China has just agreed to buy $ 200 billion in US products

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The contract signed on Wednesday provides for Beijing to purchase additional goods and services of $ 200 billion over the next two years.
The increase in purchases is compared to 2017 before the trade war started. China imported more than $ 185 billion in U.S. goods and services this year.

In return, Washington has agreed to cut tariffs on Chinese products worth $ 120 billion from 15% to 7.5%.

Taken together, China's gradual purchases would dramatically increase US exports. Total exports to China would increase to over $ 260 billion in 2020 and around $ 310 billion in 2021 if the agreement applies.

"We believe it will be a major challenge for China to import $ 200 billion more goods and services from the United States over the next two years without reducing imports from other countries," said UBS analysts.

Agricultural goods make up a large part of new purchases. Under the agreement, China will purchase another $ 12.5 billion in the first year and another $ 19.5 billion in the second year. compared to 2017.

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The promised products include soybeans, pork, cotton and wheat. Soybean and pork trade in particular was severely affected as tensions escalated between the world's two largest economies.

Both products were among the thousands of U.S. goods affected by Chinese tariffs in July 2018 in response to the Trump administration's taxes on U.S. goods worth $ 34 billion.

In addition to the purchases announced on Wednesday, the first deal provides better protection for American companies that have long complained about intellectual property theft and business secrets.

It also eases the requirements for banks wishing to operate in China and introduces measures against counterfeiting which, if broken, would result in fines.

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Beijing's pledges go further than China's in the past, but the deal does not oblige the government to change laws or regulations.

And China still didn't give in on some of America's top issues, such as calling for cuts in government subsidies that could trigger a fundamental overhaul of how the Chinese economy works. This is one of the points that both sides should discuss in the next phase of the agreement.

For the Chinese manufacturers who suffered from tariffs that made their goods more expensive, the deal should bring some relief for the time being. This also removes some of the uncertainties that have tarnished corporate investment decisions in China.

The agreement also fits seamlessly into one of Beijing's most important goals: diversifying the economy and reforming the financial system. China's central bank said on Thursday in a statement that the deal would help open up the country's financial sector.

A senior US government official told reporters that Washington would "actively monitor" data sources from both countries to ensure that China kept its promise.

– CNN's Donna Borak and Laura He contributed to this report.