MNI POLICY: China Media Say Phase-1 Deal 'Equal'; Market Muted

By Wanxia Lin

     BEIJING (MNI) - China's official media hailed the 'phase one' trade

agreement signed with the U.S. in Washington on Wednesday as an "equal and

mutually beneficial" deal that should be cherished as a hard-fought arrangement

reached after 22 months of the trade war, and critics should not only engage in

"nit-picking of the agreement and bad-mouthing future trade negotiations".

     The Chinese financial markets appear cautious over the prospects of

follow-up negotiations, as many thorny issues remain unresolved. 

     The Shanghai Composite Index closed 0.52% lower at 3,074.08. While the

onshore yuan inched up 0.03% to 6.8850 against the dollar before the 16:30 local

time close.

     Here are some key points from media reports on the deal:

     - The government won't adopt administrative instructions or subsidies to

meet the U.S. requirement of expanding imports of an additional $200 billion

American goods on 2017 levels, the People's Daily said. Chinese companies and

consumers will buy voluntarily in accordance with market condition, the

newspaper said.

     - Both sides reached a consensus with equality and mutual benefits on the

exchange rate issue, and the agreement is by no means a new "Plaza Agreement",

the People's Daily said, adding that it guarantees the autonomy of China's

exchange rate policy and will not bring about adverse consequences like those

seen in Japan.

     - Debating about who had lost or gained is shallow, and such discussions

are often exaggerated for certain political goals, said the Global Times in an

editorial, noting that any relatively fair agreement would see regrets for both

sides.

     - "If we must say what is the biggest victory in signing the phase one

deal, I believe it should be the convergence of the risks of the trade war --

that the additional tariffs declined for the first time," said the Taoran Note,

a blog associated with the Economic Daily, dismissing the idea that China's

commitment to increasing imports is a victory for the U.S.

     - The validity of the deal remains uncertain, and it may be more difficult

for China and the U.S. to reach a comprehensive trade deal, the Global Times

said, hoping that the preliminary agreement will enlighten both sides' further

efforts.

     - The deal is not only in line with China's general direction of deepening

reform and opening up and promoting high-quality development, but is conducive

to meeting the growing needs of the Chinese market and maintaining a balance of

international payments. Overall it has been welcomed by business and consumers

in both countries, the international community and financial markets, according

to a commentary by Xinhua News Agency.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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