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No trade war as China pledges 'significantly' more US buying

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While there's still a long way to go in terms of specifics, the announcement that a trade war has been averted should boost global stocks on Monday.

Washington

CHINA will "significantly increase purchases" of US goods, the White House said as Beijing's special envoy at talks in Washington declared a trade war has been averted between the world's two largest economies.

A joint statement released by the White House following the talks didn't place a dollar figure on the increased purchases by China, or address a comment by President Donald Trump's top economic adviser suggesting Beijing had agreed to slash its annual trade surplus with the US by US$200 billion.

US Treasury Secretary Steven Mnuchin confirmed Sunday that Washington and Beijing had agreed to back off from imposing tariffs on each other. "We have made very meaningful progress and we agreed on a framework," Mr Mnuchin told Fox News on Sunday. "So right now, we have agreed to put the tariffs on hold while we try to execute the framework." China's Vice-Premier Liu He, who led a high-level Chinese delegation to the United States last week, earlier announced that both sides had agreed to back off from threatened tariffs.

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Mr Liu said both sides agreed to stop "slapping tariffs" on each other and called his visit "positive, pragmatic, constructive and productive", Xinhua reported on Sunday. Cooperation will be enhanced in such areas as energy, agriculture, healthcare, high-tech products and finance, a "win-win" choice for both nations. The statement said China agreed to "meaningful increases in US agriculture and energy exports" with details to be worked out later.

While there's still a long way to go in terms of specifics, the announcement that a trade war has been averted should boost global stocks on Monday, according to Shane Oliver, head of investment strategy at AMP Capital Investors Ltd in Sydney.

"Investors had been fretting," he said. "US energy, agriculture, manufacturing and services companies with significant exposure to exports to China will be key beneficiaries. But it's also a big positive across Asia given supply chain linkages to Chinese companies that ultimately export to the US."

"There was a consensus on taking effective measures to substantially reduce the US trade deficit in goods with China," the White House said.

The delegations also discussed expanding trade in manufactured goods, and each side agreed to strengthen cooperation on intellectual property. China will "advance relevant amendments" to its laws and and regulations in that area, including its patent law, the White House said.

The statement didn't mention additional US demands, including a halt to subsidies and other government support for the Made in China 2025 plan that targets strategic industries from robotics to new-energy vehicles. China had made its own demands, including giving equal treatment to its investment, and warned US companies may be excluded from measures to open its economy.

The statement also didn't mention ZTE Corp, the Chinese telecom company that Mr Trump a week ago ordered the Commerce Department to get help back into business, reversing a ban on accessing American technology that would have effectively put it out of business.

"This round of talks is generally positive," said Li Yong, a senior fellow at the China Association of International Trade in Beijing, adding that the US still may take a harder line on reviews of Chinese investments. "Trade tensions will ease gradually, but there could still be friction."

On Friday morning, Mr Kudlow told reporters that China had offered to reduce its annual trade surplus with the US by at least US$200 billion. "The number's a good number," he said.

Earlier, posts on Chinese state social media disputed a report that China planned to slash its trade surplus by the extent demanded by Washington through increased imports of US products. A foreign ministry official also played down the suggestion.

In a sign that the Chinese government was seeking a conciliatory stance, it said on Friday it has ended an anti-dumping and anti-subsidy investigation into imports of US sorghum, citing "public interest". That move came days after it restarted a review of Qualcomm Inc's application to acquire NXP Semiconductors NV.

The US merchandise trade deficit with China hit a record US$375 billion last year. BLOOMBERG

READ MORE: US-China trade deal could cost Europe: French minister

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