China’s state-run media hailed the trade war truce with the US as “momentous” on Monday but warned of complex negotiations ahead, even as US President Donald Trump said Beijing agreed to cut car tariffs.
Asian stock markets opened higher after Trump and Chinese leader Xi Jinping agreed on the sidelines of a G20 summit in Argentina at the weekend to hold off on imposing new tariffs while negotiators seek a deal.
Trump announced another apparent breakthrough late on Sunday on Twitter, saying China had agreed to “reduce and remove” tariffs on cars.
The ceasefire follows months of tensions and punitive custom duties on hundreds of billions of dollars worth of goods that raised fears of an escalation that would harm the global economy.
Both sides gained from hitting the pause button, with Trump avoiding further hits to US agricultural exports, and Xi staving off an escalation of the pressure that higher tariffs would place on his country’s slowing economy.
China’s nationalist Global Times tabloid welcomed the Buenos Aires agreement as a “momentous step forward” that brings “huge potential for fair trade”.
“It is hoped that the trade teams from both countries will reach as many practical agreements as possible and as quickly as possible to hasten China-US cooperation,” the daily said.
The Communist Party’s official mouthpiece, the People’s Daily, described the announcement as an “important consensus” that shows the two countries’ common interests “outweigh differences”.
Asian stock markets opened on a high note on Monday, with Tokyo up by more than one per cent and Hong Kong and Shanghai rising more than two per cent.
After being spooked by the conflict, investors returned to buying following the long-awaited meeting between the two presidents.
But observers warned there were still major issues that need to be resolved, including access for US companies and intellectual property protection.
“We anticipate that things are still likely to get worse before they get better, and that the negative sentiment impact created by the trade narrative will create additional market volatility,” said Kerry Craig, global market strategist at JP Morgan Asset Management.
Under the agreement, Trump is shelving a plan to raise tariffs on $200 billion worth of Chinese imports from 10 per cent to 25 per cent from the start of next year – but the hike will kick in if negotiators fail to reach a final deal within 90 days.
The US has slapped 25 per cent tariffs on another $50 billion worth of Chinese imports and they remain in effect despite the truce.
China has hit back with similar tariffs on $110 billion worth of goods made in the US.
The US leader tweeted on Sunday that China had agreed to scale back tariffs on cars, but he did not explain which would be removed and which would be reduced.
Beijing had reduced auto import duties from 25 per cent to 15 per cent in July. But it added a 25 per cent tariff on US cars as trade tensions soared, bringing them to 40 per cent.
Trump wants China to do more to reduce its $335 billion trade surplus with the US, further open up its economy and take action to curb the alleged theft of intellectual property.
The Global Times said the two sides would discuss expanding market access, protecting intellectual property and “joint control of cyber crime”.
“Both parties agree that they will endeavour to have this transaction completed within the next 90 days,” the newspaper said, invoking a deadline that only the US side had mentioned on Saturday.
The White House said on Saturday that China had agreed to purchase a “very substantial” amount of agricultural, energy, industrial and other products from the US.
Trump and Xi will “immediately” begin talks on “structural changes” affecting forced technology transfer, intellectual property protection and cyber theft, it added.
The state-run China Daily struck a cautious tone.
“No magic wand has been waved to make the differences between the US and China vanish overnight,” the newspaper said.
The Buenos Aires deal shows that both sides are aware that the tariffs could damage the global economy, it said.
“But given the complexity of interactions between the two economies, the rest of the world will still be holding its collective breath while it waits to see if the series of constructive plans that are in the works can put bilateral relations back on a cooperative rather than confrontational track,” the China Daily said.