U.S.-China: A Hazy Deal
Jeroen Blokland | Dec 16, 2019 08:19
The US and China have reached a deal in their year-and-a-half long trade war. This should be seen as positive news in any case, as it reduces geopolitical tension. That same political tension caused a global manufacturing recession and a reduction is required to extend the current economic cycle. However, a lot of uncertainties remain, and no official ‘deal text’ has been circulated.
For example, how much US agricultural commodities will China buy? Equally important, how much can it buy? A growing amount of research shows that buying up to USD 50 billion in US farm products is virtually impossible. China would have to triple its purchases compared to 2018.
Details on more complicated topics like intellectual property and the Chinese currency are virtually absent. So, while the two countries have shown willingness to de-escalate the trade war, we simply do not know how durable this deal is.
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