The phase one trade deal done – what next?

Market Trends - 16/01/2020


Yesterday in a ceremony at the white house china and the
United States confirmed an agreement for China to purchase an additional $200B
in U.S. goods for the next two years. This section of the contract is a
fundamental part of the “phase one” trade deal. The extra purchases will
increase the positive energy that has been generated between the two countries.
The contract designates that China will buy $77 billion in additional goods and
services in 2020, and moving ahead to 2021 an extra $123 billion to reach a
total of $200 billion. China bought $186 billion of U.S. goods and services 3
years back in 2017.





The two countries confirmed the first-phase trade deal yesterday
afternoon at the White House. The world's two biggest economies have been in
this trade war for almost two years. During the dispute, the two countries
struck taxes of billions of dollars’ value to each other’s products and
disrupted the global economy with one of the most protracted trade conflicts in
recent history.





The phase one deal is viewed as a preliminary or introductory
contract to achieve peace that includes permits by the Chinese to break down on
intellectual property theft and the forced removal of American technologies.
However, additionally, the agreement covers import targets for China, who have
now vowed to purchase a multitude of American goods while the two countries are
working together for a stable mutual arrangement.





Mass-produced products include electric equipment, industrial
equipment, vehicles, and optical instruments, pharmaceutical products.
Agricultural products include cereals, seafood, oilseeds, meats, and cotton.





However, even though the phase one trade agreement signed
yesterday between the U.S. and China and with that provides some support to the
market, skepticism persists, according to experts. Chairman of the American
Chamber of Commerce in China Gregory Gilligan said, “There’s a great sense of
welcome that the deal was signed and a little bit of relief, naturally, and
some measured optimism about how we can move forward”.


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