China welcomes the US agreement, says “central concerns” must be met

“It is imperative that both parties work together, respect the principles of equality and mutual respect, strictly abide by the agreement, address each other’s central concerns and work hard to implement the Phase 1 agreement,” Geng said.

Geng did not give details, but Beijing wants tariffs imposed on most of China’s exports to the United States to be reversed, which the agreement signed on Wednesday does not meet. The Trump administration says that some sanctions must be maintained even after reaching a final agreement to ensure that Beijing keeps its promises.

President Donald Trump previously said he planned to fly to Beijing to begin a second stage of the talks, but economists say their remaining disputes are so complex that an agreement is unlikely to be reached until after the US presidential elections in November.

Asian stock markets mixed after signing. China’s main market index closed 0.5%, while Hong Kong advanced and Tokyo underwent few changes.

Investors welcomed the trade truce, but questions about how China can fulfill its promises to buy tens of billions of dollars of soybeans, oil and other agricultural and energy exports from the United States tempered the enthusiasm.

“This has put a pause in things,” said Stephen Innes, market strategist at AxiTrader. “Throwing a number out there is one thing, but how do we get there?”

China could buy more US soybeans while buying less from other suppliers, which will affect those economies.

“Where is China getting soybeans now? Brazil. So, will they stop importing from Brazil? ”Said Innes.

That would depress prices in Brazil and other markets, which would make it more attractive for other countries to buy soybeans, coal and other exports from them instead of the United States, said Timme Spakman and Iris Pang of ING.

“Higher (US) exports to China will probably be offset, in part, by lower US exports to the rest of the world,” they said in a report.

Commodity merchants seemed to agree.

Soy, cotton and wheat prices fell on the Chicago Board of Commerce, suggesting that traders do not expect a rapid increase in total US sales.

China promised to buy oil and liquefied natural gas from the US UU. For a value of $ 52.4 billion, but that will be complicated by Beijing’s decision to enforce tariffs of up to 25%. Importers would have to pass that on to customers or pay themselves.

At the same time, the growth of Chinese demand is expected to decrease. US gas exports UU. They will face competition from Russian supplies that arrive through a new pipeline.

“With a 25% tariff still in force, LNG exports from the United States to China will be a very difficult prospect,” Gavin Thompson of Wood Mackenzie said in a report.

Analysts warn that the agreement does not cover the most controversial disputes over Chinese industrial subsidies and barriers to trade in services.

“This ongoing gap ensures that bilateral technological tensions will remain high in 2020,” said Michael Hirson, Jeffrey Wright, Paul Triolo of Eurasia Group in a report.

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