Deal details a mystery as signing set

Top News | AGENCIES 13 Jan 2020

President Donald Trump is set to sign a trade deal with China on Wednesday that he will trumpet as a major victory, but it comes at a steep cost after a bitter two-year standoff between the world's two top economic powers.

Details of the scope of the agreement have remained a mystery, however.

"The whole document will be released on Wednesday," Larry Kudlow, director of the National Economic Council, said. There will be "a lovely ceremony," he added, preceded the night before by a formal dinner and followed by a lunch, he added.

Edward Alden, trade policy expert at the Council on Foreign Relations, said despite the deal "the hard issues between the United States and China are still outstanding." But he acknowledged: "Politically, this does work pretty well for Trump" as he runs for re-election next year.

The White House can boast it has been "tough on China," and that "technically he's got a deal," something he promised voters in 2016, Alden said.

At the very least, the truce has reassured markets, roiled by constant upheaval in 2018 and 2019 amid threats, counter-threats and waves of tariffs.

The current ceasefire also could help Trump on the campaign trail by giving the US economy a boost.

As uncertainty eases, consumers would have greater reason to spend with confidence and businesses might also move forward with investments that were put on hold over fears about how the conflict would play out.

Trump announced to great fanfare on New Year's Eve that he would sign the "phase one" deal on January 15 in the White House.

But it was not until Thursday that the Ministry of Commerce confirmed the visit of Vice Premier Liu He, who will be in Washington from today to Wednesday.

Kudlow dismissed criticism that the deal fell short of expectations, saying US negotiators won numerous concessions.

The deal is a "mixed success" and comes at a price, said Eswar Prasad, a professor of trade policy at Cornell University and an expert on China.

"Trump has extracted some concessions from China and other US trading partners but at a significant cost to the US economy and with an erosion of the US's international standing as a trustworthy and reliable trading partner."

The Chinese economy has slowed markedly, partly as a result of the trade war, but American manufacturing and farmers also have suffered.

To mitigate losses in the agricultural sector, the Trump administration had to provide a total of US$28 billion in aid to farmers in 2018 and 2019. And US manufacturing entered a recession in August.

"There's been significant harm to American farmers and significant harm to the US manufacturing industry and the new purchase commitments by China are unlikely to undo that damage," Alden said.

Xu Bin, professor of economics and finance at the China Europe International Business School in Shanghai, said the two sides can declare they have an agreement "that will be acceptable, [but] not a victory."

Xu added: "I think essentially the fight between China and the US will continue as far as we can see, over the next few years, next 10 years, next 20 years, even further," veering between conflicts and truce.

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