The U.S. and China are reportedly nearing a trade deal in the ongoing tit-for-tat tariff war which has erased billions from stock markets over the past year.
American and Chinese officials are apparently closing in on a trade deal, having solidified the majority of the outstanding issues in their drawn-out trade disagreement. Both nations have levied tariffs on billions of dollars’ worth of each other’s exports since the beginning of 2018.
According to executive vice-president for worldwide affairs at the U.S. Chamber of Commerce Myron Brilliant, “Ninety percent of the deal is done, but the last 10 percent is the hardest part, it’s the trickiest part and it will require trade-offs on both sides.”
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are arranged to meet Chinese Vice Premier Liu He on Wednesday to continue discussions.
If the negotiations prove productive, it’s reasonable to assume that U.S. President Donald Trump will meet with Chinese President Xi Jinping to sign an official agreement. In the case that the world’s two biggest economies are incapable of reaching a trade deal, some analysts have alerted that a worldwide recession might follow.
The news appeared to support global equities along with U.S. futures, with both European and Asian markets climbing Wednesday, and U.S. markets opening in the green.
Trade deal too late for American payment processors
A trade offer in between President Xi Jinping and United States President Donald Trump might finally satisfy a long-delayed commitment to open China’s US$ 31 trillion market for credit cards and other third-party payment processors to American companies like Mastercard, American Express and Visa.
But any compromise reached may be insufficient.
Beijing pledged to let foreign firms into its domestic electronic payments market by 2006, but foreign firms have dealt with ongoing barriers, despite a moderately strong World Trade Organization case brought by the U.S. to force open the marketplace. Only recently, China introduced a two-step application procedure for foreign business to get permission to supply electronic payment services.
Martin Chorzempa, of Peterson Institute for International Economics in Washington, explained, “If [China] had opened as promised, Alipay and WeChat Pay would have had serious competitors earlier on, and I believe China’s payment landscape would look very different today.”
Even if Xi and Trump solve the predicament as part of a complete agreement to calm the bilateral trade war, it could take another couple of years before Visa, the most distinguished American payments company, can present its services to Chinese markets. And after that comes the difficulty of charming consumers away from its Chinese counterparts.
Chinese payments apps like WeChat or AliPay have become a staple throughout the country, handling trillions in mobile payments every year, with money and even credit and debit cards taking a backseat to more simple payment methods.