US-China phase I deal no real surprise, phase II to be difficult, says Port Shelter Investment Mgmt

Trade tensions ease as the much-awaited phase-1 trade deal between the US and China was signed in Washington. The agreement aims to sharply increase sales of US goods and services to China, help protect intellectual property and further open Chinese markets.

Richard Harris, chief executive of Port Shelter Investment Management said, “They say buy on rumours and sell on facts. This deal has been a long rumour, there have been no details published of this 86-page report but we have known many of the details all the way through. There are three main areas, one is the issues about intellectual property, the other is about currency and Beijing being a currency manipulator, and the third thing is Beijing’s pledge to buy a lot of agricultural goods. Those three issues have generally been in the markets for the last week or two. So,  it has probably come as no real surprise,” he said.

“Phase-II is going to be a lot harder but don’t forget phase-I also includes a lot of enforcement provisions. China hasn’t had the best track record about pulling through a lot of agreements in this area. So, Phase-I isn’t necessarily over until it is over. Phase-II,  will see some discussions before November. I don’t see anything happening too quickly. The US becomes incredibly pre-occupied by the election from around July onwards,” he added.