China`s comprehensive bilateral agreement with the United States on the terms of its membership of the World Trade Organization, concluded last fall, reflects The Chinese leaders` search for a new growth paradigm (see Chart 2 for Conditions). It is generally accepted that repeated short-term tax incentives used since 1997 to stimulate growth are only a temporary objective. These short-term measures may prevent a total collapse in economic growth, but they cannot generate long-term sustainable economic growth. Leaders concluded that long-term growth depends largely on the more efficient use of resources, rather than simply maintaining the highest overall investment rate in the world. Leaders believe they can achieve greater efficiency by reducing restrictions that previously restricted the private sector from the economy and by strengthening the competition that will result from China`s broader opening up to the global economy. The pact aims to open up Chinese markets to more U.S. companies, increase agricultural and energy exports, and better protect U.S. technology and trade secrets. China has committed to purchase an additional $200 billion in U.S. goods and services by 2021, and is expected to ease some of its tariffs on U.S. products. At the same time, China imported more pork to cope with local shortages caused by the epidemic, resulting in U.S. pork exports exceeding their 2020 target (see Chart 3).
In September, Chinese pork imports from the rest of the world also increased by more than 400% compared to 2017. And in one of the few parts of the first phase agreement, which includes political commitments (Chapter 3), China has agreed to remove technical barriers that had slowed pork imports. Economists around the world estimate that the trade war will bring growth down by more than 0.5%. But some countries have benefited from the struggle, which is estimated to have diverted $165 billion to trade. Analysts have speculated that the trade war could influence the 2020 U.S. presidential election, as tariffs have had a negative impact on farmers, a major district for Trump.   Analysts have also speculated about the impact of the trade war on Xi Jinping with regard to the internal political pressures to which he was subjected.  If you simply rely on purchasing objectives, it is not only not about addressing China`s problematic policies that harm Americans, but also helps to consolidate state planning as opposed to commercial outcomes. In particular, because China continues to impose discriminatory retaliatory duties on U.S. exporters, only its state-owned enterprises, not the Chinese private sector, will increase many purchases to meet their commitments, the opposite of what U.S.
politicians say they want. The objectives of the agreement also send signals to America`s allies that the United States is primarily interested in China diverting imports from its suppliers, rather than attacking China`s problematic policies and undermining their confidence in U.S. policy. But these victories are highly priced. Uncertainty created by Trump`s customs threats and trade approaches has weighed on the economy, raised business and consumer prices, delayed business investment and slowed growth around the world. Companies with China`s commitment such as Deere-Company and Caterpillar have laid off some workers and reduced revenue expectations, in part by referring to the trade war. An analysis by the Peterson Institute for International Economics showed that in January 2018, before the start of the trade war, China imposed uniform tariffs of 8% on average on all its importers. By June 2019, tariffs on U.S. imports had risen to 20.7%, while tariffs on