🇺🇸 🇨🇳 Phase One #Trade Deal: Chinese Commitments
1/ To purchase at least an additional $200 billion in U.S. exports over the next 2 years (base: 2017).
2/ To do more to crack down on the theft of American technology and corporate secrets by its companies and state entities.
1/ To purchase at least an additional $200 billion in U.S. exports over the next 2 years (base: 2017).
2/ To do more to crack down on the theft of American technology and corporate secrets by its companies and state entities.
3/ To avoid currency manipulation.
4/ To bring forward the planned opening of its capital market.
5/ To set up a system to resolve conflicts over drug patents.
6/ To endorse an enforcement system.
4/ To bring forward the planned opening of its capital market.
5/ To set up a system to resolve conflicts over drug patents.
6/ To endorse an enforcement system.
🇺🇸 🇨🇳 Phase One #Trade Deal: Full Texts En/Cn
➡ #China’s Ministry of Finance published both English and Chinese versions of the text - Statement
*Link (Chinese): bit.ly/3aivKcX
➡ #China’s Ministry of Finance published both English and Chinese versions of the text - Statement
*Link (Chinese): bit.ly/3aivKcX
➡ The latest Taoran Notes piece (Chinese): bit.ly/2FZyq1m
🇺🇸 🇨🇳 Phase One #Trade Deal: Details: 1/ Chinese purchases
➡ Annex: bit.ly/2uOyBtT
➡ CNBC details: bit.ly/2syjBQi
➡ Annex: bit.ly/2uOyBtT
➡ CNBC details: bit.ly/2syjBQi
*1st headwind ⬇
*2nd headwind ⬇
*3rd headwind ⬇
The International Trade Center Export Potential Map suggests that based on untapped potential export capacity, the U.S. could theoretically ship about $88.8Bn of additional goods to #China, including $19Bn of #Soybeans.
*Link: bit.ly/2FR3Hn8
The International Trade Center Export Potential Map suggests that based on untapped potential export capacity, the U.S. could theoretically ship about $88.8Bn of additional goods to #China, including $19Bn of #Soybeans.
*Link: bit.ly/2FR3Hn8
*4th headwind ⬇
Chinese demand for soybeans could fall as the country deals with a swine fever epidemic that’s shrinking the hog herd and reducing the need for commodities used in livestock feed.
Chinese demand for soybeans could fall as the country deals with a swine fever epidemic that’s shrinking the hog herd and reducing the need for commodities used in livestock feed.
➡ Focusing on #agriculture and #energy, my first reading suggests that #China really wants (mutual benefits) and has the ability to fulfil the #trade promises they have made for 2020 (+12.5B for AG and +18.5 for Energy)
b/ #China could also import more #cotton, #corn, #wheat, etc. from the U.S. (potentially at the expense of other trading partners).
*Link: bloom.bg/2QZnx63
*Link: bloom.bg/2QZnx63
d/ #China has issued a 1st round of crude #oil import quotas for private firms that will allow non-state refiners to ship in 103.83M tonnes of crude (⬆ 8% from the 96.25M tonnes issued in the first batch of non-state firm import quotas for 2019)
reuters.com/article/us-chi…
reuters.com/article/us-chi…
➡ I have more doubts for 2021 (+19.5B for AG and +33.9 for Energy).
➡ Looking at manufactured goods, like several economists I’m cautious for both 2020 (+32.9B) and 2021 (+44.8B).
➡ Looking at manufactured goods, like several economists I’m cautious for both 2020 (+32.9B) and 2021 (+44.8B).
➡ A key problem is that #China is aiming to increase its reliance on domestic production for key components while the country is also facing U.S. Export Control System.
🇺🇸 🇨🇳 Phase One #Trade Deal: Details: 2/ Tech
China trade deal has new provisions to safeguard US #tech secrets - CNBC
cnbc.com/2020/01/15/us-…
China trade deal has new provisions to safeguard US #tech secrets - CNBC
cnbc.com/2020/01/15/us-…
🇺🇸 🇨🇳 Phase One #Trade Deal: Details: 3/ Currencies
U.S.-#China Pact Reaffirms Vow to Avoid Competitive #Devaluation - Bloomberg
bloomberg.com/news/articles/…
U.S.-#China Pact Reaffirms Vow to Avoid Competitive #Devaluation - Bloomberg
bloomberg.com/news/articles/…
🇺🇸 🇨🇳 Phase One #Trade Deal: Details: 4/ Financial Services
#China Speeds Up Opening of Market to Investment Banking Giants - Bloomberg
bloomberg.com/news/articles/…
#China Speeds Up Opening of Market to Investment Banking Giants - Bloomberg
bloomberg.com/news/articles/…
🇺🇸 🇨🇳 Phase One #Trade Deal: Details: 5/ Pharmaceuticals
China Agrees to Tweaks on Drug Patents as Part of Trade Deal - Bloomberg
bloomberg.com/news/articles/…
China Agrees to Tweaks on Drug Patents as Part of Trade Deal - Bloomberg
bloomberg.com/news/articles/…
🇺🇸 🇨🇳 Phase One #Trade Deal: Details: 6/ Enforcement
In U.S.-China Phase 1 trade deal, enforcement may end in 'We quit' - Reuters
reuters.com/article/us-usa…
In U.S.-China Phase 1 trade deal, enforcement may end in 'We quit' - Reuters
reuters.com/article/us-usa…
➡ The added duties imposed over the past two years were “approximately 100 percent” borne by American consumers and importers, a paper by three economists recently found.
*Link: papers.nber.org/tmp/65749-w266…
*Link: papers.nber.org/tmp/65749-w266…
🇺🇸 🇨🇳 Phase One #Trade Deal: 🌎 Implications
➡ The agreement between the U.S. and China will be an encouraging sign that a pause (and even an easing) in the trade tensions will continue through the 2020 U.S. presidential election.
➡ The agreement between the U.S. and China will be an encouraging sign that a pause (and even an easing) in the trade tensions will continue through the 2020 U.S. presidential election.
➡ The "direct" economic impact of tariff reductions will be limited while indirect impact (via an easing of trade uncertainty) will be larger at the global level. As I already highlighted, global trade growth (goods) should rebound in 2020.
➡ This deal could cause pain for other countries due to redirection of flows. In addition, the U.S. will add pressure on other countries (🇪🇺,🇻🇳, etc.) to strike new deals.
➡ The deal would be slightly supportive for 🇺🇸 GDP in 2020 amid diversions from other trading partners and ⬇ pressure on inventories. Yet, if #China fulfils its commitments, it should be significant in 2021 (higher confidence, CAPEX, inventories, less tariffs)
