Friday, 29 May, 2020

China trade talks to resume amid fraught ties and low expectations

U.S. visa move against China casts pall over talks to end trade warFILE U.S. visa move against China casts pall over talks to end trade warFILE
Ginger Lawrence | 10 October, 2019, 07:56

As they prepared to return to the negotiating table on Thursday, top Chinese trade officials faced a blitz of aggressive USA manoeuvres, with expectations for a grand bargain between both sides approaching zero.

Liu is still set to leave on Friday evening, CNBC said, citing a USA official.

"It is harder to imagine an S&P 500 at similar/higher levels in October 2020 without a trade deal, better confidence over global economic growth, and improved corporate earnings", said Nicholas Colas, a co-founder of DataTrek Research.

Wall Street stocks jumped early today following reports that a limited US-China trade deal is possible ahead of this week's negotiations.

Even for investors hardened by more than a year of trade-war headlines, it's been a chaotic few hours.

Another report, from Bloomberg, that the White House is looking at rolling out a previously agreed currency pact with China, also raised hopes of a partial deal and helped to lift risk assets.

With trade talks between the world's two largest economies, the USA and China, about to begin on Thursday, media reports suggest that Beijing is ready to negotiate a partial trade deal.

"Overall the market is pretty on the edge as we've seen bigger negative reactions toward trade news", said Mingze Wu, a foreign-exchange trader at INTL FCStone Global Payments in Singapore. "Now it sounds as if China would be willing to engage in some piecemeal accords". The Nasdaq picked up 1% to 7,903.74 and the Russell 2000 index of smaller company stocks added 0.5%, to 1,479.46.

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The major USA stock indexes rebounded from the get-go on Wednesday as traders turned more hopeful about the upcoming U.S.

Without significant progress, Trump is set to hike the tariff rate on US$250 billion worth of Chinese goods to 30 per cent from 25 per cent next Tuesday.

"In my opinion, China wants to make a deal more than I do", he added.

Washington and Beijing had held off from further escalating the conflict up until this week, when the USA blacklisted a group of Chinese technology companies over alleged human rights violations.

Washington is expected to press new demands for Beijing to protect US intellectual property this week, but both sides have very different views of that topic as well.

China would not ask the United States to shift to an economy that relies heavily on state-owned enterprises, or ask it to start fully funding education, as China's does, he said, so why should Washington expect the same from Beijing?

Gold rose $8.90 to $1,506.10 per ounce, silver rose 3 cents to $17.73 per ounce and copper fell 1 cent to $2.56 per pound. Numerous companies rely on China for revenue and their supply chains.