Result of US-China talks: Short-term relief, long-term risks

Tuesday, 22 May, 2018

Containers are seen at the Yangshan Deep Water Port in Shanghai, China April 24, 2018.

Investors were relieved Monday to hear that Treasury Secretary Steven Mnuchin said the nations are "putting the trade war on hold" after Beijing agreed to buy more farm goods, energy and other products and services from the U.S.

The two sides are far from a final deal and there are fears that the "China hawks" in the White House will blow up the deal, said Michael Camunez, a USA ambassador to Mexico under President Bill Clinton who helped implementation NAFTA.

The United States shipped 4.76 million tonnes of sorghum to China in 2017, worth around $1.1 billion and making up the bulk of China's roughly 5 million tonnes of imports of the grain, according to Chinese customs data.

Corn is seen in a field in Morocco, Indiana, U.S. September 6, 2016.

Crude prices climbed further on U.S. President Donald Trump's discussions with Russian Federation and China about issuing new debt to Venezuela.

Trump is dispatching Commerce Secretary Wilbur Ross to try to settle on the kinds of details that were sidestepped in last week's talks with a Chinese delegation led by Vice Premier Liu He.

Shares of industrial exporting companies were the biggest winners in the S&P 500, adding 1.5%.

"Even with a drastic reallocation of Chinese imports of energy, raw materials and airplanes in favor of the US, the bilateral trade deficit may reduce by $100 billion", said Shih. There was nary a word about Trump's signature demand that China cut its trade deficit with the U.S.by $200 billion.

With Trump administration members sending mixed messages on the status of trade negotiations with China, lawmakers are urging the White House to clarify its position and to keep the pressure on the Chinese to stop them from stealing intellectual property.

China and the United States issued a joint statement on Saturday on the economic and trade consultations, vowing not to launch a trade war against each other. He said the US must focus on getting China to agree to reforms such as scrapping requirements that USA companies share technology with their Chinese counterparts in order to take part in joint ventures there.

Result of US-China talks: Short-term relief, long-term risks
Result of US-China talks: Short-term relief, long-term risks

"You have to questions whether previous administrations were tough enough on China", said Mr. Alden. Hackett said Wall Street could get over its trade worries relatively quickly if talks go well.

US stocks rose on Monday and gains in industrials helped propel the Dow to a more than two-month closing high, after a truce between the United States and China calmed fears that a trade war might be imminent.

Some U.S. farmers scrapped plans to plant sorghum this spring, opting for corn instead, after China's probe halted U.S. sorghum imports.

Wall Street rallied amid optimism that the U.S. is backing off its recent protectionist stance in an effort to resolve an global trade dispute with China.

But major US stock indexes have risen in May and investors recently piled into exchange-traded funds tracking small and large USA companies, according to Credit Suisse. Most observers say a firm deal is likely to take a long time. A week ago, Trump tweeted that he was working with Chinese President Xi Jinping to put ZTE "back in business, fast".

Speaking at a daily briefing, Chinese Foreign Ministry spokesman Lu Kang said both countries had clearly recognized that reaching a consensus was good for all.

The deal also focused on China's "positive position" to increase imports rather than a "negative position" of getting it to cut exports, Mei said.

U.S. Treasuries, which were steady ahead of $99 billion in new supply scheduled for this week, were supported by safety buying prompted by the surging Italian borrowing costs.

Analysts said the talks may have helped to ease tensions at least slightly between the world's two biggest economic powers.

This would help level the playing field between China and not only the USA but other trading partners that take issue with China, including European Union members.