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China Open to Partial U.S. Trade Deal Despite Tech Blacklist

Stock Markets Oct 09, 2019 05:33AM ET
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(Bloomberg) -- China is still open to agreeing a partial trade deal with the U.S., an official with direct knowledge of the talks said, signaling that Beijing is focused on limiting the damage to the world’s second-largest economy.

Negotiators heading to Washington for talks starting Thursday aren’t optimistic about securing a broad agreement that would end the trade war between the two nations for good, said the official, who asked not to be named as the discussions are private.

But China would accept a limited deal as long as no more tariffs are imposed by President Donald Trump, including two rounds of higher duties set to take effect this month and in December, the official said. In return, Beijing would offer non-core concessions like purchases of agricultural products without giving in on major sticking points, the official said, without offering further details.

S&P 500 Futures rose 0.9% on the news and the offshore yuan extended gains.

The Ministry of Commerce didn’t immediately reply to faxed questions.

The latest round of trade talks come just days after the White House announced the blacklisting of Chinese technology firms over their alleged role in oppression in the far west region of Xinjiang, as well as visa bans on officials linked to the mass detention of Muslims. At the same time a fight over free speech between China and the National Basketball Association, triggered by a tweet backing Hong Kong’s protesters, showed the widening gap between the countries.

“I think there might be big breakthrough in the coming trade talks as both sides have expressed good gestures and positive signals,” said Huo Jianguo, a former Chinese commerce ministry official who is now vice chairman of the China Society For World Trade Organization Studies. “The recent blacklist and sanctions from the U.S. is just another usual tactic to showcase that it has multiple tools in the trade negotiations in line with Trump’s maximum pressure policy. It is hardly surprising to us and we shouldn’t take it too seriously.”

Bloomberg News reported last month that the Trump administration has discussed offering a limited deal that would delay or even roll back some U.S. tariffs for the first time in exchange for Chinese commitments on intellectual property and agricultural purchases. Questions about the strength of the U.S. economy have lingered before Trump faces an election next year.

President Xi Jinping’s government is under pressure to stem the broadening conflict as the trade war adds to the downward forces on China’s slowing economy. At the same time, China has resisted changes to its own industrial and economic policies that could potentially weaken the Communist Party’s grip on the economy.

The trade talks have failed to make serious headway since negotiations collapsed in early May. Since then, China has ramped up its nationalist rhetoric as the U.S. has targeted national champions like Huawei Technologies Co.

The reaction of the Chinese state this week after an NBA team manager tweeted support of protesters in Hong Kong is a case in point, with broadcasters refusing to broadcast games watched by millions. China also vowed to retaliate after the U.S. took action against companies and officials it said were involved in oppressing Muslims in Xinjiang.

“The rising nationalism sentiment at home is creating hurdles for President Xi to make concessions in the upcoming trade talks with the U.S. in light of the NBA firestorm and Xinjiang sanctions,” said Suisheng Zhao, executive director of the Center for China-U.S. Cooperation at the University of Denver’s Graduate School of International Studies. “Even if China is willing to make some compromise, that space is limited.”

China Open to Partial U.S. Trade Deal Despite Tech Blacklist
 

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Comments (28)
Jonathan Snell
Jonathan Snell Oct 09, 2019 11:31AM ET
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it typically fashion trump will make a announcement of not making a deal on friday at 4 after the market has closed. watch he will be silent until then.
Bill Chan
Bill Chan Oct 09, 2019 11:09AM ET
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When China roar =D
Daniel Stiglitzplatz
Daniel Stiglitzplatz Oct 09, 2019 10:45AM ET
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The other thing of interest is that China will refine whatever AG products it buys (soy, pork) and flip it for a profit to some of the smaller nations it has established an economic interest in like Sri Lanka and some countries in Africa.
Thom Miller
Thom Miller Oct 09, 2019 10:37AM ET
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True...and the US policy is never to negotiate with Communists....SAD!
Daniel Stiglitzplatz
Daniel Stiglitzplatz Oct 09, 2019 10:25AM ET
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China buying US agriculture with the coupon it receives from it's US treasuries is like getting to negotiate for free. China is paying the US with it's own money. It is the same for all things China pays US dollars for (Nike's Apple products, NBA endorsements, etc). All paid for by the US taxpayer via Treasury interest rate or via Fed (Fed gives money to banks, banks buy equities/corporate bonds, companies that issue the equity/bonds spend  a portion of this capital in China to produce goods.) China's laughing.
Pham Ngoc Tien
Pham Ngoc Tien Oct 09, 2019 10:02AM ET
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I hate Xi, all what he say is  lie. Look at what China is doing in South Asia ocean
Suman Jutur
Suman Jutur Oct 09, 2019 9:19AM ET
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China knows that Trump is sitting on a very weak ground. all these offers are just to make Trump either accept a partial deal or just cause delay until elections.
PMSF Small
PMSF Small Oct 09, 2019 9:19AM ET
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Trump and USA must keep going
Gary Gee
TheGman Oct 09, 2019 9:19AM ET
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trump would likely come out saying we couldn't make a deal but we'll keep talking and still apply tarrifs rather than fold. he'd have to walk back the commerce department too which wouldn't make sense. so i think china doesn't actually understand how trump works. the out china thinks they're leaving by buying agriculture is like dangling bait over a cliff....and I don't think trump will jump at that if china looks like it's playing games.
taylor jason
taylor jason Oct 09, 2019 8:41AM ET
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hmm china has a shortage of agricultural products and they want to make a deal to buy agriculture products?
Erski Gumby
SB20 Oct 09, 2019 8:41AM ET
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That’s how it usually works.
Charlie Jr U
Charlie Jr U Oct 09, 2019 8:29AM ET
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partial deal lol, doesnt work like that fake news
emerick giberne
investmania Oct 09, 2019 8:29AM ET
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That is right . The market is going to buy that fake and bad rumor to go higher. Wether that partial deal is real done then the news will be sell ! sell the news buy the rumors.
ahchc bkgcotc
ahchc bkgcotc Oct 09, 2019 8:28AM ET
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fake news, clear short here.
 
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