China-US trade deal: no cause for euphoria
The US and China on Wednesday signed a trade agreement which at least partially resolves the trade dispute that has been dragging on for months. Tariffs on both sides are to be lowered and China is committing itself to purchasing 75 billion dollars worth of US manufactured goods. But the deal shouldn't be overrated, Europe's press advises.
US validating distortion of competition
The EU should take note of the fact that Washington has changed its stance on Beijing's involvement in the Chinese economy, China analyst Jean-François Dufour writes in Le Monde:
“The US administration has accepted that the Chinese government's instructions have a decisive impact on purchases of industrial manufactured goods. It is therefore no longer calling for reforms of the Chinese system, which distorts free competition, but actually backing it as long as it serves American interests. … Consequently, the European Union must acknowledge a basic fact: the US has given up its bid to reform China's economic system and is instead reacting to unfair competition with unfair competition of its own. Given this development, the naivety of free trade must not continue.”
It will take more than this to tame China
The agreement is by no means as far-reaching as US President Trump is making it out to be, Dagens Nyheter warns:
“The global economy can catch its breath for a moment, nevertheless the agreement between the US and China is more of a ceasefire than a lasting truce. ... The fundamental conflict between China and the West persists. The dictatorship has no intention of ending the oppression of its citizens and is very unlikely to abandon its economic model - after all, it is one of the instruments for maintaining the power of the Communist Party. The major democratic market economies must work together to exert real pressure on China. Trade wars are not, as Trump claims, easy to win. They are expensive.”
The loser is Europe
The result of this duel is worrying for one spectator in particular, L'Echo stresses:
“A catch-up like this can only come at the cost of other suppliers to China, and in particular Europe as its main trade partner. At the moment the Europeans keep turning to the referee, the World Trade Organization. But this body is on its last legs. The day before yesterday the trade associations of the EU, Japan and the US took the initiative for the first time and published a statement addressing the 'urgent need' to revive the institution. This is necessary because otherwise one day Europe will have to climb into the ring. And at the moment it is still searching for its gloves.”
Trade relations remain strained
The deal can only be a first step, the Financial Times cautions:
“On its own it leaves the US-China trade relationship in a much worse state than when Mr Trump took office. It leaves average tariff levels on both sides at around 20 per cent. Two years ago the average US tariff on Chinese imports stood at 3 per cent; in the other direction it was 8 per cent. The deal brings welcome relief that trade relations may stop getting worse. But that should not delude anyone into thinking that they are good. ... As a result of tariff hikes and counter-hikes, the US manufacturing recession is worsening. China’s growth has slowed. Other trade-dependent economies have been caught in the crossfire.”
Misunderstanding or coexistence?
According to Delo the agreement is a good thing, but the question is what it will bring in the long term:
“Trump has announced a Don Quixotesque victory against the red windmill, which continues to turn at the same pace as before. We must concede that the US President has raised good questions about relations with China. However, the Chinese - fair play to them - have managed to sell these questions as elaborate lies and extinguish the fire of the White House with billions of dollars with which they hope to buy off a little of Trump's ego. One question remains unanswered, however: is this a deal on a misunderstanding between autocracy and the democratic world? Is it about the coexistence of two completely different development models? Or will there be a war in spite of everything?”
Europe cannot aspire to Trump-style deal
Even if the danger of escalation has been averted for the time being, Europe should not aspire to a similar deal, der Tagesspiegel warns:
“The US has shown other western industrial nations that are also suffering under unfair Chinese trade practices that they are not defenceless and it is possible to set limits with China. ... China must be confronted, and this is certainly possible, but for goodness sake be a bit cleverer about it, apply pressure intelligently, and mimimise the consequences for global trade. The aim should not be a Trump-style deal: you buy goods from us worth X billion euros. But to oblige China to stick to the rules of fair trade. Then everyone stands to benefit.”