【英文】J.P. 摩根报告：中国特别报告：2020年中国十问（32页）

The Phase One deal is a positive development that signifi cantly lowers the near-term tail risk of further escalation of the tariff war. Indeed, although the 50% reduction of the September tariff (i.e. average tariff reduction of 1.5%pts) is modest, it is the first tariff rollback since 2018. Nonetheless, escalation risk is not off the table.

Some uncertainty on the Phase One deal remains, especially at the implementation stage. Lack of trust has been a major problem in the bilateral negotiations, which is why the US emphasizes a strict enforcement mechanism, and China is not eager to move to Phase Two negotiations. Drafting of the text itself is challenging, which led to a previous round of negotiations falling apart in early May 2019. This seems less of a problem at this stage, but implementation can be a bumpy process. First, the two sides have different interpretations of some key concepts, like IP protection, competitive devaluation and forced technology transfer, and it is almost impossible to rely on the agreement document to completely bridge the gap. Think about how the WTO, China andthe US have completely different assessments on how China has abided by its WTO commitments. Second, at the implementation stage we think it is almost unavoidable that the US will be dis-satisfied with the pace of progress. This is not necessarily because the central government of China will not have taken serious actions, but because of resistance at a local level. Although China is a centrally controlled economy, if a policy (e.g. IP protection) hurts the interests of a specific local economy and business community, it could be bypassed or compromised at that level (so called “上有政策，下有对策”).