Update: In an interview with Fox Business Network, Sarah Huckabee Sanders said the White House is ‘optimistic’ about the prospects for a trade deal with China following this week’s talks in Beijing.
While this should help reassure markets, it’s important to keep in mind that if talks weren’t going well, the White House probably wouldn’t tell us.
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After the ‘mid-level’ talks between US and Chinese delegations in Beijing were extended for a third day on Wednesday, the negotiations have reportedly wrapped up, with both sides touting that they are “serious” about coming to an agreement, and that significant progress has been made, according to CNBC.
With the US delegation on its way back to Washington, China’s Foreign Ministry hinted that the talks had been a success and said it would soon release a statement on the outcome.
The Editor-in-Chief of China’s Global Times said that “though arduous” the trade talks were productive and that both sides were waiting for the US delegation to arrive back in Washington before delivering official statements on the outlook for a deal.
Meanwhile, US Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs Ted McKinney told a group of reporter’s at the delegation’s hotel that he thought negotiations “went just fine.”
“It’s been a good one for us,” he said.
US markets climbed on Tuesday even as traders priced in a slightly more hawkish Fed as many apparently bought in to the narrative that both sides are doing everything in their power to come to an agreement (with equities moving higher after Bloomberg reported that Trump is desperate for a deal because he hopes it might send stocks back toward ATHs).
Though there were some reports that the two sides were further apart than some of the headlines let on.
However, people familiar with the talks told Reuters on Tuesday that the two sides were further apart on Chinese structural reforms that the Trump administration is demanding in order to stop alleged theft and forced transfer of U.S. technology, and on how Beijing will be held to its promises.
In another sign of confidence, China has approved another large order of US soybeans while also approving five GMO crops for import – its latest effort to boost imports from the US in accordance with one of Trump’s key demands.
In what is widely seen as a goodwill gesture, China on Tuesday issued long-awaited approvals for the import of five genetically modified crops, which could boost its purchases of U.S. grains as farmers decide which crops to plant in the spring.
On Monday, Chinese importers made another large purchase of U.S. soybeans, their third in the past month.
Trump and other White House officials have insisted that the US has leverage because of China’s rapidly cooling economic growth and the fact that its market dropped 25% last year (though Chinese stocks have slightly outperformed the US since the US imposed its first round of China-specific tariffs in July) . However, China has insisted that the trade strife harms both countries equally, and that it would not yield to any “unreasonable concessions.”
China is keen to put an end to its trade dispute with the United States but will not make any “unreasonable concessions” and any agreement must involve compromise on both sides, state newspaper the China Daily said on Wednesday.
The paper said in an editorial that Beijing’s stance remains firm that the dispute harms both countries and disrupts the international trade order and supply chains.
Setting the meeting off to an auspicious start, Liu He, China’s top economic official, dropped in and greeted the US trade delegation – led by Deputy U.S. Trade Representative Jeffrey Gerrish – on Monday. We now await confirmation that Liu and a delegation of more-senior officials will travel to Washington next week for the next round of talks.
The US and China have agreed to a “hard” deadline for an agreement of March 2.