Apparently U.S. President Donald Trump and Chinese President Xi Jinping will talk at next week’s meeting of the Group of 20 in Osaka Japan. President Trump tweeted his morning: “Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.”
Government-run China Central Television reported that President Xi has said he’s willing to meet with Trump and exchange views.
U.S. stocks rallied on the news with the Standard & Poor’s 500 up 1.03% as of 2 p.m. New York time and the Dow Jones Industrial Average, with its greater exposure to big U.S. exporters, ahead 1.33%. The NASDAQ Composite, with its strong representation of tech stocks exposed to restriction on sales of U.S. technology goods to China, climbed 1.51%. The Russell 2000 small cap index was ahead 1.22%.
Oil move higher too on the news with U.S. benchmark West Texas Intermediate up 3.27% to $53.63 a barrel and international benchmark Brent gaining 1.61% to $61.92 a barrel.
Markets seem to be keeping their enthusiasm under control. Talks with Beijing broke off last month after the U.S. accused China’s leaders of reneging on provisions of a tentative trade agreement and Beijing said the U.S. raised its demands. After that Trump raised tariffs on about $200 billion of Chinese imports to 25%, and threatened that he would expand the tariffs to cover another $320 billion in goods.
The odds are that the two presidents will agree to reopen talks between the countries with an actual agreement even in outline unlikely to result from their meeting.
Yesterday in Congressional testimony U.S. Trade Representative Robert Lighthizer said that the Trump administration will stay tough. “Our economic relationship with China has been unbalanced and grossly unfair to American farmers, ranchers and businesses for decades.” On top of existing tariffs, the administration is prepared to do more “if certain issues cannot be resolved satisfactorily,” he added.
Over the weekend Commerce Secretary Wilbur Ross said “I think the most that will come out of the G-20 might be an agreement to actively resume talks.” ay.’ It’s a lot of nonsense. You know what happens, really? Companies move back.”
Trump’s announcement that he will meet with Xi came shortly after a tweet in which he again accused China and other countries of manipulating their currencies, “making it unfairly easier for them to compete with the USA.”