A new US-China trade deal provides each country access to each other’s markets. China will accept beef and liquefied natural gas imports from the USA, while Chinese cooked chicken can enter the US market. Chinese banks will also have improved access to the USA. In general, the trade deal will help reduce the US trade deficit with China.
Until now, China had banned beef imports from the US, rendering it impossible for American farmers to have access to a growing Chinese demand for high-quality beef products from July 16 at the latest. American financial services had been unable to tap the resources of the increasing wealth of the Chinese ‘middle classes.’
Foreign financial services companies can now access the Chinese market with regard to credit card and credit rating services. China will publish guidelines allowing America companies to offer electronic payments services in China and will provide licenses for two American firms to underwrite bonds.
Since Donald Trump assumed the presidency, there has been a great deal of rhetoric between the US and China, trade and North Korea being major topics of discussion. Mr. Trump had initially attempted to link any US-China trade deal to the North Korean nuclear tests situation, but his position on this has changed. His attitude to China had become less confrontational than it had appeared during his Presidential campaign.
After the deal was announced, it was stated by Zhu Guangyao, the Chinese vice-minister of finance, that economic issues should not be politicized. This was in answer to a question regarding the relationship between the US and China trade deal and the North Korean nuclear issue. It now seems like China and President Trump are on the same page regarding this matter. However, few doubt that the North Korea situation is completely disconnected with a softening in his attitude to China.
This deal means more to China than just being able to sell cooked chicken in America. The US has stated that it recognizes the importance to China and the West to the One Belt One Road initiative. This is a plan conceived by Chinese leader Xi Jinping to improving connections between East China, Central Asia, Africa and Europe. In fact, President Trump has stated he will send a US delegation to the OBOR summit in Beijing this weekend.
The US-China trade deal also benefits China in that it improves the country’s global image, including that within the USA. Trade talks between the two countries began in April, and this deal is the first tangible evidence of progress and an improvement in relations between the two countries. According to Wilbur Ross, the US Commerce Secretary, this deal should reduce America’s trade deficit with China by the end of the year.
For once, a US-China trade deal has resulted in more than just a benefit to China. Beef, credit cards and cooked chicken might seem relatively unimportant in the great scheme of things. It represents a level of rapport that should benefit both countries and the world. It is a start of improved relations between the two countries. The US has a financial foothold in China, while Beijing has improved its global image while gaining more access to US markets.
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