China, US to cut phase one deal soon – Global Times

Global Times carries a story by a former Chinese Vice Minister of Commerce and Executive Deputy Director of the China Center for International Economic Exchanges, Wei Jianguo, as he says that he is confident and optimistic that China and the US can reach a phase one trade deal.

Key Quotes:

“If the bilateral trade talks make good headway and make progress quickly, the two sides can expect to reach a trade deal before the coming Chinese New Year at the end of January 2020. 

The content of the trade deal will focus on a few major issues including intellectual property protection, financial opening, and agricultural products purchasing. But the most essential problem is to lift the tariffs.

Other divergences can be left to the second phase. The phase one agreement is unlikely to include too much substance, instead, it should solve the most pressing issues and march forward step by step.

Rolling back tariffs levied by the US is a must. The China-US trade war instigated by the US with tariffs, so the tariffs have to be cut first. China does not want a trade war, but it is not afraid of one.

If the US continues the trade war, China will fight back. No matter if the tariffs are lifted all at once or at separate stages, the US must roll back all tariffs if it is going to show sincerity.” 

The latest retaliation by China over the US’ Hong Kong Democracy Act seems to have no impact on the trade deal expectations, as markets continue to remain hopeful about a deal being clinched sooner.

Meanwhile, the risk sentiment remains buoyed by the surprise upturn seen in the Chinese manufacturing sector, with Treasury yields 3% higher, Aussie flirting with daily tops near 0.6780 region. However, USD/JPY drifts slightly lower near 109.60 region, as S&P 500 futures pare gains.