South Africa: Commodities Grapple With the Post-Trade Deal Outlook

analysis

Initial excitement around the signing of the US-China Phase 1 trade deal has settled into circumspection about whether the Chinese commodity spending targets are achievable. Most commodity prices, including oil, have edged back from their peaks, but palladium continues to soar on environmental considerations and supply constraints.

The official signing of a US-China Phase 1 trade deal has lifted the veil of uncertainty that has shrouded financial and commodity markets for the last couple of years. However, its long-awaited signing hasn't cleared the air completely.

The consensus is that the $200-billion in goods and services and $95-billion in commodities spending targets China has agreed to, and a much-anticipated Phase 2 deal, will be difficult, if not unrealistic, to achieve.

The US deliberately kept tariffs on Chinese imports in place to ensure Phase 2 negotiations are taken seriously. However, there is a great deal of scepticism about whether the key issues that need to be resolved, including removing the web of state subsidies that support Chinese companies, will happen anytime soon.

UBS Global Wealth Management Chief Economist Paul Donovan points out that three things will not change after signing the trade deal. "First, supply chains involving China have shifted. Over half...

See What Everyone is Watching

More From: Daily Maverick

Don't Miss

AllAfrica publishes around 800 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.