China hails phase one trade war deal signing, with focus on strategic value over specific details

Zhou Xin

China awoke on Thursday morning to news of a phase one trade deal with the United States signed overnight, hailed as “win-win” by Vice-Premier Liu He, but the details of what the agreement contained were not available inside China until more than eight hours after the event.

China’s Ministry of Finance published both English and Chinese versions of the text at around 10.30am, hours after the Office of the US Trade Representative (USTR) posted a 96-page English-language version of the deal, including attachments, outlining commitments China made in areas such as intellectual property, market access, currency and imports – however as expected, granular detail on individual commodity purchases were absent.

State media outlet CCTV and its English-language network CGTN provided live coverage of the signing ceremony between Liu and US President Donald Trump after midnight local time. However, the simultaneous translation cut out when Vice-President Mike Pence, a known China hawk, started speaking.

State media talked up the fact that after 18 months of hard slog, the world’s two largest economies had finally found enough common ground to sign what is seen internationally as a relatively low-end agreement.

The White House published a full transcription of the lengthy signing ceremony, including a full translation of Chinese President Xi Jinping’s letter to Trump, read aloud by Liu. Again, there was no immediate mention of this in China’s government media organs.

The official Xinhua News Agency published an editorial on Thursday morning saying that the phase one deal showed China and the US are looking for “a more reasonable approach” to managing their differences. But it warned that the deal should only be considered “a good start” to address a dispute that is “long-term, complicated and arduous”.

Most analysts would agree with this sentiment, especially since on the same day Liu and Trump signed the deal in front of a packed White House East Room, the US was preparing to unleash new restrictions on Chinese telecoms giant Huawei’s access to US technology.

Chinese tabloid the Global Times reiterated that this should not be viewed as a “one-sided win” and hoped that more than a dozen rounds of painstaking negotiations could be instructive for China and the US in “curbing the impulse for confrontation” in the future.

The biggest takeaway from the deal is that both sides didn’t give up contacts and negotiation, didn’t give up the difficult search for consensus,

Global Times

“The biggest takeaway from the deal is that both sides didn’t give up contacts and negotiation, didn’t give up the difficult search for consensus,” the editorial read.

People’s Daily – the official newspaper of China’s Communist Party – struck a hopeful note, declaring that the bilateral trade relationship “is now standing at a new starting point”. It tried to play down comparisons between China’s currency commitments and the Plaza Accord – a US-Japanese currency arrangement in the 1980s which some say helped instigate Japan’s “lost decade” – and said that China’s “huge demand” means it should have no problem buying an additional US$200 billion of US goods and services.

Meanwhile, independent Chinese business magazine Caixin ran comments made by Liu at a press conference held for select Chinese media in Washington after the agreement was signed. Liu said that China’s commitments on intellectual property rights protection, technology transfer and financial market opening would also be applied to China’s other trading partners.

This is perhaps a signal intended to head off disgruntlement among trading partners which have stepped into the US’ place, after bilateral trade between the two superpowers fell away last year.

Trump made a point of announcing that negotiations for a phase two deal would begin immediately. “Negotiating with Liu is very tough. But [tariffs] will all come off as soon as we finish phase two,” Trump said.

Again, though, there was no mention of phase two in any Chinese state media. Chinese analysts, however, accepted that this is where the real hard work will begin.

“The phase two deal may involve more difficult domestic regulatory issues such as subsidies, state-owned enterprises, and internet supervision,” said Wang Heng, a professor focused on trade law from the University of New South Wales in Australia. “Due to the complexity of the negotiations, it remains to be seen whether the two parties can reach a second-stage agreement. If market competition rules such as subsidies are not agreed upon, economic and trade frictions may continue and affect the two countries and the international economy.”

Analysts have warned that despite the glitz of the White House signing ceremony, US-China relations remain fraught. Photo: EPA-EFE

Shen Jianguang, chief economist at Chinese fintech giant JD Finance and a veteran China policy watcher, said that despite the agreement, the road ahead remains full of obstacles.

“The repeated ups and downs of the economic and trade situation between the two countries since last year indicate that we should still be alert to the possibility of future disputes,” Shen said. “In addition, even if the trade agreement is implemented in the short term, the losses caused by the tariffs that have been imposed are difficult to recover.

“Since the trade war started, the strategic mutual trust between China and the United States has retrogressed. Frictions and disputes in other areas have also occurred frequently. We need to prepare comprehensively for the complexity of Sino-US relations and long-term battle.”

Note: This article was updated at 11.00am after China’s Ministry of Finance published the text of the deal on its website.

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