US and China reach partial trade deal

Traders work on the floor of the New York Stock Exchange in New York City

Traders work on the floor of the New York Stock Exchange in New York City

A newspaper featuring a front page story about the meeting between US President Donald Trump and Chinese President Xi Jinping as seen at a news stand in Beijing on December 3, 2018. - The headline says the two leaders agreed not to increase tarrifs. That could include up to four waves of deals, according to the president.

President Trump says the US and China have come to a "substantial deal" on trade.

"National security hawks in the USA are determined to show that no trade agreement will stop the US from confronting China on other issues in the relationship, including technology competition, Hong Kong, Taiwan and the South China Sea", they said in a report. A scheduled tariff increase to 30% on some Chinese imports will not take place, Treasury Secretary Steven Mnuchin said.

"The US has elevated this issue to national security and it may be hard to reverse, no matter what kind of agreement they reach (or not) on Huawei", said Wang Tao, head of Asia economics at UBS Investment Bank.

China, he said, were purchasing products worth USD 16 or 17 billion at the highest point and that would be brought up to USD 40 billion to USD 50 billion.

Trump said on Friday the terms will be written up over the course of three to five weeks.

"I think that we're going to have a deal that's a great deal that's beyond tariffs", Trump said.

"You're very tough negotiators", Trump said to the Chinese delegation.

President Donald Trump meets with Chinese Vice Premier Liu He in the Oval Office of the White House in Washington, Friday, Oct. 11, 2019.

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As part of the deal, China would agree to some agricultural concessions and the USA would provide some tariff relief.

The trade talks hit a roadblock that month when China sent back to Washington a substantially trimmed down draft of the deal, signaling that they were not willing to compromise on sensitive issues such as state subsidies to their industries.

While the details are scant, Mnuchin said the sides made good progress on opening the Chinese economy to financial services, while including an agreement on preventing manipulation of the yuan.

The world's two largest economies have made progress in their trade dispute before without sealing a deal. The two countries have been engaged in an ongoing trade war for 15 months, slapping retaliatory tariffs on each other's products.

News of the partial agreement and the trade pause sent stocks higher during the trading day on Friday.

Since the China trade war began a year ago, moments of comity and cheer have a couple of times been shattered, giving way to jolting deteriorations in relations between the two sides.

Similarly, American Apparel and Footwear Association president and CEO Rick Helfenbein said the organization "welcomes the president's decision" but added that "the reality is that everything now being hit with punitive tariffs is still being charged". In May U.S. officials accused China of walking away from a sweeping agreement that was almost finished over a refusal to make changes to Chinese laws that would have ensured its enforceability.

Liu also praised the accord.

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