Trade War Fears Ease as Signs Emerge that China, US are Negotiating

Posted March 28, 2018

It's yet to be seen if President Donald Trump 's tough trade talk will work but there have been some promising signs, said Larry Lindsey, who served as a top economic advisor to President George W. Bush.

CB Insights tracked patents on the Espacenet database, and found that 530 patents for camera and video surveillance technology were filed in China a year ago, more than five times as many applications as were filed for the same field in the U.S. China has committed significant investments to growing the capabilities of its domestic artificial intelligence industry, including in a $2.1 billion research campus, and recently announced an open-source platform for AI development. The S&P 500 index climbed 70 points, or 2.7 percent, and the Nasdaq gained 228 points, or 3.3 percent. U.S. Treasury Secretary Steve Mnuchin is reportedly considering a visit to Beijing to advance the talks.

Fears in financial markets of a potential trade war between the USA and China have eased somewhat after China's government said it is open to negotiating with Washington.

Premier Li Keqiang said earlier on Monday that China and the United States should maintain negotiations and repeated pledges to ease access for American businesses to China's markets.

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Dublin said it will expel one Russian diplomat, while Chisinau announced it had asked three diplomats to leave the country. It is also closing the Russian consulate in Seattle.

Referring to the incident, Hua said that China strongly opposes "any use of chemical weapons but we still believe that this issue will be properly handled by United Kingdom and Russian Federation on the basis of getting all the facts straight".

Reports that Beijing and Washington are negotiating greater access to Chinese markets sent US stock prices soaring.

Li vowed at a news conference that China would no longer force foreign firms to transfer technology and appropriate intellectual property rights.

The US has continued to push China towards reducing its current $375 billion trade deficit, asking yesterday that China buy more US semiconductors and auto parts.

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Investors fear that the US measures could escalate into a trade war, with potentially dire consequences for the global economy. On Thursday, investors fled stocks and bought bonds, which sent bond prices higher and yields lower.

Chinese officials are also working to finalize rules by May - instead of the end of June - to allow foreign financial groups to take majority stakes in Chinese securities firms, the Financial Times said.

China can increase the regulatory burden on U.S companies through new inspections and rules; ban travel; stop providing export licenses of key intermediate goods; raise the tax burden on US multinationals in China; or block USA companies from the government procurement market, he said.

China's third-biggest US import category - motor vehicles - totalled $10.6 billion in 2017, about 8 per cent of the country's overall US imports by value, according to data from the US Census Bureau.

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