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10 December 2023

China, US hail trade truce but key obstacles still remain


Donald Trump and Xi Jinping each got something out of hitting pause on a trade war that threatens both of their economies, but analysts stressed that the tenuous truce does little to address the core sticking points of their economic rivalry.

The White House said it would postpone for 90 days a planned increase of US tariffs on Chinese goods, while China pledged to take in more US imports.

The steps temporarily pause an escalating confrontation between the world's two largest economies that has rattled world markets.

Trump launched the bitter row earlier this year by implementing tariffs on billion of dollars in goods from China, which he accuses of market barriers and predatory practices that Washington says make fair trade impossible. The tariffs prompted tit-for-tat responses from Beijing.

After months of sabre-rattling, however, Trump praised an "amazing and productive" meeting with Xi at the G20 on Saturday, and Chinese state mouthpiece Xinhua news agency said the outcome in Buenos Aires "needs to be cherished."

"This is good news for both countries, and a relief for the international community," Xinhua said.
The pauses allows Xi to stave off an escalation of the pressure that higher tariffs would place on his country's slowing economy.

At the same time, Trump -- stung by the US Democrats' congressional win in mid-term elections -- can avoid further pain for agricultural US states whose exports of key crops like soybeans to China have been hit, said Beijing-based political consultant Hua Po.

"This was a rare opportunity for China because (the mid-terms) made Trump a lame president. So at this time it was acceptable for China to maintain some bottom lines while making concessions," Hua said.
But analysts said the two sides remain miles apart on key issues.

Trump may come under pressure once scrutiny of the cease-fire reveals that Xi got off "without yielding any meaningful concessions," said Brock Silvers, managing director of Shanghai-based investment advisory Kaiyuan Capital.

"The tensions have only been delayed, not resolved, and unless China quickly finds the political will to make a long-term peace via significant concessions on technology issues, this week's expected gains may prove to be temporary," he said.