A "beautiful monster" deal is how United States President Donald Trump described the so-called phase one trade agreement that he signed on Wednesday with Chinese Vice-Premier Liu He. But the euphoric spin being put on the deal in Washington has not been echoed in Beijing, where the reaction, albeit positive, has been more muted. And with good reason, because while the agreement amounts to a welcome truce in the US-China trade war, it is a fragile truce, clouded by uncertainties. The agreement will require China to buy more US products, strengthen intellectual property protection, stop forced technology transfers and open up its financial services sector. It also has a mechanism for dispute settlement.

One of its key provisions, which the Trump administration has especially played up, is purchases. Under the deal, China is required to ramp up its imports of farm products, manufactured goods, energy and services from the US by US$200 billion (S$269 billion) over the next two years compared to 2017 levels, which amounts to an increase of more than 55 per cent. This is a daunting target, especially at a time when China's economy is slowing. Besides, in order to buy more US products, it would need to divert purchases from other trade partners, such as the European Union, Japan, Brazil, Australia, and Canada. It would, in other words, be maintaining a regime of import quotas, which World Trade Organisation (WTO) rules prohibit. It would also be in danger of violating the WTO's most-favoured-nation clause, which requires member countries to treat all their trade partners equally. Numerical targets for imports are also impractical because a lot of trade is conducted by private traders at market prices, driven by supply and demand, which is one reason why China has, understandably, been reluctant to commit to numerical import targets.