New Washington-Beijing trade 'consensus' resolves little: analysts

Delphine TOUITOU
President Donald Trump's steel and aluminium tariffs announcement sent global markets into a tailspin

The compromise reached over the weekend between Washington and Beijing has reduced the threat of a trade war, but the Americans won few concessions from the Chinese side, with key disagreements far from being resolved.

Both sides said Saturday they were committed to reducing the soaring US trade deficit with China, one of President Donald Trump's central demands. To get there, China will "significantly" increase purchases of American goods and services and open its domestic markets wider.

Top White House economic advisor Larry Kudlow called the results a "big step."

"These are sort of like peace treaties in a sense," he told CNBC, adding that "the fine print, the details will come later."

Just days earlier, stock markets had been on tenterhooks at the possible approach of a trade war that could stymie global economic growth.

"It is striking that two rounds of intensive negotiations have resulted in at best a temporary truce, while the fundamental differences on trade and other economic issues remain unresolved," said Eswar Prasad, a professor of trade policy at Cornell University.

Edward Alden, a trade expert at the Council on Foreign Relations, agreed.

"I think this is at best a very preliminary agreement," he said.

Both said President Donald Trump's administration appeared ready to declare victory because the Chinese had acknowledged the need to reduce the US goods deficit with China, which stood at more than $375 billion in 2017.

However, analysts pointed Monday to the glaring lack of details and dollar amounts.

In sum, according to Alden, Team Trump won a "vague Chinese commitment" to buy more American goods and services.

Louis Kuijs, chief Asia economist at Oxford Economics, likewise wrote in a research note that the Chinese had not succumbed to US pressure to agree to cut trade deficit by $200 billion, a demand he called "practically almost impossible."

- North Korea -

After announcing tariffs of 25 percent on steel and 10 percent on aluminum in March, Trump raised the ante repeatedly in the following weeks, threatening tariffs on as much as $150 billion worth of Chinese imports.

For years, Trump has denounced the trade imbalance with China, calling it a threat to US workers and businesses. He has called on China to end allegedly unfair trade practices, in particular the forced transfer, or "theft," of technology and know-how that American companies say the can suffer as a condition of doing business in China.

Observers said that on these points Saturday's White House statement was vague and general. Kuijs of Oxford Economics pointed out that the statement made no reference to China's industrial and technology policies, which are "highly controversial in the US (and elsewhere)."

If the Trump administration gets no further than Saturday's commitments from Beijing, "then this is a huge failure of the Trump administration," said Alden, who noted the discord between reality and the tweets that Trump posted Monday morning.

"China has agreed to buy massive amounts of ADDITIONAL farm/agricultural products," the president tweeted.

Alden said it was "ridiculous and absurd" to point to possible increases in US agricultural exports to China as a major victory. This was never the problem, he said. Technologies and the direction of technological development were, he said.

Alden said the "consensus" announced Saturday should be viewed in light of the possible June 12 summit with North Korean leader Kim Jong Un. China is Pyongyang's principal ally.

"I do think the upcoming summit is a factor. Chinese cooperation is very important to any successful outcome in North Korea," he said. "So I think there is a desire not to escalate the trade conflict in advance of this summit."