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US, China Agree to Sign Massive New Purchase Agreement

WASHINGTON – On Wednesday, the US-China trade war is expected to enter a new, calmer phase as US President Donald Trump and Chinese Deputy Prime Minister Liu He sign a first trade agreement that aims to significantly increase Chinese purchases of US manufactured goods, of agricultural products, energy and services.
Phase 1 agreement ends 18 months of tariff dispute between the world’s two largest economies, which have affected hundreds of billions of dollars in goods, disrupted financial markets, uprooted supply chains and slowed growth World.
Trump and Liu are expected to sign the 86-page document during a White House event in front of more than 200 guests from business, government and diplomats.
A translation of the text into Chinese was still being finalized Tuesday afternoon, as Liu met with US trade representative Robert Flightier.
Trump has already started to tout the trade deal as a centrepiece of his 2020 re-election campaign, calling it a “big beautiful monster” at a rally in Toledo, Ohio last week.
“Our farmers will accept it. I keep saying”
“Go buy bigger tractors, go buy bigger tractors,” said Trump.
The centrepiece of the agreement is a commitment by China to purchase an additional $200 billion in U.S. goods over two years to reduce a U.S. bilateral trade deficit that peaked at $420 billion in 2018.
An informed source of the agreement told Reuters that China will purchase an additional $80 billion in US manufactured goods over the two-year period, including planes, automobiles and auto parts, agricultural machinery and medical devices.
Beijing will increase energy purchases by some $50 billion and services by $35 billion, while purchases of agricultural products will increase by $32 billion in the two years, all compared to the benchmarks of U.S. exports to China in 2017, the source said.
When combined with $24 billion in agricultural exports in 2017, the annual increase of $16 billion approaches Trump’s target of $40-50 billion in annual agricultural sales to China.
While the deal could be a big boost for farmers, the aircraft manufacturer Boeing, U.S. automakers and heavy equipment manufacturers, some analysts question China’s ability to divert imports from others trading partners to the United States.
“I find a dramatic change in Chinese spending unlikely. I have low expectations of meeting the targets,” said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.
“But I think all of the negotiations have advanced football for the United States and China.”
(Sahar News Monitoring Desk)

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