China-U.S. trade tensions drop as countries agree to further talks
Trade tensions between the U.S. and China appear to be subsiding with the two countries agreeing to hold further talks, Reuters reported.
Over the weekend, the two sides pledged to continue negotiations over how China could import more energy and agricultural commodities from the U.S. so as to narrow the US$335 billion annual U.S. goods and services trade deficit with China, although details and a firm timeline were thin.
The biggest immediate beneficiary appeared to be China, which won a reprieve from threatened tariffs on US$50 billion of its exports to the United States as well as a lifeline for ZTE Corp, China’s second-biggest telecom equipment maker whose existence had been threatened by U.S. sanctions, Reuters reported.
The U.S., meanwhile, appeared to have won promises of more imports by China, although there were no specifics.
Threatened U.S. restrictions on Chinese investments in the United States also appeared to be put on hold. The U.S. Treasury said it met a legal obligation to report progress to President Donald Trump on the development of such restrictions, but it declined to provide details.
Economists at Morgan Stanley estimated that exports of U.S. agricultural products, primarily beef, and energy, mostly liquified natural gas, could add between US$60 billion and US$90 billion to sales to China over a period of years.
“China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products - would be one of the best things to happen to our farmers in many years!” Trump wrote on Twitter on Monday.
China’s government praised the cooling of trade tensions with the U.S., saying an agreement was in both nations’ interests, while state media trumpeted what it said was Beijing’s refusal to surrender to U.S. economic threats.