Abu Dhabi, UAEFriday 28 February 2020

Chinese delegation to travel to US to sign 'phase one' of trade deal

Chinese Vice Premier Liu He will lead China's delegation from January 13 to 15

Liu He speaks with US President Donald Trump on April 4, 2019. The Chinese Vice Premier will travel to Washington on January 13 to sign the "Phase One" trade deal with the United States. AFP
Liu He speaks with US President Donald Trump on April 4, 2019. The Chinese Vice Premier will travel to Washington on January 13 to sign the "Phase One" trade deal with the United States. AFP

Chinese Vice Premier Liu He will head to the US on for a three-day visit to sign “phase one” of a trade deal, according to China’s Ministry of Commerce.

US President Donald Trump said on December 31 that the first phase deal with China would be signed on January 15 at the White House. Mr Trump also said he would sign the deal with “high-level representatives of China”, and the president would later travel to Beijing to begin talks on the next phase.

The Beijing delegation is travelling next week at the invitation of Washington.

An agreement for first phase of a US-China trade deal was reached last month, and is expected to cut tariffs and boost Chinese purchases of American farm, energy and manufactured goods, while addressing some disputes over intellectual property.

Nothing of the text has been made public, and Chinese officials have yet to commit to key points such as increasing imports of US goods and services by $200 billion (Dh734.6bn) over two years.

The US launched a trade war against China 18 months ago over allegations of unfair practices, such as theft of intellectual property and subsidies that unfairly benefit Chinese state-owned companies.

Global equity markets reacted positively to the news of Mr Liu’s visit and the seeming easing of the conflict between the US and Iran.

Tensions had intensified after the US assassination of Iranian general Qassem Suleimani last week and retaliatory strikes by Iran on US military bases on Wednesday.

The Shanghai Composite index closed up 0.9 per cent on Thursday, and the FTSE China A50 index of the country’s biggest “A” shares closed 1.1 per cent higher. The Hong Kong market had an even more bullish reaction, with the Hang Seng index up 1.7 per cent.

In the US, the S&P500 index was up 0.45 per cent and the Nasdaq Composite index 0.66 per cent higher by 4.45pm UAE time on Thursday.

“In less than 24 hours, investors have performed an about-turn from their initial defensive positioning to risk-taking and markets rallying,” said Hussein Sayed, chief markets strategist at foreign exchange brokerage FXTM.

“By the time European markets opened on Wednesday, most of the panic was over and losses in stocks were reversed after President Trump addressed the nation, sending clear signs of de-escalation by downplaying the missile attack,” he said.

Mr Sayed pointed out oil prices had fallen by 9 per cent since they spiked at $71 as news of the missile attacks broke on Wednesday.

“All investors needed to hear was the US President say it appears Iran is ‘standing down’. After that we were off to the races with fresh record highs for the S&P 500 and the Nasdaq,” said Jasper Lawler, head of research at London Capital Group.

“Markets have heard what they needed to hear and are ready to refocus on the signing of the US-China phase one deal. The deal is supposed to be signed next week and investors are hoping it removes the biggest source of uncertainty over the economic outlook, paving the way for more investment returns this year.”

In the Gulf, markets made a strong recovery after losing ground earlier in the week due to fears over the potential impact of a widening conflict in the region.

Updated: January 9, 2020 08:46 PM

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