Trade: calm between China and the United States

Donald Trump at the G7 discussion table in Biarritz (Photo: Getty Images)

A calm as sudden as the storm had been brutal: after being burdened reciprocally with customs duties and reproaches Friday, China and the United States resumed Monday the path of negotiation.

"We have very significant negotiations, which have never been so significant," said US President Donald Trump from Biarritz at the G7 summit.

"The Chinese want an agreement (…) I think we will find one (…) I do not think they (the Chinese) have the choice," he said, letting hope for a break in a arm wrestling that could derail for good a global economy in slowdown.

For his part, China's chief negotiator, Liu He, assured that Beijing was ready to "calmly resolve the problem through consultations and cooperation."

"We are staunchly opposed to the escalation of the trade war," Liu said, quoted by the financial press.

The financial markets applauded this renewed optimism on Monday around the world: on Wall Street, the Dow Jones index took 1.05% and the Nasdaq 1.32% at the close, and the European stock markets have advanced to closing a little earlier.

In this climate of appeasement, the plunge of the yuan at the close against the dollar at 7,1512 yuan to the dollar, a development favorable to Chinese exporters, has almost gone unnoticed. This is the lowest level of the yuan since 2008.

The American billionaire, obsessed by the reduction of the gigantic trade deficit that the United States accuses, usually never loses an opportunity to complain about the low level of the Chinese currency, whose price is tightly controlled by Beijing.

Economic Patriotism

It remains to be seen what turn will take in practice the discussions, which are suffused with many questions and take place against the backdrop of an election campaign in the United States, with a Donald Trump thoroughly playing the card of economic patriotism.

The US president assured that the demand for dialogue came from Beijing. "China called last night (…) She said, let's get back to the bargaining table, so we'll come back," he said, without specifying who "called" who.

Chinese Foreign Ministry spokesman Geng Shuang said he was unaware of the conversation Trump was talking about during a press briefing.

No date has been set for this contact recovery. During their last negotiation in Shanghai in late July, the two parties had agreed to meet again in September in the United States, without further details.

The lull is as sudden as the storm had been brutal Friday, especially in the markets.

Before the weekend, China had announced an increase in its tariffs on US products representing $ 75 billion in annual imports.

It was a response to US trade sanctions already announced. From the beginning, in March 2018, of the commercial conflict between the two first economic powers of the world, they are thus shot in one stroke.

Predictably, this Chinese initiative had nonetheless triggered a strong US reaction, Washington announcing higher increases than expected its own customs surcharges on Chinese products from September 1, or December 15 for a list of products of consumption, especially electronic.

President Trump has also paralyzed the American business community by telling them to stop doing business with China, a threat he did not specify the legal basis, which was then mitigated by senior officials of his administration.

The markets, exhausted after more than a year of commercial conflict, between unexpected reconciliations and unpredictable bouts of fever, have clinked. Wall Street lost more than 2% on Friday.

As a reaction to the threat of the former real estate mogul, representative of an American right that is generally hostile to any public constraint on business, Liu said Monday that China wants to "welcome investors from around the world." whole, including the United States ".

The US Chamber of Commerce in Shanghai pointed out that US companies have no interest in withdrawing from the huge Chinese market, which would only penalize the US economy.