducted by the Peterson Institute for International Economics found that China imposed uniform tariffs averaging 8% on all its importers in January 2018, before the trade war began. The analysis also found that average American tariffs on Chinese goods increased from 3.1% in 2017 to 24.3% by August 2019. Read More