US, China reach trade deal framework in London

US, China reach trade framework after London talks

The US and China have made a preliminary deal on a trade "framework" after two days of talks in London. The move is a first step toward moving the world's two largest economies away from a contentious trade, and geopolitical, relationship. The framework, which was announced on Tuesday, now needs to be approved by US President Donald Trump and his Chinese counterpart Xi Jinping.

Progress on Key Trade Issues
US Commerce Minister Howard Lutnick said discussions focused on the "Geneva consensus", agreed during talks last month. Although the details of the new agreement were not immediately known, Lutnick said on the call that the sides had resolved all of the major issues. Anatomy of a trade dispute The restrictions, including China's diminished exports of rare earth minerals, which are necessary for the manufacturing of high-tech goods, might ease if supply levels return to what they used to be, U.S. curbs notwithstanding.

Li Chenggang, Chinese Vice Commerce Minister called the discussions "professional, rational, in-depth and candid." He added that both sides would now return to report the results to their leaders.

Market Confidence vs Global Economic Fears
Asian financial markets reacted favorably to the announcement. Japan's Nikkei 225 was up almost 0.5 percent by early Wednesday, while the Hang Seng in Hong Kong was up about 1 percent and the CSI 300 in mainland China rose 0.8 percent. These moves are a sign of optimism about a lessening in the trade war.

There are broader ones, however. The World Bank's new global growth forecast is lower than the 2.7 percent growth rate it estimated in January, and the global lending institution points to the persistent uncertainty around trade issues as the main factor dragging down growth.