Stocks rise amid trade optimism as Trump and Xi plan to meet

Stocks rise amid trade optimism as Trump and Xi plan to meet

02/11/18

Joshua Lay, Business and Policy Researcher

US President Donald Trump and Chinese President Xi Jinping announced plans to meet over dinner on 1 December, after the G20 summit in Buenos Aires, Argentina, the South China Morning Post reports.

The prospects of a trade war truce buoyed global stock markets, with Hong Kong’s Hang Seng Index gaining 4.2 per cent and the Shanghai composite stock index rising 2.7 per cent.

Trump has also reportedly pushed his cabinet to draft a potential trade deal with China, Bloomberg reports, following a phone call between the two leaders. He tweeted that the conversation was “long and very good,” and that trade negotiations were “moving along nicely.” The Chinese Foreign Ministry declined to comment other than reaffirming the need for strong bilateral relations, according to the Financial Times. The value of the yuan climbed on the news of a potential trade thaw.

The development contrasts with weeks of media reports that painted a gloomy picture of trade relations, and the prospects of a US-China trade deal, although improving, still remain distant. Reuters reported after the announcement that the US Justice Department has charged Chinese state-owned technology firm Fujian Jinhua Integrated Circuit Co Ltd with conspiring to steal trade secrets from US semiconductor company Micron Technology Inc – highlighting how IP usage remains at the heart of US rancour with Beijing.

The Trump administration has taken a hard line on what it calls Chinese intellectual property theft. Beijing has also taken steps to prepare for what is likely to be a long, drawn-out conflict. Channel NewsAsia reports the Chinese government plans to implement targeted steps to promote employment amid a slowing economy, including loan guarantees to startups, and unemployment insurance premium refunds of up to 50 per cent to firms facing economic difficulty.

The impact of the US-China trade war on the global economy will be a major topic of discussion at Asia House’s Signature Conference, Asia Trade in the New Global Order, to be held in Singapore on 22 November at the Mandarin Oriental.