The decision by United States President Donald Trump to delay the increase in tariffs on US$200 billion (S$270 billion) worth of Chinese goods in anticipation of a trade deal is a positive development and brought relief to jittery markets. But the scope and durability of any agreement between the US and China are open to question. The tariff increase, from 10 per cent to 25 per cent, was supposed to take effect from March 1. But Mr Trump postponed the hike to an as-yet-unspecified date, indicating that meanwhile, there is a "good chance" of a trade deal which he hopes to formally sign with China's President Xi Jinping by the end of next month. The easing of China-US trade tensions has been welcomed by US business groups and has propelled Chinese stocks higher. But from what is known at this stage, the deal is limited.
One of its highlights is a pledge by Beijing not to artificially weaken the value of the yuan as well as to step up Chinese purchases of US agricultural and energy products - both of which will help reduce China's bilateral trade deficit with the US, which crossed US$380 billion last year. China has also drafted a new foreign investment law that bans foreign technology transfers - which US and other foreign companies operating in China have long complained about. However, several key issues that have been at the core of US objections to China's trade policies remain unaddressed, including subsidies to China's state-owned enterprises, policies that grant more favourable market access to local companies and issues relating to cyber security and the alleged cybertheft of industrial secrets by Chinese entities.