US-China Phase One deal has undergone discussion on the last Friday. Accordingly, US Trade Representative Robert Lighthizer informed that the signing will happen in early January.
Additionally, Lighthizer said that there would be routine ‘scrubs’ to finalize the text, but the agreement is ‘totally done’. Referring to the schedule, he added that the deal will only be ministerial level, meaning that US President Donald Trump and Chinese counterpart Xi Jinping will not be present.
In short, the US-China Phase One deal canvasses China’s obligation to make a purchase on US agricultural products worth of USD 50b. However, this is not certain as Beijing would observe the market situation prior to purchase.
Regarding the purchase, Washington demands that the purchase escalates annually. However, analysts are skeptical that the amount might not be consumable for China.
Also, among the issues to tackle, China also promised to be more protective to US intellectual property as well as guarantee financial transparency. Moreover, the country will also do its best to avoid currency manipulation.
In the future, both countries will work on the Phase Two deal after the signing. Many analysts, in contrast, argue that this might not settle the issue, it just strengthens the bad rivalry.
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Market Conditions Following US-China Phase One Deal
Despite analysts being pessimistic over the subsequent outcomes, market reactions mostly prove the opposite. Regardless the ‘unfavorable’ deal, this appears to boost hope for markets.
Asian stock markets, for instance, edged a bit higher this Tuesday. Most of the indexes, likewise Hang Seng, KOSPI, and Nikkei, went up apart from its number significance.
The same goes for Wall Street. Reportedly, Wall Street closed at new highs as the trade war tension gradually declines at the moment.
Aside from stocks, commodities like pork also experience a shift change in rapid transaction. The trade deal optimism has caused pork trade to begin to elevate.
Also, oil markets, despite insignificantly declining a bit, managed to sustain near a three-month high. Investors, accordingly, have a huge faith that the trade war optimism will continue to the point that the trade will again be stable.
Considering the deal, however, the current update is simply a trade truce. Even Robert Lighthizer told reporters that everyone should still be skeptical as everything is up to China.
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