Still far from certain that US-China trade spat is near settlement

THE stock market cheer at the interim trade deal between the United States and China may be way premature.

Yes, the US has put off new tariffs that were to come into force today on US$250 billion worth of Chinese goods. And Beijing has agreed to buy US$40 billion-US$50 billion of American farm produce. This latest partial deal is supposed to pave the way for a three-stage process that would address issues such as the Trump administration's allegation that China forces transfers of American technology to Chinese firms. Differences over exchange rates, financial services, trade cooperation and dispute settlement will also be thrashed out. In the final stage, China's subsidies to its state-owned firms and related matters would be settled, if all goes to plan.

But even this interim pact raises questions. Will the tariffs that are due to come into force on Dec 15 be shelved as well? Is China's purchase of US$40 billion-US$50 billion in farm produce an aspirational figure or has Beijing committed to buying that much every year in all circumstances? If it has, that would be a major coup for US President Donald Trump since the figure is more than double 2017 levels. Beijing has previously made it clear it will not divert trade away from, say, Brazil, to accommodate America's Midwestern farmers.