China, U.S. confirm trade deal, but lack of details leave markets confused

BEIJING - China confirmed Friday it had agreed to a partial trade deal with the United States, but neither government released a text, leaving investors confused about the agreement's significance.

One day after President Donald Trump approved the so-called "phase one" accord, the only official word from the White House was a presidential tweet that was long on salesmanship and short on details.

"We have agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder …," the president wrote. ".....The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal. We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election. This is an amazing deal for all. Thank you!

An official statement from the office of the U.S. Trade Representative did little to dispel the confusion, offering no specific figures on the agreed Chinese purchases of U.S. farm goods and other products or what structural changes China would make in its economic system.

Trump has canceled a scheduled tariff increase that would have hit about $160 billion in Chinese goods on Sunday and has agreed to halve the 15% tariff on about $120 billion in Chinese products that took effect in September, according to USTR. A 25% tariff on an additional $250 billion in imports will remain in place as negotiations begin on a second deal.

Financial markets were unimpressed. The Dow Jones industrial average rose about 130 points before quickly surrendering those gains and dipping into the red just before 11 a.m., after the official statements were released.

"This trade negotiation is turning into a 3-ring circus that looks a lot like a game show or reality TV series only the victims are American investors. It won't be a Record Stock Market & Jobs! for long if the Trump administration doesn't come clean and show markets their cards. So far we've got nothing. Absolutely nothing," Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in a client note early Friday morning.

The text includes nine chapters, including ones on intellectual property rights, technology transfer, food and farm products, financial services, exchange rates, and dispute resolution, Wang Shouwen said at the 11 p.m. news conference at the State Council Information Office in Beijing.

The Chinese and the American delegations will now carry out a legal review and check the translation as soon as possible, Wang told reporters. They will then make the arrangements for the formal signing of the agreement, he said.

Liao Min, vice finance minister, said that China will consider not imposing the tariffs it had threatened to slap on 3,300 American products Sunday, including auto parts and chemicals.

"China will take corresponding measures by not implementing the new tariffs planned for Dec 15," Liao said. "This is the consensus reached by both sides in the phase one deal."

The agreement still, however, seemed tenuous.

The Chinese side did not make any mention of the dollar amount for the farm products that Beijing will buy from the United States in return. The Trump administration had previously suggested that China would buy $50 billion in agricultural goods like soybeans and pork.

Bai Ming, an expert linked to China's commerce ministry, said the U.S. tariff rollback was "a goodwill gesture."

"It is an improvement but not enough. China will mean what it says, and the U.S. should not go back on its promise," the nationalist Global Times quoted Bai as saying.

The deal appeared to be "win-win," said Su Qingyi, Deputy Director of Department of International Trade at the Chinese Academy of Social Sciences.

Reaching an agreement and lowering tariffs would boost China's exports and therefor its employment rate and economic growth, Su said before the Friday night news conference.

"Secondly, resuming purchases of U.S. farm products is in our own interests," he said. "We need some of their agricultural products. And if the deal includes opening financial service sector, that's good for us."

The Washington Post’s Wang Yuan in Beijing contributed reporting.