The United States and China are set to sign phase 1 of their trade deal on Wednesday. President Donald Trump and the Chinese Vice Premier Liu He are expected to meet and sign the accord during an event that is taking place at the White House.
The 86-page document aims to boost the Chinese purchases of American goods and products, concretely around US $200 billion worth of goods over two years.
The United States government aims to close the trade gap between the US and China, demanding China to change its position regarding forced technology transfers, intellectual property issues, subsidies, digital trade restrictions, currency manipulation and the openness of the Chinese financial sector. However, not all those details are assessed in the phase 1 trade deal and are going to be included in a potential phase 2 according to US officials.
Many are doubting regarding a potential change in the status quo since the United States has introduced an enforcement mechanism that would reimpose tariffs over Chinese goods if China doesn’t comply with the conditions of the trade deal. China has failed to comply with the United States’ demands in the past, hence the possibility of coming back to the current situation.
The trade deal, which was called “a big beautiful monster” by President Donald Trump during a rally last week, would put an end to an 18-month trade war that has destabilised the global economy.
The Chinese economy grew at its weakest pace in 30 years in the fourth quarter, due to a sluggish local and international demand for Chinese goods according to a poll conducted by Reuters.
According to 65 analysts polled by Reuters, the economy is set to grow from 5.8 to 6.3 percent during the fourth quarter. This would make the Chinese economic growth to go from 6.6 percent in 2018 to 6.1 percent last year. They also foresee the Chinese economy to slow further in 2020, as they expect it to grow 5.9 percent.
This would increase the probability of seeing the Chinese government implementing more stimulus measures in the future.
The 18-month trade war has heavily affected the Chinese exports sector, as the United States has imposed tariffs over Chinese goods, disrupting the global supply chains in a significant way.
By 11:16 GMT the US dollar remained almost steady against the Chinese Yuan, growing 0.014 percent and hitting the 6.8851 level.