US stocks rally as new round of trade talks with China begins
‘Very good chance’ of ‘reasonable’ deal from Beijing talks, US commerce secretary says
US president Donald Trump said his relationship with China’s president, Xi Jinping, was as good as any between a US president and a Chinese leader. Photograph: Damir Sagolj/Reuters
US negotiators led by deputy trade representative Jeffrey Gerrish arrived in China on Sunday for two days of high-stakes talks. It marks the first official engagement between the two countries since President Donald Trump met Chinese leader Xi Jinping on the fringe of the G20 summit in Buenos Aires last month.
Chinese vice-premier Liu He made a surprise appearance at the negotiations on Monday, a positive sign of political buy-in at the highest levels in China, according to analysts.
In Washington, comments from senior administration officials also spurred optimism that an agreement could be reached. “There is a very good chance that we’ll get a reasonable settlement that China can live with, that we can live with, and that addresses all the key issues,” US commerce secretary Wilbur Ross told CNBC.
China’s blue-chip CSI 300 index rose by 0.6 per cent on Monday while in New York the main US stock markets also finished the session higher – a welcome rally for investors in the wake of recent market volatility.
The US and China have been locked in a nascent trade war since last year, after President Trump followed through on some of the “America First” rhetoric of his presidential campaign, imposing tariffs on $250 billion worth of Chinese exports to the US.
On December 1st both sides agreed a 90-day truce at the Buenos Aires meeting. Negotiators now have until the beginning of March to forge an agreement. In the absence of a deal, tariffs on up to $200 billion of Chinese imports into the US will increase from 10 per cent to 25 per cent on March 2nd.
Speaking on Sunday, President Trump expressed confidence that China would accede to many of the US demands, citing the recent slowdown in the Chinese economy.
“I think China wants to get it resolved. Their economy is not doing well. They’re down close to 38 per cent. That’s a lot. And I think that gives them a great incentive to negotiate,” he told reporters. “But we’re doing very well . . . My relationship with President Xi is as good as any relationship that a president here has had with a president or leader in China. And I think good things are going to happen.”
US job numbers
Mr Trump’s buoyant mood was also boosted by strong US job numbers on Friday.
Among the concessions sought by the US in the negotiations is a change to the Chinese practice of forcing US companies to hand over intellectual property. They are also pressing China to buy more US agricultural and industrial products.
The impact of the slowdown in China is already beginning to hurt US companies, as well as strengthen the US hand in the negotiations.
Technology giant Apple last week cited reduced demand in China as one of the main reasons behind their surprise revenue warning.
In a sign of the wider potential political tensions between the two sides, US warships sailed closed to disputed Chinese islands in the South China Sea on Monday. Though the military exercise had been planned, it underscores the wider political dynamics at play between the world’s two largest economies.