This is the big day for the two biggest economic powers in the world. The United States and China must sign a trade agreement this Wednesday at 5 p.m. French time “historical”, in the words of the American secretary of the Treasury Steven Mnuchin. After two years of Sino-American trade war that has destabilized the world economy, the two states are preparing to seal a first party agreement – “phase 1” – before continuing negotiations for a “phase 2 “.
The United States has put the small dishes in the big ones for the occasion: the Chinese vice-premier, Liu He, traveling to Washington from January 13 to 15, was received with great fanfare Monday evening at the White House during a dinner. A lunch awaits this Wednesday the two signatory parties, as well as a “wonderful ceremonyAccording to Oval Office economic advisor Larry Kudlow, which should precede the signing of the text.
Certain clauses of the agreement are still unclear and official documents will be made public at the end of the day. The White House administration says Beijing will buy American products for $ 200 billion over the next two years. The concession will reduce China’s trade surplus with the United States – the workhorse of the two economic powers. In return for this promise to purchase, Trump is expected to forgo setting new tariffs and halving those applied last September on $ 120 billion worth of Chinese goods.
Two days before the agreement, China announced an 8.5% reduction in its trade surplus with the United States last year, from 323 billion in 2018 to 295.8 billion dollars in 2019. An indicator of ‘improved commercial relations between the two superpowers. Another sign of a more peaceful economic relationship: the same day, Washington removed Beijing from the list of countries accused across the Atlantic of manipulating its currency, according to a document from the United States Treasury. This is also a nerve of the war between the two countries, China being suspected of voluntarily dropping its yuan (which it controls completely) with the sole aim of lowering its export prices.
In addition, the agreement provides for Beijing’s efforts on the issue of intellectual property: the People’s Republic should review its practices regarding forced technology transfer.
Be that as it may, this first act towards the end of the trade dispute was greeted by some with skepticism. On January 7, Bruno Le Maire, the French Minister of the Economy, did not hide his skepticism. “We are told of an agreement for January 15, but let’s be clear, this agreement (…) will be partial, bilateral and fragile”, he said in his 2020 vows. Act two is to be held in Beijing for a second phase of negotiations, in the presence of Trump.