U.S. hints that deal with China on horizon
Trump’s hint of potential imminent deal gives North American markets a bounce
WASHINGTON Top White House officials met with Chinese Vice Premier Liu He on Thursday as U.S. President Donald Trump signalled that a trade agreement may follow, buoying North American stock markets.
The highly anticipated trade talks have spawned a rush of conflicting reports about whether the negotiations would spur progress or be cut short.
Stock markets got a lift Thursday as investors responded positively after Trump said he will meet at the White House on Friday with China’s vice-chairman. “Big day of negotiations with China,” Trump tweeted earlier in the day. “They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.”
Later, Trump tweeted the talks with China went “very well today.”
In New York, the Dow Jones industrial average was up 150.66 points at 26,496.67. The S&P 500 index was up 18.73 points at 2,938.13, while the Nasdaq composite was up 47.04 points at 7,950.78. The S&P/TSX Composite Index closed up 42.81 points at 16,422.68.
There’s hope that fate of talks have not gotten any worse, said Greg Taylor, chief investment officer of Purpose Investments, even though the U.S. took action recently to blacklist some Chinese tech firms.
“I certainly don’t think anyone’s looking for an outright deal to come out of these talks tomorrow but even a truce would be looked at as good news and potentially enough to set up a bounce in the markets,” he said in an interview.
But Taylor warned that investors could face disappointment if nothing good comes out of the first meetings between the world’s two largest economies since July.
“But it does feel like we’re close enough to some sort of truce, whether it’s a delay of tariffs, whether it’s some future agriculture buys from the Chinese, but it does feel like at least the worstcase scenario isn’t going to happen.”
Liu met with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Thursday morning.
China is ready to “promote positive progress” in trade talks with the United States, Beijing’s top negotiator was reported as saying Thursday.
“The Chinese side came with great sincerity, willing to conduct serious exchanges with the United States on issues of common concern, such as the trade balance, market access and investor protection, to promote positive progress in the negotiations,” Liu said during a meeting Wednesday, according to the official Xinhua News Agency.
Liu reportedly made the remark in a meeting with Craig Allen, president of the U.s.-china Business Council, Myron Brilliant of the U.S. Chamber of Commerce, and new managing director of the International Monetary Fund, Kristalina Georgieva. The comments echo previous statements.
The talks appeared to be in jeopardy after the South China Morning Post reported that little had come out of the deputy-level talks earlier in the week, and that higher-level talks involving the vice premier had been cut to one day. Forced technology transfers were reported to be a top issue behind the standstill.
But a White House spokesperson said it was unaware of any changes in the vice premier’s schedule. A senior administration official told CNBC that Liu was scheduled to depart Friday evening.
The back-and-forth did not stop there. A principal in the negotiations told CNBC that the meeting schedule was “fluid,” with Friday’s discussions being an “open question.” The source told CNBC it was possible that Liu would leave early and that Vice Minister Liao Min would remain in Washington.
Lower-level “early harvest” agreements on issues such as currencies and copyright protections were possible despite increased irritants between the world’s two largest economies, a U.S. Chamber of Commerce official briefed by both sides said.
Brilliant, the Chamber’s head of international affairs, told reporters that negotiators were “trying to find a path toward the bigger deal” with progress on market access and less controversial intellectual property and other issues.
“I believe that there’s even the possibility of a currency agreement this week. I think that could lead to a decision by the U.S. administration to not put forth a tariff rate hike on Oct. 15.”
Late Wednesday, Bloomberg News reported that the Trump administration was considering a suspension of the Oct. 15 tariff increase in exchange for a currency pact with Beijing. Next week, the U.S. plans to raise levies to 30 per cent from 25 per cent on about $250 billion of Chinese imports. More duties are slated to take effect in mid-december.
Meanwhile, ongoing protests in Hong Kong have cast a shadow on the trade negotiations.
China has lashed out at Western businesses — from Tiffany & Co. to video-game giant Blizzard Entertainment — in a fierce attempt to quell support for the pro-democracy protests.
But Chinese officials indicated more willingness to negotiate and avoid further escalation, according to Chinese state media reports.
“The Chinese side came with great sincerity, willing to cooperate with the U.S. on the trade balance, market access and investor protection,” Xinhua quoted Liu as saying on Thursday.