After two days of talks in Switzerland aimed at easing the trade war, both the United States and China reported making “substantial progress”. Chinese Vice Premier He Lifeng said it was an “important first step” towards resolving differences.
Although neither side immediately announced specific measures on Sunday, He said that the world’s two largest economies agreed to establish a further negotiation mechanism led by US Treasury Secretary Scott Norton and himself. Norton said that the US would release details on Monday, and He promised to issue a joint statement.
“As we often say in China, if the dish is good, the timing doesn’t matter,” Li Chenggang, vice minister of the Ministry of Commerce and China’s newly appointed trade representative, told reporters in Geneva last month. “Whenever it is released, it will be good news for the world.”
In separate comments to reporters, the negotiators sought to convey a positive tone. He Zhiping praised the professionalism of the US side, while US Trade Representative Jamie Smith Greer suggested that the trade conflict between the two sides might have been overestimated.
Asian stocks and US stock index futures rose as the China-US trade talks made “substantial progress”, triggering a risk-on sentiment. Gold fell as safe-haven demand weakened.
Chinese stocks and other Asian indexes rose. The Topix index rose for the 12th consecutive day, setting the longest winning streak since October 2017. The Hang Seng Index rose for the eighth consecutive day, posting its best gain in a year. S&P 500 futures rose 1.4% and the Nasdaq 100 index rose 2%. The dollar rose against major currencies and the yield on the 10-year US Treasury note rose 3 basis points.
Homin Lee, senior macro strategist at Lombard Odier Bank Singapore Ltd., said: “Although investors are still waiting for the details of the China-US agreement, the overall positive tone of the negotiations should boost their sentiment towards Chinese and Asia-Pacific stock markets.”
Sean Darby, director general of Mizuho Securities Asia, said on Bloomberg Television: “In fact, I think many trade agreements will take longer to finalize. The specific contents of these trade agreements are much more detailed.”
Valentin Marinov, head of G-10 foreign exchange research and strategy at Credit Agricole, said, “A de-escalation of trade, economic and geopolitical tensions could boost market risk sentiment.” “The latest developments could be positive for risk-related assets and currencies, but could weigh on safe-haven currencies such as the Japanese yen, the Swiss franc and even the euro.”
Win Thin, global market strategist at Brown Brothers Harriman, wrote in a report: “While we still doubt that any substantive agreement can be reached after just two days of negotiations, it is clear that both sides are seeking to ease tensions.”
Previously, Besant, Greer and He Jiankui held several hours of talks, which were chaired by the Swiss ambassador to the United Nations and took place at the ambassador’s residence. Both Besant and He Jiankui said that the two sides had made “substantial progress”.
According to informed sources, as the weekend approached, the United States hoped to ensure that China would lift its export restrictions on rare earths used in the production of magnets, as a series of industries faced disruptions. The sources said that the US aimed to reduce tariffs to below 60% and hoped to discuss with Beijing how to reduce the export of raw materials for fentanyl production.
