China trade vow after Trump talks helps settle financial markets

Irving Hamilton
December 7, 2018

Chinese officials have commenced preparations to resume imports of USA soybeans and liquefied natural gas (LNG) following the meeting between the two Presidents over the weekend where China agreed to enhance its imports from the U.S. But he added, "if that's real" - raising some doubt - it would close the USA trade deficit with China, and 'we have to have a negotiated agreement and have this on paper'.

He added that Xi has sought to control the Indo-Pacific region, where the USA previously had significance.

The White House has said China had committed to start buying more American products and lifting tariff and non-tariff barriers immediately, while beginning talks on structural changes with respect to forced technology transfers and intellectual property protection.

Trump, in a post on Twitter, linked Beijing's silence to officials' travels and said he thought Xi had been honest during their weekend meeting to hammer out progress over trade.

United States liquefied natural gas was also absent from China's shopping list in October, following Beijing's move in September to impose a retaliatory 10 per cent tariff on USA supplies.

On Monday, Kudlow said there was an "assumption" that China would eliminate auto tariffs, not a specific agreement.

Earlier this year Trump imposed an import tax of 25 percent on $50 billion in Chinese products, then hit an additional $200 billion worth of goods with 10 percent tariffs.

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On the sidelines of G20 summit meeting, Jinping and Trump has agreed to ceasefire trade war between the countries with reducing new tariffs with providing a timeline of 90-day to reach an agreement.

China has promised to act quickly on the agreement but failed to release details, rattling financial markets.

There are several significant take-aways from this development, including the argument that Trump's hard line, even at times belligerent stance with Beijing, has caused them to blink first, particularly since economic growth in China has already started to feel the brunt of US tariffs, while USA economic growth, though not as robust as a few months ago, is still strong.

"Relations with China have taken a BIG leap forward!"

Officials from the United States and a number of other major economies have often criticized China for its slow approach to negotiations and not following through on commitments.

China's Ministry of Commerce did not respond to phone calls and a faxed request to comment.

Mr Xi and his most senior officials, including the Commerce Minister and the country's two top diplomats, are in Portugal, and due back in China on Thursday.

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