China is “Cautiously Optimistic”on Trump Trade Talks Despite Tariffs’ Escalation

China is “Cautiously Optimistic”on Trump Trade Talks Despite Tariffs’ Escalation

China and the US have agreed to hold more trade talks in Beijing, Vice Premier Liu He said as President Trump ordered his trade Chief to begin the process of imposing tariffs on all remaining imports from China.

Mr. Liu voiced some optimism on reaching a deal, but said there were “issues of principle” on which China would not back down.

“Negotiations have not broken down,” Mr. Liu, China’s chief negotiator in the talks, said in Washington Friday, according to Chinese state television Saturday. “Quite the opposite, I think small setbacks are normal and inevitable during the negotiations of both countries. Looking forward, we are still ‘cautiously optimistic’,” he said.

But Mr. Liu’s optimism was tempered by Treasury Secretary Steven Mnuchin, who told reporters Friday that there were no further talks with China planned “as of now.”

Saturday, President Trump Tweeted, “Such an easy way to avoid Tariffs? Make or produce your goods and products in the good old USA. It is very simple!”

The United States escalated its tariffs on Key China goods Friday by hiking levies on $200-B worth of them and more in the midst of last-ditch talks to rescue a trade deal. President Trump delayed the tariffs for the past 2 months, as negotiations between Washington and Beijing were progressing.

Friday, President Trump issued orders for the tariff increase, saying China “broke the deal” by reneging on earlier commitments made during 10 months of negotiations.

President Trump’s move would subject another $325-B worth of Chinese imports to punitive tariffs, US Trade Representative Robert Lighthizer said in a statement Friday. Mr. Lighthizer said a final decision has not been made on the new duties, which would come on Top of an early Friday tariff rate increase, to 25% from 10%, on $200-B worth of Chinese imports.

The trade dispute has weighed heavily on the Chinese economy.

When asked about domestic concerns over how the latest tariffs could further pressure the economy, Mr. Liu said he was optimistic about China’s economy in the longer term, adding that it had entered an up-cycle after bottoming last year.

He said he believed the Chinese economy would maintain a stable and healthy trend despite some downward pressure, and that China had ample room for fiscal and monetary policy maneuvers.

Monday, just after President Trump said he intended to raise tariffs, the PBoC cut the amount of reserves that some small and medium-sized banks need to hold, freeing up more funds for lending to cash-strapped firms aka central bank stimulus.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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