Sino-US deal on IT tariffs could add $190 billion to global GDP: official

Chinese President Xi Jinping and US President Barack Obama Tuesday night held an informal meeting, their first one-on-one encounter during Obama's visit to Beijing.

Xi hosted a private dinner for Obama at the Zhongnanhai leadership compound in central Beijing following the conclusion of the 22nd Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting.

Before a bilateral meeting to exchange views on Sino-US ties and international and regional issues of mutual concern, the two heads of state took a stroll through Zhongnanhai.

For many observers, the Zhongnanhai meeting called to mind the informal meeting between the two leaders at the Sunnylands estate in California in June 2013.

While briefing Obama on the history of Zhongnanhai, Xi said it is important to learn about China's modern history in order to understand the Chinese people's current aspirations and the path forward they have chosen, the Xinhua News Agency reported.

During the Tuesday meeting, Obama reportedly struck a positive note despite tensions in the Sino-US relationship caused by issues ranging from cybersecurity to maritime disputes in the South China Sea.

"When the US and China are able to work together effectively, the whole world benefits," he was quoted as saying by Reuters. Obama also added he wanted to "take the relationship to a new level."

Earlier on Tuesday, Ben Rhodes, a US deputy national security adviser, said the US will be "very clear" with China if it veers beyond the bounds of international norms on cybersecurity and other issues.

Despite points of tension, in a sign that they can work together, China and the US reached a breakthrough agreement on expanding the tariff-cutting Information Technology Agreement (ITA) covering more than 200 information technology products, a move which could affect $1 trillion in trade.

The two countries reached a deal late Monday after marathon negotiations to expand the ITA and eliminate global tariffs on a wide range of products including medical equipment, GPS devices, video game consoles and next-generation semiconductors. The details of the agreement have yet to be disclosed.

"This is encouraging news for the US-China relationship," US Trade Representative Michael Froman said Tuesday.

"It shows how the US and China work together to both advance our bilateral economic agenda and support the multilateral trading system," he added.

Froman said the move will add an estimated $190 billion to global GDP.

Zha Xiaogang, a research fellow at the Shanghai Institute for International Studies, told the Global Times that the deal will not give a significant boost to Chinese trade, but will bring long-term benefits to both countries in the form of increased exports for the US and swifter technological development in China.

"When the tariffs are removed, R&D for many technology companies in China will be put under pressure due to an increase in market competitiveness. They will need to work harder to come up with better products to compete with those of foreign companies. In other words, the deal will promote research in information technology," he said.

Zha also pointed out that the trade pact is a strategy to further stabilize the Sino-US relationship as the two countries have now become increasingly interdependent.

"The deal shows that China has stepped back. The move not only stabilizes Sino-US relations but also benefits the future of bilateral economic ties," he said.

Zhao Zhongxiu, an international trade expert at the University of International Business and Economics in Beijing, told the Global Times that the trade pact is a "gift" to the US during the APEC meetings.

Xi and Obama are scheduled to hold a second round of talks at the Great Hall of the People in Beijing on Wednesday.

Agencies contributed to this story