Chinese media cautiously welcomes US trade truce

Chinese media cautiously welcomes US trade truce

The highly anticipated summit between Trump and Xi concluded with the planned increase in U.S. tariffs on hold for 90 days - (A statement released by the White House confirmed both men had enjoyed a "highly successful" discussion over sirloin steak).

China responded by imposing its own tariffs.

But in an editorial, the official China Daily warned that while the new "consensus" was a welcome development and gave both sides "breathing space" to resolve their differences, there was no "magic wand" that would allow the grievances to disappear immediately.

Growing concerns that the trade war will increasingly hurt corporate earnings and the US economy are a key reason why USA stock prices have been sinking this fall.

Government bond futures fell as shares rallied, with the 10-year treasury futures for March delivery CFTH9 , the most-traded contract, falling 0.26 percent at the open.

In China, Hong Kong's Hang Seng index and Shanghai Composite were up more than 2% in early trading, while Japan's Nikkei 225 rose more than 1%.

While Mr Trump has drawn praise for finally taking on China, his methods have raised fears of a deeper and wider trade war that would eventually cost more jobs than it creates. The agreement "is not a ceasefire, it's just a de-escalation", he said.

"We anticipate that things are still likely to get worse before they get better, and that the negative sentiment impact created by the trade narrative will create additional market volatility".

But as trade tensions ratcheted up with the USA this summer, Beijing retaliated by slapping vehicles imported from the United States with an extra 25 percent tariff, bringing the total tariff rate to 40 percent. "People have already started to reconsider their sourcing arrangements", said Larry Sloven, who has been sourcing and manufacturing in China for three decades.

At the same time, USA farmers have been hurt by reduced Chinese imports of soybeans and other products. China will be opening up.

Hopes of a breakthrough in the trade war - a major source of uncertainty for financial markets this year - helped values surge on Monday.

William Zarit, chairman of the American Chamber of Commerce in China, said the outcome of the meeting was "as good as we could have expected" considering the complex issues involved.

There was also caution from the USA business community.

The Chinese have always been willing to buy more USA goods, help fight fentanyl abuse and launch trade talks, said Dr Bonnie Glaser, senior adviser for Asia and the director of the China Power Project at the Centre for Strategic and International Studies.

The U.S. and China also made progress on the regulation of fentanyl, which is 50 times more powerful than heroin.

China "is open to approving the previously unapproved" deal for United States company Qualcomm Inc to acquire Netherlands-based NXP Semiconductors "should it again be presented".

In an August 2018 article by the state-run newspaper Global Times, Yu Haibin, the head of the China National Narcotics Control Commission, reiterated that position and was quoted as saying, "I don't know where the basis for this claim is coming from".

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