US-China trade dispute likely to re-escalate after Mar 1, says Fitch Solutions

US-China trade dispute likely to re-escalate after Mar 1, says Fitch Solutions

Michelle Zhu
11/01/19, 03:06 pm

SINGAPORE (Jan 11): Fitch Solutions Macro Research is suggesting a high likelihood that the US-China trade dispute will re-escalate after Mar 1, due to disagreements over a number of outstanding key concerns.

One such concern is a persistent lack of detail surrounding the planned increase in Chinese purchases of American goods and services, which have only been characterised as “substantial” – a term that Fitch notes has been similarly used in statements following presidents Trump and Xi’s dinner meeting at the G20 summit in Dec 2018.

Another issue is a gap between Washington and Beijing’s positions on structure issues that form the core of US key demands, such as China stopping state subsidies for its state-owned enterprises.

“Despite the public display of cordiality and positivity by both sides during and after the talks, we maintain our core view that there will likely not be a lasting resolution to the trade dispute after the end of the truce on March 1,” comments Fitch on the recent scheduled trade talks between US and China, which took place earlier this week over Jan 7-9, in a Friday note.

While the firm acknowledges the likelihood of a eventual deal being struck between the two countries, it believes the outcome will be based on “more shallow and short-term concerns” such as the increased Chinese imports of American goods.

“Key issues such as the protection of intellectual property and US accusations of Chinese corporate espionage will likely remain unaddressed. This means that a re-escalation of the trade dispute after March 1 due to disagreements on these outstanding key concerns still remains likely,” concludes Fitch.

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