US–China trade deal disappoints | East Asia Forum

Why did China sign a deal that seems destined to fail?

First, it achieves short-term benefits by avoiding further escalation of bilateral tariffs in return for Chinese commitments to purchase needed agricultural and energy products. Second, the two-year time horizon for the purchase commitments creates some policy stability even if it means accepting the current high bilateral tariffs for the indefinite future. The pact also buys time to see how US policy will evolve in 2020 and especially after the US presidential election. Third, China basically agreed to domestic economic reforms that it is already pursuing as it implements its new foreign investment law, applies stronger penalties for intellectual property violations, and pursues the PBOC’s market-oriented exchange rate policies.
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