China promises $80bn trading boost with US in tariff war truce

US Trade Representative Robert Lighthizer described the deal with China as ‘a huge step forward.’ (AFP)
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Updated 15 January 2020

China promises $80bn trading boost with US in tariff war truce

  • Farm products, aircraft, cars and energy to benefit from major spending surge under two-year agreement

LONDON: China has pledged to buy almost $80 billion of additional manufactured goods from the US over the next two years as part of a trade war truce, according to a source, likely giving a much-needed boost for planemaker Boeing.

Under the terms of the trade deal to be signed on Wednesday in Washington, China would also buy over $50 billion more in energy supplies, and boost purchases of US services by about $35 billion over the same two-year period, the source told Reuters on Monday.

The Phase 1 agreement calls for Chinese purchases of US agricultural goods to increase by some $32 billion over two years, or roughly $16 billion a year, said the source, who was briefed on the deal.

When combined with the
$24 billion US agricultural export baseline in 2017, the total gets close to the $40 billion annual goal touted by US President Donald Trump.

The numbers, expected to be announced on Wednesday at a White House signing ceremony between Trump and Chinese Vice Premier Liu He, represent a staggering increase over recent Chinese imports of US manufactured goods, raising some skepticism over how it would be achieved.

Two other sources familiar with the Phase 1 trade deal agreed with the rough breakdown of the purchases, without providing specific numbers.

A spokesman for the US Trade Representative’s office could not be reached for comment.

US Trade Representative Robert Lighthizer on Monday called the deal a “huge step forward” for US-China trade relations and “a really, really good deal for the US.” He said that Beijing’s compliance would be monitored closely. “We expect them to live up to the letter of the law,” he said.

When the Phase 1 trade deal was struck on Dec. 13, US officials said China had agreed to buy $200 billion in additional US farm products, manufactured goods, energy and services over the next two years, compared to the baseline of 2017.

They said they would publish targets for the four broad areas, but would keep details of specific products classified to avoid market distortions.

The $32 billion agriculture increase over 2017 was confirmed by Myron Brilliant, the US Chamber of Commerce’s head of international affairs, who spoke to reporters on Monday in Beijing.

While seeing room for China to boost purchases of wheat, soybeans, sorghum, dried sistillers grains and some corn, analysts and traders doubted whether it could absorb such a big increase. Relying on the US so heavily could expose China to price and supply risks, they said.

Trump had mainly touted the increased farm exports, which would benefit a major political constituency that has been battered by Chinese retaliatory tariffs during his 18-month trade war with Beijing.

Company executives have been waiting eagerly for details of what other US goods China would be buying more of, aside from farm products, after 18 months of tit-for-tat tariffs that have stalled US business investment.

The $80 billion increase for manufactured goods includes significant purchases of autos, auto parts, aircraft, agricultural machinery, medical devices and semiconductors, said one of the sources, without giving the names of any specific suppliers.

The aircraft would likely be built by Boeing, the No. 1 US exporter, whose sales to China have ground to a halt over the past two years. 

Aramco international listing ‘still on the cards’: Saudi finance minister

Updated 17 min 43 sec ago

Aramco international listing ‘still on the cards’: Saudi finance minister

  • The minister said that he was “very confident” that the Saudi economy was picking up speed
  • He said that international investors had responded positively to ongoing reforms in the Kingdom

LONODN: Saudi Finance Minister Mohammed Al-Jadaan said that an international listing of Saudi Aramco was “still on the cards” but likely won’t happen soon.
He made the disclosure in an interview with Bloomberg News at the World Economic Forum’s annual meeting in Davos, Switzerland on Wednesday.
The minister also said that he was “very confident” that the Saudi economy was picking up speed, as the Kingdom successfully completed a $5 billion bond sale this week after receiving orders for four times as much.
“Yesterday showed very clearly that demand for Saudi credit is very high and very healthy. We are very pleased not only with the level of debt but also the pricing,” he said. “Demand is very positive. We are starting seeing results of Vision 2030. The numbers are proving that reform is working. We are basically cashing on the successes.
The minister said that international investors had responded positively to ongoing reforms in the Kingdom.
“I think investors are focusing on fundamentals,” he said. “They see the growth they see the potential. We are seeing a growth in FDI, a growth in the number of applications for licenses. The confidence is back in a strong way.”