Washington and Beijing have appeared to have made some headway in resolving the dispute over trade after a prolonged deadlock. US President Donald Trump said that both sides reached a very substantial 'phase one' deal. Discussing the global picture in this context, Richard Harris, CEO of Port Shelter Investment Management, said the deal has been on the table for a long time and has just been re-announced but it hasn’t been signed yet. "So there are concerns about how real it actually is and whether the Chinese can execute it," he added.
As part of this partial deal, China will purchase between $40 billion and $50 billion worth of US agricultural products. It will also address intellectual property and financial services concerns, Trump had said. However, Chinese import of agricultural goods was only around $5 billion last year.
According to Harris, there is a big disconnect in what President Trump is saying. "The deal has been sort of agreed but it is very difficult for the Chinese to execute it because the person on the street has to buy these goods. It looks like the deal has been rather oversold and the European markets are starting to reflect that," he said in an interview with CNBC-TV18.
He pointed out that Trump needs a deal to say how good things are ahead of the election but whatever deal is going to happen, it is going to come on a
line-to-line, item-by-item basis. "That is why the whole thing about the agriculture deal looked quite positive because it looks like a start on
line-to-line basis,” he noted.
According to Harris, the biggest issue is about intellectual property and access to the Chinese market and that is equivalent to access that the Chinese have to other peoples’ market and that is the key. "The Chinese do understand their economy well. They do understand that a lot of reforms are needed but they are not going to do it under pressure, they will do it when the spotlight comes off and it looks like Trump is not willing to let that spotlight go,” said Harris.