Phase-1 trade deal to stabilize global growth

Chinese Foreign Ministry said yesterday China is in close touch with the United States on the signing of phase-one economic and trade deal.

Economic and trade teams of the two sides are keeping close touch on specific arrangements for the signing of the phase-one trade deal, ministry spokesman Geng Shuang said at a regular briefing.

“Both sides’ economic and trade teams are in close communication about detailed arrangements for the deal’s signing and other follow-up work,” Geng said.

Geng’s comments came after US President Donald Trump said on Tuesday that he and Chinese President Xi Jinping will have a ceremony to sign the phase-one trade deal.

“We will be having a signing ceremony, yes,” Trump told reporters. “We will ultimately, yes, when we get together. And we’ll be having a quicker signing because we want to get it done. The deal is done, it’s just being translated right now.”

Last week, Xi had a phone conversation with Trump, noting that the trade deal benefits both sides and the whole world.

United States Trade Representative Robert Lighthizer said on December 13 that representatives from both countries would sign the trade deal agreement in the first week of January.

The phase-one deal is beneficial to the world economy, an expert with Standard Chartered said. “With the phase-one deal reducing the tail risk facing the global economy, we think 2020 will be a year of soft but stabilizing growth for the global economy,” said Ding Shuang, chief economist of Greater China and North Asia with the bank.

He added that the global growth forecast next year is at 3.3 percent, slightly higher than the bank’s 3.1 percent estimate.

China and the United States agreed on the text of the agreement based on the principle of equality and mutual respect earlier this month, which was the latest progress for the two sides to settle their two-year-long trade dispute.

Pointing out three long-term structural drags for the global economy, namely debt, demographics, and deglobalization, Ding said the phase-one deal will lift investors’ sentiment in the global financial markets.

Oil prices hit a three-month high last week, buoyed partly by better prospects of a trade truce between the United States and China.

The US equities posted solid gains last week amid positive sentiment, with the Dow adding 1.13 percent, the S&P 500 gaining 1.65 percent, and the Nasdaq rising 2.18 percent.

“The positive market reaction suggests it is helpful in shoring up business confidence,” said Ding.

The deal is also beneficial to both the United States and China, the expert said.

For the United States, the deal is “essential for President Donald Trump’s re-election as it reduces the chance of a recession and boosts the stock market,” while for China, it improves China’s trade outlook, and reduces the need to implement large-scale stimulus to boost its economy, said Ding.

He added that the deal is also in line with the main direction of China’s deepening reform and opening up, as well as needs for advancing higher quality development.

“Based on what has become public information, China has committed to better protect the IPR, which is essential for China to encourage investment in R&D and foster innovation,” Ding said.