Markets buoyed by optimism over US-China trade talks

Cornelia Mascio
Gennaio 10, 2019

Chinese traders and refiners are still cautious about buying USA crude until the trade problems between the world's two biggest economies are resolved, but if they are, chances are US crude exports would get an additional boost.

Washington is pressing Beijing for changes including rolling back plans for government-led creation of Chinese global champions in robotics and other fields.

The Wall Street Journal reported Tuesday the two sides were narrowing their differences, with Chinese officials offering greater purchases of USA goods and services and Cabinet-level follow-up meetings expected later this month.

Investors welcomed signs of optimism from the talks.

Stocks rose globally after the US and China concluded talks and appeared closer to an agreement, with all major USA equities benchmarks rising.

"The U.S. feels uncomfortable with China's rapid development, and can't adapt to its own declining influence", wrote Chen Yonglong in the state-run China Daily". President Donald Trump and his deputies have criticized China for failing to live up to past promises, including a pledge to promptly open up the Asian nation's economy to more trade and investment after it joined the World Trade Organization in 2001.

The Global Times commentary said China's growing economy means it can "carry out a more intense boycott" of trade with the United States if needed.

The USTR statement contained no details on the amount of commodities, goods and services discussed in the Beijing talks. "Progress should include a mechanism for the removal of tariffs and measurable, commercially meaningful outcomes", the U.S.

US Dollar and China Yuan notes are seen in this picture illustration. The USTR statement didn't say whether progress had been achieved on its main concerns.

Beijing has tried to defuse pressure for more sweeping change by offering concessions including purchasing more American soybeans, natural gas and other exports.

Mr Ted McKinney, US under secretary of agriculture for trade and foreign agricultural affairs, said the US trade delegation is "wrapping up" meetings with Chinese officials and will return to the US later on Wednesday after a "good few days". Some disagreements remain on structural issues and they need to be addressed when more senior negotiators meet later on, according to Chinese officials involved in the discussions who asked not to be identified.

Vice Commerce Minister Wang Shouwen headed the vice ministerial level talks for China, though Vice Premier Liu He, a top economic adviser to Xi, made an appearance at a meeting on Monday. Prior to the meeting, China made a number of concessions to US demands including temporarily cutting punitive tariffs on USA -made cars, promising to open up its markets for more foreign investment, and drafting a law to prevent forced technology transfers. USA government data shows the Asian nation scooped up more than 2.6 million metric tons of beans in December and at least another 1.3 million were sold this year, according to people familiar with the matter.

If no deal is reached by March 2, Mr Trump has said he will proceed with raising tariffs to 25 per cent from 10 per cent on US$200 billion (S$271.5 billion) worth of Chinese imports, at a time when China's economy is slowing significantly.

The talks that started Monday were the first face-to-face meetings since Mr. Trump and his Chinese counterpart, Xi Jinping, agreed on December 1 to suspend further action against each other's imports for 90 days while they negotiate over USA complaints that Beijing steals or pressures companies to hand over technology. -Chinese talks aimed at ending a costly tariff battle wrapped up Wednesday in an optimistic atmosphere after President Donald Trump said they were "going very well!".

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