Published: Fri, September 13, 2019

Chinese Firms Look Into Buying US Farm Goods as Trade Talks Loom

Chinese Firms Look Into Buying US Farm Goods as Trade Talks Loom

The United States and China traded conciliatory gestures, raising hopes they can de-escalate a standoff over trade that has shaken financial markets and cast gloom over the global economy.

Chinese importers are asking US suppliers for prices of soybeans, pork and other farm goods, the Commerce Ministry said Thursday, in a possible goodwill gesture ahead of talks aimed at ending a tariff war.

The gestures on Wednesday and Thursday seem meant to slice tension earlier than the talks.

U.S. president Donald Trump has agreed to a two-week delay in a planned increase in tariffs on some Chinese imports. Trump said on social media that the delay was "a gesture of good will" that took into account the October 1 celebration of Communist control of China.

The two sides have agreed to resume negotiations in Washington early next month.

Mnuchin said "we clearly didn't make the progress we wanted to" at the last meeting in Shanghai in late July, but he added: "I'm cautiously optimistic".

During his appearance at the CNBC interview, the US Treasury Secretary Steve Mnuchin gave several statements concerning the likely US-China trade relations, Iran and also concerning the readiness to issue longer maturity bonds.

"The exemption could be seen as a gesture of sincerity towards the USA ahead of negotiations in October but is probably more a means of supporting the economy", ING's Greater China economist Iris Pang wrote in a note. The world's biggest consumer of pork accounted for about half of global demand previous year, while it produced about 54 million tons, Citigroup said.

Beijing has said it would work on exempting some USA products from tariffs if they are not easily substituted from elsewhere.

China will exempt American soybeans and pork from its latest round of tariffs, in what appears to be another move to ease tensions between the countries as they prepare for a new round of trade talks.

It's not clear if special licenses for Huawei Technologies Co. will be part of the deal, two of the people said, citing congressional worries over national security issues related to the Chinese company.

William Reinsch, a former senior US Commerce Department official, said the goodwill gestures should help, but big hurdles remained.

In a sign of the economic pressure being felt by China, the central People's Bank of China said on Friday it would cut the amount of cash lenders must keep in reserve, allowing for an estimated $126 billion in additional loans to businesses. The Trump administration said the talks were productive and announced the delay of some tariffs on Chinese electronics and toys for the holiday shopping season.

Earlier on Wednesday, a survey by a prominent American business association showed the trade dispute was souring the profit and investment outlook for USA companies operating in the world's second-biggest economy.

If the USA tariffs stay in place at current and intended levels, some 450,000 fewer jobs will be created by year-end - that figure would rise to 900,000 if the trade dispute carries on through next year, Zandi told CBS MoneyWatch in an email.

President Trump marked the development in a tweet.

The Chinese exemptions apply to raw materials needed by farmers and factories.

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