White House adviser says U.S.-China trade deal on track for January 15

White House adviser says U.S.-China trade deal on track for January 15
WASHINGTON (Reuters) – The Phase 1 U.S.-China trade deal is on track to be signed Jan. 15, White House economic adviser Larry Kudlow told Fox Business Network on Friday.

“It’s all on schedule,” he said.

The translation of the agreement “has worked out beautifully. It is virtually complete,” Kudlow added in an interview, adding that he had spoken to U.S. Trade Representative Robert Lighthizer on Thursday.

(Reporting by Susan Heavey; Editing by Chizu Nomiyama)

China says in touch with U.S. on signing of Phase 1 trade deal

China says in touch with U.S. on signing of Phase 1 trade deal
BEIJING (Reuters) – China and the United States are in touch over the signing of their Phase 1 trade deal, China’s commerce ministry said, which will see lower U.S. tariffs on Chinese goods and higher Chinese purchases of U.S. farm, energy and manufactured goods.

The Phase 1 deal was announced last week after more than two years of on-and-off trade talks, although neither side has released many specific details of the agreement.

Both the Chinese and U.S. trade teams are in close communication, Gao Feng, a spokesman at the Chinese commerce ministry, told reporters at a regular briefing on Thursday, adding there is no specific information on the deal to disclose currently.

“After the official signing of the deal, the content of the agreement will be made public,” Gao said.

U.S. officials say China agreed to increase purchases of U.S. products and services by at least $200 billion over the next two years.

According to Washington, that would include additional purchases of U.S. farm products of $32 billion over two years. That would average an annual total of about $40 billion, compared to a baseline of $24 billion in 2017 before the trade war started.

Chinese officials have so far not publicly confirmed much of Washington’s version – especially on goods purchase commitments. But China said on Friday when the deal was announced that it will import more U.S. wheat, rice, corn, energy, pharmaceuticals and financial services.

Earlier on Thursday, China unveiled a new list of tariff exemptions for U.S. imports, mostly chemical products, days after the world’s two largest economies announced the Phase 1 deal. China said the second part of the waiver list will be released at an appropriate time.

Washington said the deal also includes stronger Chinese legal protections for patents, trademarks, copyrights, including improved criminal and civil procedures to combat online infringement, pirated and counterfeit goods.

The two countries have reached a consensus over the protection of trade secrets, guarding intellectual property rights for pharmaceutical products, and cracking down on counterfeits and pirated goods on e-commerce platforms, Chinese Vice Minister of Commerce Wang Shouwen said on Friday.

China will step up protection of intellectual property but at its own pace, Wang said.

(Reporting by Stella Qiu and Martin Pollard; Writing by Ryan Woo; Editing by Muralikumar Anantharaman, Lincoln Feast and Giles Elgood)

Take Five: What’s the deal?

LONDON (Reuters) –

1/AFTER PHASE ONE COMES PHASE TWO

U.S. President Donald Trump and Chinese officials have agreed to a “phase one” trade deal that includes cutting U.S. tariffs on Chinese goods.

Washington has agreed to suspend tariffs on $160 billion in Chinese goods due to go into effect on Dec. 15, Trump said, and cut existing tariffs to 7.5%.

The agreement covers intellectual property, technology transfer, agriculture, financial services, currency, and foreign exchange, according to Washington’s Trade Representative.

Neither side offered specific details on the amount of U.S. agricultural goods Beijing had agreed to buy – a key sticking point of the lengthy deal negotiations. News of the trade deal saw U.S. stocks romp to fresh record levels. But few doubt that the rollercoaster is over yet.

While Trump announced that “phase two” trade talks would start immediately, Beijing made it clear that moving to the next stage of the trade negotiations would depend on implementing phase one first. While markets cheered the December rally, few expect the trade deal rollercoaster ride to be quite over yet.

 

2/MORE NICE SURPRISES, PLEASE!

First clues as to whether euro zone powerhouse Germany can avoid a fourth quarter recession emerge on Monday when advance PMI readings for November are released globally.

The economic activity surveys, a key barometer of economic health, come after Citi’s economic surprise index showed euro zone economic data beating consensus expectations at the fastest pace since February 2018. The latest surprise was a 1.2% rise in German exports in October, defying forecasts of a contraction.

Hopes are high that exports and private consumption, which helped Germany skirt recession, will hold up. Last month’s PMI data showed manufacturing remained in deep contraction across the bloc.

A Reuters poll showed expectations of a modestly higher 46.0 manufacturing reading in the euro zone but that’s still far below the 50-mark which separates growth from contraction. Services, which have held up better so far, are expected to grow modestly from November, at 52.0.

Graphic: Citi surprise index most positive since Feb 2018, https://fingfx.thomsonreuters.com/gfx/mkt/12/9901/9813/Citi%20index.png

3/BEWARE THE BOJ

Japan’s central bank meets on Thursday with the global economic outlook “relatively bright,” according to Governor Haruhiko Kuroda.

Growth green shoots, a possible U.S.-China trade deal and something nearing certainty on Brexit has got almost everyone expecting the BOJ will do very little: Interest rates are at -0.1% and the bank has eased off bond buying – even though the bank’s balance sheet is bursting with negative-yielding paper.

The government has flagged a gigantic $122 billion stimulus package to keep things moving after next year’s Olympics. Yet the business mood is dire with Friday’s “tankan” survey at its lowest reading since 2013. Big manufacturers – especially automakers – are gloomiest, as the trade war takes its toll.

The Bank of Japan has justified standing pat on the view that robust domestic demand will cushion the hit. It blames the weather and a sales tax for recent patchy data. But another week of dollar weakness will not have gone unnoticed in Tokyo, where a cheaper yen is much desired. A surprise on Tuesday export data forecast to show further contraction and Thursday’s inflation reading could jolt yen longs out of their slumber.

4/JOHNSON, AND MORE JOHNSON

A thumping election win for Prime Minister Boris Johnson has raised hopes that 3-1/2 years of Brexit-fuelled chaos will finally end.

Expectations that he may swing slightly nearer the centre of his Conservative Party, sidelining the fiercest eurosceptics, and ease the path towards a free-trade deal with the European Union have sent sterling and British shares surging.

Yet there are signs of caution, with sterling stalling around $1.35. Further gains will hinge on Johnson’s new cabinet, how the global growth and trade war backdrop pans out and what the Bank of England might do.

At the central bank’s Dec. 19 meeting, markets will watch for any shifts in its views on inflation, the UK economy and the interest rate outlook for 2020. While policymakers have skewed dovish of late amid a torrent of dismal data and sub-target inflation, the election result – and a hoped-for growth recovery – have seen money markets halve the probability of an end-2020 cut to 25%.

Without more clarity, investors might just be wary of chasing sterling much higher.

Graphic: UK economic indicators, https://fingfx.thomsonreuters.com/gfx/mkt/12/9958/9869/GB.png

5/SWEDEN RETURNS TO ZERO?

While most central banks are busy pondering whether to hold or cut interest rates, Sweden may swim against the tide and deliver a 25 basis-point rate hike on Dec. 19. That will end half a decade of negative interest rates in the country and make it the first in Europe to pull borrowing costs from sub-zero territory.

Policymakers flagged a rate hike in October and recent data showing inflation rising to 1.7% — just off the 2% target — cemented those expectations. The crown’s rallied to eight-month highs versus the euro, up almost 5% since October.

The proposed interest rate increase has its critics, who cite still-sluggish inflation and factory activity at its weakest since 2012.

Meanwhile, neighbouring Norway’s policy meeting, scheduled for the same day, may be less exciting as no change is expected. Investors remain baffled by the Norwegian crown’s weakness – despite policy makers delivering four rate hikes since Sept 2018, it’s at near record lows to the euro.

Graphic: Swedish crown , https://fingfx.thomsonreuters.com/gfx/mkt/12/9961/9872/crown.png

(Reporting by Alden Bentley in New York, Tom Westbrook in Singapore, Sujata Rao, Elizabeth Howcroft and Yoruk Bahceli in London, compiled by Karin Strohecker; edited by Philippa Fletcher)

The U.S. will phase out China tariffs, Beijing officials say

BEIJING/WASHINGTON (Reuters) – The United States has agreed to phase out tariffs on Chinese goods, Chinese officials said at a press conference in Beijing Friday evening.

The two countries have achieved major progress in their phase one trade negotiations, Beijing officials said, and agreed on the text of a phase one deal.

The deal will provide more protection for foreign companies in China, and Chinese companies in the United States, Chinese officials said.

U.S. sources said Thursday that Washington has set its terms for a trade deal with China, offering to suspend some tariffs on Chinese goods and cut others in exchange for Beijing’s buying more American farm goods, but Beijing had no comment during the day on Friday in Asia.

The silence had raised questions over whether the two sides can agree a truce in their trade war before a new round of tit-for-tat tariffs takes effect on Sunday.

A source briefed on the status of bilateral negotiations said Thursday the United States would suspend tariffs on $160 billion in Chinese goods expected to go into effect on Sunday and roll back existing tariffs.

(Reporting by Vincent Lee, writing by Heather Timmons; Editing by Nick Zieminski)

Trump says U.S. and China ‘very close’ to trade deal as fresh tit-for-tat tariffs loom

Trump says U.S. and China ‘very close’ to trade deal as fresh tit-for-tat tariffs loom
BEIJING/WASHINGTON (Reuters) – China and the United States are in close communication on trade, officials in Beijing and Washington said, days before tit-for-tat tariffs are due to go into effect.

U.S. President Donald Trump on Thursday said on the United States was “very close” to nailing down a trade deal with China. “Getting VERY close to a BIG DEAL with China,” Trump posted on Twitter. “They want it, and so do we.”

During a regular briefing on Wednesday in Beijing, Gao Feng, spokesman at the Chinese commerce ministry, told reporters “The two sides’ economic and trade teams are maintaining close communication.”

Stock markets jumped on Trump’s tweet, and the S&P 500 <.SPX> shot to a record high, gaining 0.85% on the day.

U.S. negotiators have offered to cut existing tariff rates on $360 billion in Chinese goods by as much as 50%, one person briefed on the negotiations said. They have also offered to suspend tariffs due to go into effect on Dec. 15, the Wall Street Journal reported on Thursday.

The White House had no comment on any offers.

Gao declined to comment on possible retaliatory steps if Washington imposes more tariffs on Chinese goods this weekend.

The United States is due to impose tariffs on almost $160 billion of Chinese imports such as video game consoles, computer monitors and toys on Dec. 15.

Trump is expected to meet top trade advisers on Thursday afternoon to discuss the move, sources told Reuters previously.

Trump’s son-in-law Jared Kushner has recently taken a larger role in U.S.-China trade negotiations, and is among the advisers pushing the 50% tariff rollback, one person briefed on the talks said.

Analysts at Capital Alpha Partners said Thursday they expect Trump to announce a delay in the Dec. 15 tariffs as soon as Thursday for more than 30 days.

A decision to proceed with the Dec. 15 levies could roil financial markets and scuttle U.S.-China talks until after the U.S. presidential election next November. The 17-month-long trade war between the world’s two largest economies has slowed global growth and dampened profits and investment for companies around the world.

The countries agreed in October to conclude a preliminary trade agreement, but Beijing is balking at U.S. demands that it promise to buy a specific amount of agricultural goods. Beijing is also demanding rollbacks of existing tariffs imposed by the United States.

Beijing has said it would retaliate if the United States escalates the trade dispute.

In August, China said it would impose 5% and 10% in additional tariffs on $75 billion of U.S. goods in two batches. Tariffs on the first batch kicked in on Sept. 1, hitting U.S. goods including soybeans, pork, beef, chemicals and crude oil.

The tariffs on the second batch of products are due to be activated on Dec. 15, affecting goods ranging from corn and wheat to small aircraft and rare earth magnets.

China also said that it will reinstitute on Dec. 15 an additional 25% tariff on U.S.-made vehicles and 5% tariffs on auto parts that had been suspended at the beginning of 2019.

(Reporting by Gabriel Crossley and Jeff Mason; Writing by Ryan Woo and Heather Timmons; Editing by Kim Coghill and Jonathan Oatis)

China says hopes it can reach trade agreement with U.S. as soon as possible

China says hopes it can reach trade agreement with U.S. as soon as possible
BEIJING (Reuters) – China said on Monday that it hoped to make a trade deal with the United States as soon as possible, amid intense discussions before fresh U.S. tariffs on Chinese imports are due to kick in at the end of the week.

Beijing hopes it can reach a trade agreement with the United States that satisfies both sides, Assistant Commerce Minister Ren Hongbin told reporters on Monday.

“On the question of China-U.S. trade talks and negotiations, we wish that both sides can, on the foundation of equality and mutual respect, push forward negotiations, and in consideration of each others’ core interests, reach an agreement that satisfies all sides as soon as possible,” Ren said.

China and the United States are negotiating a so-called “phase one” deal aimed at de-escalating their prolonged trade dispute, but it is unclear whether such an agreement can be reached in the near term.

Washington’s next round of tariffs against Chinese goods are scheduled to take effect on Dec. 15.

China has demanded that some of the existing U.S. tariffs imposed on about $375 billion worth of its exports be removed, in addition to cancellation of the Dec. 15 tariffs on some $156 billion of its remaining exports to the United States.

U.S. President Donald Trump has demanded that China commit to specific minimum purchases of U.S. agricultural products, among other concessions on intellectual property rights, currency and access to China’s financial services markets.

White House economic adviser Larry Kudlow said on Friday that the two sides had talked almost daily, but there were currently no plans for face-to-face talks or a signing ceremony between Trump and Chinese President Xi Jinping.

With less than a week to go before the deadline amid “intense” negotiations, Kudlow said Trump would make the final decision on the tariffs, which would hit Chinese-made cellphones, laptop computers, toys and clothing.

“We’ll have to see, but right now we’re moving along,” Trump said last week. “On December 15th, something could happen, but we are not discussing that yet. We are having very good discussions with China, however.”

(Reporting by Gabriel Crossley, writing by Se Young Lee and Ryan Woo; Editing by Himani Sarkar & Kim Coghill)

China maintains tariffs must be reduced for phase one trade deal with U.S.

China maintains tariffs must be reduced for phase one trade deal with U.S.
BEIJING (Reuters) – Tariffs must be cut if China and the United States are to reach an interim agreement on trade, the Chinese commerce ministry said on Thursday, sticking to its stance that some U.S. tariffs must be rolled back for a phase one deal.

“The Chinese side believes that if the two sides reach a phase one deal, tariffs should be lowered accordingly,” ministry spokesman Gao Feng told reporters, adding that both sides were maintaining close communication.

Completion of a phase one deal between the world’s two biggest economies had been initially expected in November, ahead of a new round of U.S. tariffs set to kick in on Dec. 15, covering about $156 billion of Chinese imports.

Trade delegations on both sides remained locked in discussions over “core issues of concern,” with rising bilateral tensions over non-trade issues such as the protests in Hong Kong and Beijing’s treatment of its Uighur Muslim minority clouding prospects for a near-term deal to end a trade war.

China warned on Wednesday that U.S. legislation calling for a tougher response to Beijing’s treatment of Uighurs in the western Chinese region of Xinjiang will affect bilateral cooperation.

But “there is no need to panic,” as talks did not stop, a Chinese source who advises Beijing on the trade talks told Reuters on Wednesday.

“Both leaders have talked about reaching a deal, and officials are now finishing the work,” said the source, who thought it unlikely China would retaliate against U.S. legislation by releasing its so-called “unreliable entities list” aimed at punishing firms deemed harmful to Chinese interests.

When asked if China would release the list this year, Gao said he had no further information to reveal at present.

Beijing may hold back from publishing the list until the trade situation with the United States is at its most tense, a Chinese government source told Reuters in October.

On Wednesday, Trump said trade talks with China were going “very well,” sounding more positive than his remarks the previous day that a deal might have to wait until after the 2020 U.S. presidential election.

On Nov. 7, Gao said China and the United States must simultaneously cancel some existing tariffs on each other’s goods for both sides to reach a phase one trade deal, but how much tariffs should be canceled could be negotiated.

On a telephone call last week, China’s lead trade negotiator Vice Premier Liu He discussed “core issues of concern” with U.S. Trade representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.

Washington imposed additional 15% tariffs on about $125 billion worth of Chinese goods on Sept. 1, on top of the additional 25% tariffs levied on an earlier $250 billion list of industrial and consumer goods.

U.S. President Donald Trump and Lighthizer recognize that rolling back tariffs for a pact that fails to tackle core intellectual property and technology transfer issues will not be seen as a good deal for the United States, a person briefed on the matter told Reuters late last month.

(Reporting by Gabriel Crossley and Yawen Chen; Writing by Ryan Woo; Editing by Clarence Fernandez and Jacqueline Wong)

U.S.-China trade deal close, White House says, after negotiators speak by phone

By Andrea Shalal, Doina Chiacu and Kevin Yao

WASHINGTON/BEIJING (Reuters) – The United States and China are close to agreement on the first phase of a trade deal, White House adviser Kellyanne Conway said on Tuesday, after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu on Tuesday morning, China’s Commerce Ministry said, as the world’s two largest economies try to hammer out a “phase one” deal in a 16-month trade war that is slowing global growth.

They discussed core issues related to the phase one deal, the ministry said.

Completion of a phase one deal had been expected in November, but trade experts and people close to the White House said last week it could slide into the new year, as Beijing presses for more extensive tariff rollbacks and Washington counters with its own demands.

Tuesday’s news lifted markets, with Wall Street’s three major indexes adding slightly to the previous days’ records. Reaching a trade agreement with China is one of U.S. President Donald Trump’s top priorities.

Conway told Fox News the United States and China were nearing agreement on the preliminary deal.

“We’re getting really close and that first phase is significant,” she said, adding that Trump wanted to “do this in phases, in interim pieces because it’s such a large, historic trade deal.”

Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, told reporters on Tuesday, an initial trade deal with China could be reached before the end of the year.

He said China had invited Lighthizer and Mnuchnin to visit Beijing for in-person talks and they were willing to go if they saw “a real chance of getting a final agreement.”

The U.S. trade representative and the Treasury did not respond to requests for comment. A source familiar with the trade talks said the U.S. officials could go to Beijing after the Thanksgiving holiday on Thursday.

In October, Trump said he expected to quickly dive into a second phase of talks once “phase one” had been completed, focusing on U.S. complaints that China effectively steals U.S. intellectual property by forcing U.S. firms to transfer their technology to Chinese rivals.

U.S. and Chinese officials, lawmakers and trade experts warn such follow-on negotiations may prove difficult given the November 2020 U.S. presidential election, the difficulties in getting the first-stage done, and the White House’s reluctance to work with other countries to pressure Beijing.

“We continue to negotiate,” Conway said. “But those forced tech transfers, the theft of intellectual property, the trade imbalance of a half a trillion a year with the world’s second largest economy, China – this makes no sense to people.

“But the president wants a deal. But President Trump always waits for the best deal,” she said.

Tuesday’s call took place amid heightened tensions on various fronts between Beijing and Washington, with China saying on Tuesday that it had summoned U.S. Ambassador Terry Branstad on Monday to protest the passage in the U.S. Congress of the Hong Kong Human Rights and Democracy Act.

China’s foreign ministry said the legislation amounted to interference in a Chinese internal matter.

Commerce Minister Zhong Shan, central bank governor Yi Gang and vice head of state planner Ning Jizhe also participated in the phone call.

(Reporting by Doina Chiacu and Andrea Shalal; Editing by Catherine Evans and Jonathan Oatis)

Trump, Powell met Monday at White House to discuss economy

By Howard Schneider

WASHINGTON (Reuters) – U.S. President Donald Trump and Federal Reserve Chair Jerome Powell met at the White House on Monday morning, their second meeting since Powell started the job in February 2017 and soon after became the target of frequent criticism from the president who had appointed him.

The Fed announced the meeting in a morning press release, noting they met “to discuss the economy, growth, employment and inflation.”

“Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.,” Trump tweeted soon after, calling the session “good & cordial.”

The Fed’s wording closely followed its description of Powell’s first meeting with Trump, this past February, over a dinner that also included Vice Chair Richard Clarida.

Trump’s tweet marked a change in tone. The president in recent months derided Powell and colleagues as “pathetic” and “boneheads” for not cutting interest rates, and in August labeled Powell personally as an enemy of the United States on a par with China leader Xi Jinping.

The Fed in its statement was careful to note what wasn’t discussed: Powell’s expectations for future monetary policy. Trump has for more than a year charged the Fed with undermining his economic policies by, in his view, keeping interest rates too high, and depriving the United States of what Trump feels are the benefits of the negative rates of interest set by the European and Japanese central banks.

The U.S. central bank has cut rates three times this year – in part to offset what it views as damage done by the Trump administration’s trade war with China. But after their last meeting, in October, policymakers signaled they would lower rates no further unless the economy takes a serious turn for the worse.

Less than 24 hours after that decision, Trump laid into Powell again, saying people are “VERY disappointed” in him and the Fed. And only last week, Trump lobbed another dig in a tweet that noted inflation was low: “(do you hear that Powell?)”

CONSISTENT

Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy,” the Fed said in its statement.

Powell appeared before congressional committees twice last week, and the Fed said his comments to Trump were “consistent” with his statements to lawmakers.

“Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”

The meeting included Treasury Secretary Steven Mnuchin.

Powell met with Trump in February, and in each of the three following months the two had a brief phone conversation. That compares with the three times his predecessor, Janet Yellen, met President Barack Obama at the White House; Yellen also met with Trump during her final year as Fed chair.

Powell’s has made much more extensive and deliberate efforts to court members of the House and Senate, even as Trump expressed regret for appointing Powell and reportedly explored whether he could remove him.

Fed chairs are appointed to four-year terms by the president, but once confirmed by the Senate are intended to be insulated from White House political pressure over how to manage monetary policy. They can only be removed “for cause,” not over a disagreement over policy.

Meetings between Fed chairs and presidents are not unprecedented but they are infrequent, as opposed to the nearly weekly sessions that central bankers have with the head of the Treasury.

(Reporting by Howard Schneider and Ann Saphir; Editing by Andrea Ricci)

U.S. and China ‘getting close’ to trade deal: White House economic adviser

By Andrea Shalal

WASHINGTON (Reuters) – The United States and China are getting close to a trade agreement, White House economic adviser Larry Kudlow said on Thursday, citing what he called very constructive talks with Beijing about ending a 16-month trade war.

Kudlow said negotiators for the world’s two largest economies were in close touch via telephone but he gave no further details on the timing of a possible deal.

“We’re getting close,” he told an event at the Council on Foreign Relations in Washington. “The mood music is pretty good, and that has not always been so in these things.”

The United States and China have been locked in successive waves of tit-for-tat tariffs that have roiled financial markets and threaten to drag growth in the global economy to its lowest rate since the 2007-2008 financial crisis.

Markets are anxiously awaiting an agreement to end uncertainty that has slowed business investment around the globe. An agreement had appeared likely in May, but those prospects were dashed after U.S. negotiators said China backed away from the text of a draft agreement.

Kudlow’s comments could ease market concerns that flared again this week amid reports that the trade talks had hit a snag over how and when to reduce tariffs, and what level of agricultural purchases could be expected from China.

Markets also soured after U.S. President Donald Trump on Tuesday said he could impose substantial new tariffs on China if no deal was reached.

Kudlow told the audience he had just come from a meeting of the top Trump administration trade officials and was more optimistic.

“It’s not done yet, but there has been very good progress and the talks have been very constructive,” he told the event.

He also opened the door to the possibility that Trump and Chinese President Xi Jinping would not need to meet in person to clinch a deal.

Trump had hoped to sign the “phase one” agreement with China on the sidelines of the Asian-Pacific Economic Cooperation summit in Chile this month, but that possibility disappeared after Chile withdrew from hosting the event.

Kudlow said the White House had hoped to stick to that general timetable. He joked that his preference was for the deal to be signed in his office on the second floor of the White House.

“I don’t like to travel,” he quipped.

(Reporting by Andrea Shalal; editing by Sandra Maler and Grant McCool)