And to think how blissfully stocks surged today on optimism that China was willing to pursue a partial deal…
Moments after US equity futures reopened for trading, they plunged after the SCMP reported that deputy-level trade talks between the US and China aimed at laying the groundwork for high-level negotiations later this week “failed to yield any progress on critical issues, according to two sources with knowledge of the meetings.”
According to the report, the deputy-level negotiators, led on the Chinese side by vice-minister for finance Liao Min, spent the time focusing on only two areas: agricultural purchases and intellectual property protection. This apparently was not enough.
As other newswire reported earlier, during the discussions on Monday and Tuesday in Washington, the Chinese refused to talk about forced technology transfers, one source said, which is a core US grievance regarding China’s economic policies.
Speaking on condition of anonymity, the person said that talks had also skirted the issue of state subsidies, which the Trump administration says give Chinese companies an unfair advantage over international competitors.
“They have made no progress,” said another source familiar with the talks, adding that the Chinese side had not made headway in persuading US negotiators to consider a freeze on tariff increases, a main priority for Beijing.
And confirming that the week’s entire negotiation was a fiasco from the start, the SCMP reports that the Chinese delegation is planning to leave Washington on Thursday – one day early – and after just one day of principal-level talks, the SCMP source noted. Beijing’s negotiating team, headed by Vice-Premier Liu He, had previously planned to leave Washington late on Friday, allowing for up to two full days of talks.
Liu arrived in the US capital on Tuesday afternoon amid one of the tensest weeks for bilateral relations since the trade war began in July 2018.
It appears that this week’s NBA fiasco may have been the straw that broke the camel’s back:
Fallout from an NBA team general manager’s message of support for Hong Kong protesters has roiled public opinion on both sides. And earlier this week Washington announced sanctions against Chinese government entities, officials and companies it considers implicated in Beijing’s policies targeting largely Muslim ethnic minority groups in the Xinjiang Uygur autonomous region.
The Chinese government shot back, calling for an immediate reversal in the administration’s actions.
To be sure, Wednesday’s announcement that the US would block visa of various Chinese officials did not help.
In any case, with any hopes of even a modest, or mini, trade deal now seemingly collapsed, so have futures, which are puking after hours…
… as is the Yuan.
If confirmed, expect much more pain for a market which some have said has priced in the US-China trade deal no less than three times already.