Friday, 18 January, 2019

Markets buoyed by optimism over US-China trade talks

New York Stock Exchange US and China wrap up trade talks in Beijing. What happens next?
Nellie Chapman | 09 January, 2019, 21:41

The global economy has been suffering from the chilling effect of a trade war between the world's two largest economies.

Chinese and American officials began talks Monday aimed at ending a bruising trade battle between the world's two biggest economies as Beijing complained over the sighting of a USA warship in what it said are Chinese waters.

The US delegation was supposed to end its visit on January 8.

The two governments have announced no details, but Asian stock markets rose on news of the decision to extend negotiations that originally were planned for two days.

"Our sense is that there's good progress on the purchase piece", said one person familiar with the talks.

"I don't speak for them obviously", Cook said in reference to the Trump administration.

The extension shows both sides are serious about negotiations, Chinese foreign ministry spokesperson Lu Kang said after more than two days of trade talks, "a good result will not only benefit both China and the United States. If good results come out of the trade talks between the two countries, they will not only benefit both China and the USA, but also be good news for the world economy", Lu Kang said.

A spokeswoman for the US Trade Representative's office, which is leading the US negotiating team, said talks would continue on Wednesday and "a statement will likely follow then".

"From the beginning we have believed that China U.S. trade friction is not a positive situation for either country or the world economy", Lu said.

Given the relatively low-ranking status of the negotiations, led by deputy USTR Jeffrey Gerrish on the United States side and vice-minister for commerce Wang Shouwen on the Chinese side, observers and analysts had predicted that the talks would seek to lay groundwork for future, more senior, discussions, rather than brokering any substantive deals.

U.S. Commerce Secretary Wilbur Ross, left, shakes hands with Chinese Vice Premier Liu He as they pose for photographers after their meeting at the Diaoyutai State Guesthouse in Beijing, June 3, 2018.

But as meetings wound down in Beijing on Tuesday evening, Mr Trump tweeted: "Talks with China are going very well!".

Without a resolution, punitive USA duty rates on US$200 billion in Chinese goods are due to rise to 25 per cent from 10 per cent on Mar 2.

President Donald Trump argued that China has not treated the US fairly in terms of trade. Unlike many other news organizations, we have not put up a paywall.

China is facing the daunting task of presenting a credible plan to meet Trump's demands to cut down the trade deficit.

China's yuan strengthened in offshore trading by 0.4 per cent to its strongest level in five weeks.

Since the two presidents met on December 1, China has made a number of concessions to US demands, including temporarily cutting punitive tariffs on USA -made cars, resuming soybean purchases, promising to open up its markets for more foreign investment, and drafting a law to prevent forced technology transfers.

Chinese exports to the USA have held up despite tariff increases of up to 25 percent on $250 billion of Chinese imports, partly due to exporters rushing to fill orders before more increases hit.

Fears of a global slowdown and weaker corporate earnings - exacerbated by billions of dollars in tit-for-tat tariffs between the USA and China - have led to a sharp pullback on markets over the last few months.

China is now America's largest goods trading partner with $635.4 billion in total (two way) goods trade during 2017. The US goods trade deficit with China was $375.6 billion in 2017.

"China is determined to bring the trade war to an end", The Economist has reported.