coordinating minister for economic affairs Darmin Nasution rated the trade dispute between United States (US) and China has been calmed after run for months - Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesian coordinating minister for economic affairs Darmin Nasution rated the trade dispute between United States (US) and China has been calmed after run for months. His commenting comes after the two largest economy agreed to a partial trade agreement last weekend.

“China – US seems to have learned its lesson and is starting to feel its effects. I saw US – China starting to give up. The trade wars still cannot be stopped immediately, but the steps must begin. Starting easily but stopping it is difficult,” he told reporters at the State Palace in Jakarta, today (10/14).

He said, the American’ peoples are really angry on the trade dispute caused has bothered their businesses. Most of US citizen, he adds, are farmers. They are exporters of soy, corn, cotton and all other products.

Previously, finance minister Sri Mulyani Indrawati also judged the global economy could be hit by a second wave of damage from the US – China trade war. The escalation has “created a point of no return” and “cannot be measured” but will be significant and can push the world to an “absolutely uncertain era”, she added.

The type of coordinated policy response seen during the global financial crisis a decade ago could help counter the threat, she said, but right now “it seems like the world is heading in a direction that nobody wants”.

“The policy’ action is not coherent. That’s creating very weak confidence among many economic players in the world in the ability of leaders or decision-makers to actually avert or avoid this recession,” she said on August 29.

While, Michael Taylor, Managing Director, Credit Strategy & Standards APAC, Moody’s Investors Service revealed, the US – China potential deal represents a temporary de-escalation in tensions and the delay in tariff increase removes an immediate risk to growth in both the US and Asia.

However, a limited agreement will not resolve the underlying areas of disagreement between the two sides as long-term divergence in US and China national interest remains across trade, technology, investment and geopolitics, he stated.

“We expect further rounds of negotiation to remain challenging, with further potential for financial markets volatility,” said the analyst.

Last week, US and China has agreed on an outline of a partial trade agreement. President Donald Trump said he and his partner, President Xi Jinping would sign the agreement as soon as next month.

In the agreement, China will significantly increase US purchases of agricultural commodities, approve intellectual property policies and concessions related to financial services and currencies. In return the largest economy in the world, will postpone tariff increases scheduled to take effect on Oct. 15 but additional import tariffs effective in December against Chinese imports of US$160 billion, are not included in this cancellation.

“It is important for the two countries to work together to solve each other’s problems. I hope both parties will act in the principles and direction that we have agreed on and work to advance US-China relations based on coordination, cooperation and stability,” Trump wrote in an official statement.

Furthermore, he said, the problems related to Huawei Technologies Co., is not part of the Friday’ agreement and will be processed separately. According to Trump, the issue of Chinese companies, which were subjected to export blacklist sanctions in May, will be discussed in the second phase of negotiations.

Washington revealed that as part of the agreement, China will increase purchases of US agricultural commodities over the next two years, with total of $40 billion to $50 billion. A few weeks ago, China had discussed buying more US products such as soy, pork and wheat.

However, he revealed, some traders remain skeptical that the buying plan will be a breakthrough in the overall trade conversation. They warned that there needed to be a concrete follow-up to the purchase.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com