Signing of Sino-US trade deal will be confidence booster for global growth

With China's Commerce Ministry confirming that Vice-Premier Liu He will lead a delegation to Washington next week to sign the gestated trade deal with the United States, there is optimism that the trade tensions between the world's two largest economies will now be less acute.

Details of the deal have not yet been forthcoming, but no matter how far China and the US have come to reach where they are now, the signing of the agreement, though limited in scope compared with the broad range of issues they are discussing, demonstrates that divergences can be narrowed and an understanding reached if they conduct their discussions on an equal footing and with mutual respect.

This in itself is an encouraging sign. And a welcome pick-me-up for the global economy, which is in acute need of a restorative tonic.

Commenting on the deal, which is expected to be signed at the White House on Jan 15, Chinese Ambassador to the US Cui Tiankai, speaking in New York on Wednesday, expressed confidence that it will prove to be beneficial for China, the US and the rest of the world, especially since the international environment remains highly complex and fluid.

It is fair to say that global growth prospects are still dominated by downward pressures.

In its 2020 Global Economic Prospects issued on Wednesday, the World Bank trimmed its global growth forecasts slightly for 2019 and 2020 despite taking into account the cooling of Sino-US trade frictions.

Cutting 0.2 percentage points off its growth forecast for both years, it said that 2019 marked the weakest economic expansion since the global financial crisis a decade ago, and 2020, while likely to witness a slight improvement, remained vulnerable to uncertainties over trade and geopolitical tensions.

Although its forecast of 2.5 percent growth for 2020 is a slight acceleration from the predicted 2.4 percent of 2019, that mainly stems from the anticipated growth recovery of the emerging market economies.

The report expects China's growth to be 5.9 percent, and with resilient monetary and fiscal frameworks, robust supervisory and regulatory regimes, and transparent debt management, along with coordinated structural reforms aimed at improving the business environment, the rule of law and productivity, the Chinese economy can continue to defy the headwinds of trade and geopolitical tensions.

If the soon to be signed deal between China and the US heralds smoother negotiations to come, it will mark the formation of a more conducive environment for China to be a driver of the world economy.

The two sides should take signing the deal as putting the seal on their joint commitment to carry forward the spirit of modus vivendi in their future negotiations.

Doing so would ensure that no matter how protracted their bargaining may be, the trade talks can be conducted in an atmosphere conducive to accommodation and progress.