Teams will hold a mid-month call to “create favorable conditions” before their face-to-face encounter. The announcement gave a respite to stock markets in Asia and Europe. U.S. And China To Resume Bilateral Negotiations In October. All this in a context of fears that tariff escalation will trigger a global economic downturn.
Despite the fact that China and the United States continue to apply punitive tariffs, Xi Jinping’s government announced on Thursday new negotiations for October. In a context in which the trade war is already beginning to affect both economies.
China’s chief negotiator, Liu He, spoke Thursday with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, the Chinese trade minister said.
“The two parties agreed to maintain the thirteenth round of high-level economic and trade negotiations between China and the United States in Washington in early October, after which both parties will be in constant contact,” the text said.
The markets had been nervous about a report on officials’ problems agreeing on a schedule for contacts, which were originally scheduled for this month.
Following the announcement of the agreement, the exchanges reacted favorably. China’s main stock index rose 1.6% at noon after the announcement. Tokyo’s Nikkei 225 gained 2.3% and the South Korean benchmark index rose 1.0%.
Meanwhile, European equities rose to one-month highs and safe-haven assets such as gold and yen fell after hopes of a reduction in the trade war rose.
The contact comes five days after the entry into force of new mutual tariffs. China replied by increasing customs duties by $75 billion on U.S. products. By December, Washington plans to apply tariffs to almost all of its trade with China. Tariffs they had delayed to avoid a price hike in the middle of the Christmas season.
Beijing also announced this week a complaint to the World Trade Organization (WTO) in reaction to the new U.S. sanctions.
On Tuesday the tension had risen again between the two countries. Donald Trump warned Xi Jinping that the conditions demanded by the U.S. for an agreement would be much tougher if he wins re-election in 2020. Trump believes Beijing is speculating on a Democratic victory next year to get relief on the negotiations.
The US president predicts a haemorrhage of jobs in China. Although he omits the fact that many companies in his country are also suffering the consequences of his protectionist policy.
Economists at the Washington-based Peterson Institute for International Economics question Trump’s claims. According to their report, manufacturing employment in China fell last year “but at a slower pace than in 2014-2017, before tariffs were imposed.
“The destruction of jobs directly attributable to the trade war seems to be minimal,” the study notes.
The trade conflict between Beijing and Washington began last year. And it is threatening the growth of the world’s two major economies.
“The progressive but continuing escalation of the trade disagreement between China and the United States is already damaging economic activity” in those two countries and in the rest of the world, warned George Zhu, of Moody’s financial rating agency.
Several agencies have already lowered growth forecasts for China in recent days for next year to less than 6% (compared to 6.6% in 2018), which would be the slowest rate of growth in almost 30 years.
U.S. And China To Resume Bilateral Negotiations In October.
Manufacturing activity in China slowed again in August for the fourth consecutive year, according to official figures.
Although U.S. manufacturers also recorded the first decline in their index in three years.
A sign of the pressure on its economy, Beijing announced on Wednesday new stimulus measures after a meeting chaired by Prime Minister Li Keqiang. At a time when China “is suffering downward economic pressure,” as recognized by the official agency Xinhua.
Chinese government and the central bank
The Chinese government asked the central bank to reduce the proportion of obligatory reserves of the banks to facilitate loans to small and medium enterprises. The most dynamic in job creation but that cannot access credit, unlike large public groups, not very profitable.
Chinese leaders will have a full agenda next month, with preparations for National Day celebrations scheduled for October 1.
They will also hold a key meeting in October. They will discuss improving governance and “perfecting” the country’s socialist system, state media have said.
In the United States, several hundred U.S. companies and professional groups last month warned the Trump administration of their fear of the employment consequences of new tariffs on Chinese products.
Uncertainty over the trade war is already affecting U.S. manufacturing activity. Which contracted in August for the first time in three years.