China’s economic data, stronger than expected, gave stock markets a bounce despite ongoing concern about whether Washington and Beijing will be able to conclude a trade deal in the weeks to come.
According to U.S. reports, the bill signed by Donald Trump last week endorsing the protest movement in Hong Kong has “stalled” the discussions close to the months-long talks cited on Monday by the Axios website.
The two new acts also upset the Chinese government, ensuring the US will conduct an annual review of the special trade status of Hong Kong and require U.S. penalties on authorities responsible for human rights violations in the region.
Beijing’s public hostility has cooled talks to end the 16-month dispute between the two economic superpowers on “phase one” of an agreement. But unnamed sources also told Axios that Chinese President Xi Jinping needed a timeout to allow the anger against the law to subside.
The next critical due date in the talks is December 15, when the US is due to impose an additional 15% tariff on Chinese products worth about $156 billion. Axios cited two other sources as saying that the extent of any tariff rollback remained a “substantial” barrier to progress, as well as how to ensure that China buys more US agricultural products.
Reports from China on Monday suggested that the priority for Beijing was to remove all existing tariffs on Chinese goods worth hundreds of millions of dollars–not just future additional levies. “As part of the deal, the US must eliminate existing tariffs, not planned tariffs,” the Global Times reported, citing “sources with talks knowledge.”
It was widely expected by investors that both sides would reach an agreement before that, with the US scrapping the levies and averting some flare-up.
Trump’s move could be seen as a major change of policy unless he extracts more wide-ranging intellectual property concessions and US firms ‘ access to Chinese markets.
Stock markets, however, stayed more broadly confident about the prospects for the Tokyo deal with the Nikkei up 1.1% and the Sydney ASX200 rose to another record high by 0.6%.
The optimism was improved by Monday’s positive manufacturing surveys from China indicating the industry’s growth over the past month.