American stick

16 January 2020 By Pete Sweeney Follow @petesweeneypro

The most substantive part of Beijing’s trade deal is the commitment to open its financial sector. Combined with other liberalisations, local institutions face real U.S. competition. That should reduce the credit misallocation that irks trade partners and warps economic growth.

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The United States and China signed an initial trade deal on Jan. 15 that will roll back some tariffs and boost Chinese purchases of U.S. products and services by $200 billion over two years.

According to the announcement published by the White House, Beijing has agreed to lift foreign equity caps for securities companies, insurers, and fund managers by April 1, 2020. Other concessions include easing the licensing process for U.S. credit and debit card companies, allowing credit ratings agencies to take control of joint ventures, and allowing American distressed debt investors to obtain provincial-level licenses.

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