Chinese Vice Premier Liu He arrives at his hotel Monday afternoon in Washington. He is expected to conclude a phase one trade agreement with the US. Photo:CGTN

After a 22-month trade deadlock and dozens of strenuous consultations, China and the US signed a first phase trade agreement in Washington on Wednesday, officially hitting the pause key on the punishing battle that has inflicted serious wounds on the bilateral relationship, their economies and the global economy.

During a lengthy ceremony at the White House, Chinese Vice Premier Liu He and US President Donald Trump inked the widely expected phase one deal. 

Among the key takeaways from the agreement was China's pledge to increase purchases of US products, including $40 billion worth in agricultural goods, over the next two years and a US commitment to roll back tariffs in phases on Chinese goods. 

The agreement also covered disputed areas including protection of intellectual property rights, technology transfer and an implementation review mechanism.

At the signing ceremony, Liu read a letter from Chinese President Xi Jinping to Trump, in which Xi said that the phase one trade agreement was "good for China, the US and the world."

The signing presented a stark contrast to the hostility and brinkmanship between the two countries of the past 660 or so days and the theatrical back-and-forth negotiations that lasted through 13 rounds of high-level talks.

In a clear indication of the importance Trump, who praised the deal as "momentous," attaches to the deal, in attendance were a slew of senior US officials, lawmakers and business representatives.

On the Chinese side, Commerce Minister Zhong Shan, Governor of the People's Bank of China Yi Gang and Chinese Ambassador to the US Cui Tiankai also attended. 

In his remarks, Liu said that China and the US will be problem-oriented and focus on implementing the phase one trade agreement.

The signing of the phase one trade agreement offered some much-needed certainty and relief for businesses in both countries and around the globe, but it remains to be seen whether the two largest economic powers will be able to build on the momentum to address their considerable differences over a wide range of issues in a constructive manner, Chinese analysts noted.

Global boost

"The overall signal from the phase one agreement is much larger than the content of the deal itself," Wei Jianguo, a former Chinese vice commerce minister, told the Global Times onWednesday. "It is a boon for the world that the world's largest and second-largest economies have hit the pause key in the trade war."

Global equity markets have rallied in the lead-up to the signing and since the two countries announced the agreement in mid-December.

"The phase one deal means that China and the US have entered a new relatively predictable cycle," Li Yong, a deputy chairman of the expert committee of the China Association of International Trade, told the Global Times on Wednesday.

"It will be able to help revitalize the global value chain disrupted by the trade war and remedy at least some of the losses."

The tariffs imposed by Trump had cost US companies $46 billion since February 2018, according to some analysis of US official data last week. 

In China, the trade war has also been partially blamed for persistent downward pressure on its growth. Globally, it could result in $700 billion losses by the end of this year, according to the IMF.

Photo: IC

China holds ground 

But in a vivid display of the deep distrust between China and the US, even before the deal was signed, many in both countries rushed to gauge who had gained more from the agreement and questioned how long the deal would last. 

On each side are people that argue their country made too many concessions or did not gain enough from the deal.

But the deal resulted from compromises by both sides and a mutual realization that a trade war was in nobody's interest, said Wei, the former Chinese vice commerce minister. 

As a result of the realization, he noted, the US has toned down its tough stance in the trade war it launched against China and China's sincerity and resilience have prevailed. 

In the face of US bullying and maximum pressure tactics, China has mounted a robust defense, while also actively pursuing consultations with the US, he said. 

"If you are familiar with China's core stance, you would know that China held all of its core grounds," said Song Guoyou, director of the Fudan University center for economic diplomacy in Shanghai.

From the outset, Chinese officials have said that any agreement will be balanced in terms of commitment and on equal footing in terms of each other's principles. 

China has also demanded its sovereignty and rights to development be respected. 

For the phase one deal, China demanded the US roll back its tariffs. 

Song pointed out that the US dropped its tough stance based on its own interests and domestic laws laid out in the so-called Section 301 probe that started the whole trade war in the first place. 

He said that no terms in the phase one deal required changes against Chinese national interests and China was already addressing issues such as IPR protection on its own. 

"There would have been no deal if only one party made concessions," he said.

Uncertainty remains 

Uncertainty remains in the trade war, with pressing tasks for both sides to address and try to bring the bilateral relationship back on track, analysts said.

"I don't want to dampen the mood, but there is still a lot to do," Li said. 

First and foremost, both sides must fully implement the agreement and properly manage possible disputes that might emerge in the process, according to Li. 

"China will not hold back in carrying out the deal, and neither should the US," he said.

Wei said that apart from remaining trade disputes, US officials have also continued to crack down on Chinese technology companies such as Huawei and blatantly intervened in China's internal affairs related to Hong Kong, Xinjiang, Tibet and Taiwan.

It is hoped that with the experience from the phase one deal, both countries will "rise to the task of addressing remaining issues including technology, WTO reforms and geopolitical issues," he said.