China and U.S. to Meet Amid Low Expectations


US China Trade warChinese representatives are expected to meet this week with their American counterparts in Shangai, despite many considerations that no significant deal is going to be reached. This would be the first round of negotiations after President Trump met with the Chinese leader Xi Jinping during the G20 summit in Japan.

Last Friday, President Trump expressed his skepticism about China's willingness to reach a deal before his current term ends.

“I think that China will probably say, ‘let’s wait,’” he told reporters, “When I win like almost immediately, they’re all going to sign deals,” he added.

The U.S. representative Steve Mnuchin said that the talks would be followed by a meeting in Washington as “there’s a lot of issues” on both sides. He also added that China chose Shangai because “there’s a significance to them of the Shanghai Communique and the symbolism, obviously, of that important agreement." However, this was denied by the Chinese Representative Gao Feng, adding that they chose Shangai because of its “good conditions for holding the trade talks”.

Many expect at least "goodwill" gestures from both sides, as the expectations of reaching a deal are very low. China could resume buying US farm commodities and the U.S. could let its companies sell their products to China's Huawei Technologies.

The trade war, which has lasted about two years, has perturbed the global economic outlook and may be affecting the Chinese economy. The Chinese Yuan retreated this morning, hitting a three-week low and losing 0.21 percent to 6.8948, as the markets knew that Chinese Industrial firms contracted the last month, following a softening trend that began in the second half of 2018. Industrial profits fell 3.1% to 601.9 billion yuan in June, after a soft gain in May, falling 2.4% during the first semester. The Chinese economic growth is also suffering, hitting a 30-year low in the second quarter.

Despite Trump's confidence, the U.S. is also suffering the consequences of the Trade War. The US trade gap with China keeps widening, the revenue from tariffs are not enough to aid the affected sectors, and the U.S. credibility as a trade partner has been severely undermined.

The new round of trade talks is set to happen today, whether a deal will or not be reached is still not clear.

Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.