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US-China relations to remain contentious: Moody’s

Moody'sNew Delhi : Reacting to US President Donald Trump’s decision to delay the date for American tariff hike on Chinese goods, US ratings agency Moody’s on Monday said although the compromise reached had become increasingly likely, the US-China relationship would continue to be contentious, “swinging between compromise and conflict”.

Reporting substantial progress in the US-China trade talks, Trump on Sunday announced that he would delay the March 1 deadline to increase American tariffs on Chinese goods.

Trump said he would like to have a summit with his Chinese counterpart Xi Jinping at his Florida resort to finalise a trade agreement.

“An extension of the March 1 deadline had become increasingly likely in recent weeks and is part of our baseline assumptions,” Moody’s Investors Service MD (Sovereign Risk Group) Marie Diron said in a note.

“While some compromise may be reached between the US and China on certain trade matters, the process is unlikely to be smooth and the US-China relationship should remain contentious, swinging between compromise and conflict, and involving frictions not only on trade, but also on technology, investment and geopolitics,” she said.

The Trump administration had set March 1 deadline for a trade deal in the US-China talks or else Washington would hike tariffs from 10 per cent to 25 per cent on yearly imports of Chinese goods worth $200 billion.

The announcement comes as Trump prepares to meet North Korean leader Kim Jong-un for the two-day second summit in Hanoi, Vietnam, starting Wednesday.

Earlier on Sunday, Trump tweeted about the role China is playing ahead of talks with the North Korean leader. “President Xi of China has been very helpful in his support of my meeting with Kim Jong-un. The last thing China wants are large-scale nuclear weapons right next door,” he wrote on Twitter.

He also tweeted it had been “a good weekend for US and China” in trade talks.

The President’s announcement followed days of negotiations in which American and Chinese officials met last week near the White House to work line-by-line through a handful of documents covering intellectual property, services and subsidies, according to the New York Times.

An American delegation is expected to travel to Beijing soon to resolve the remaining differences.

The trade war between the world’s two biggest economies was sparked by Trump’s aggressive protectionist stance and has generated uncertainty and volatility in international financial markets for months.

—IANS

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