Yesterday, we received more information about the current state of the trade negotiations between China and the United States. According to the East Asian country, it wants to see all of the US tariffs imposed on its goods removed as part of the agreement. However, this is slowing down the talks, as the United States is reluctant to give up its only leverage against China.
This news differs slightly from an earlier estimation that China’s main goal with the phase-one agreement would be to avoid the tariffs scheduled to begin on December 15 and buy itself more time to negotiate rolling back the previously imposed duties.
The talks between the world’s two largest economies have been additionally strained because of a new bill in the United States that expresses support for Hong Kong’s semi-autonomy from China. Donald Trump signed the bill into effect, angering Xi Jinping and putting the trade negotiations in question.
Despite all of this, China has still not left the negotiations formally, so there is hope for a deal. The issue is causing quite a bit of volatility on the markets, so every little bit of news on the topic has an effect on the USD and safety assets like the Japanese yen and gold.
In other news from China, a PMI survey published earlier today indicated a surprising recovery in the economy, boosting the financial markets. However, the factors behind it are not entirely clear and economists are not rushing to any conclusions about China’s economic recovery just yet.
