China Offered More on Cutting Trade Deficit with U.S. Prior to Last Week’s Talks

Posted on 02/04/2019 6:08 AM

Trade policy issues to be part of Trump’s State of Union address


Trump remains upbeat on getting trade deal with China. In an interview with CBS' Face the Nation that aired Sunday, Trump insisted that he is making progress in negotiations with China. "It looks like we're doing very well with making a deal with China. I can tell you this, no two leaders of this country and China have ever been closer than I am with President Xi. We have a good chance to make a deal," Trump said. Link to transcript of Trump interview.


Trump is planning to meet with North Korean leader Kim Jong Un in late February and he may decide to use the same trip to meet with Xi. Trump and Xi Jinping may meet in Vietnam on Feb. 27-28, according to the South China Morning Post.


Ahead of last week’s U.S./China talks, China reportedly offered to increase U.S. imports from $155 billion in 2018 to $200 billion in 2019 and to even eliminate its trade surplus with the United States by 2024. And China has taken steps to fast-track domestic legislation that would prohibit forced transfers of technology and open the country's markets more, though analysts note implementation will take years and fall short of U.S. demands in the short term.


Traders are looking for USDA to confirm China purchases of U.S. soybeans via daily sales announcements. Reports note China bought 2 to 3 MMT of soybeans and basis and transportation logistics seem to confirm business was done.


President Donald Trump will use his State of the Union speech Tuesday evening to renew his call for tough action on immigration while also urging Democrats to work with him on issues where they broadly agree, including rebuilding infrastructure and lowering the cost of prescription drugs, a senior White House official said Friday. No details of the speech were released beyond broad themes, which also include a call to adopt a revised trade agreement with Mexico and Canada and an end to ongoing American involvement in wars around the globe.


Trump will update Congress Tuesday about the state of U.S.-China talks that ended Thursday. Trump sounded optimistic during a White House news conference that the talks to force changes to Beijing’s trade and business policies, such as forced transfers of intellectual property and technology from U.S. companies to Chinese joint venture partners.


Trump on North Korea summit during interview Sunday with CBS: "You'll be finding out probably State of the Union or shortly before. But the meeting is set. He's looking forward to it. I'm looking forward to it." Link to transcript of Trump interview.


A military intervention in Venezuela is "an option," according to President Trump, as Western nations boost pressure on socialist leader Nicolas Maduro to step down. On Saturday, protestors flooded the streets of Caracas in support of self-proclaimed President Juan Guaido. The Trump administration last week issued crippling sanctions on Venezuelan state oil firm PDVSA, whose debt issue due in 2026 is trading at 23.75 cents on the dollar.


Trump: Pompeo is staying put. "[Secretary of State Mike Pompeo] may have spoken to [Mitch McConnell, R-Ky., about running for Senate], but I think he loves being Secretary of State. He's doing a fantastic job. And I asked him the question the other day, he says he's absolutely not leaving. I don't think he'd do that. And he doesn't want to be lame duck. And he's doing a fantastic job as our secretary of State. Great energy and great — a great, smart gentleman.” On Wednesday, Pompeo speaks at a breakfast in Kansas, increasing speculation he is considering a run for the Senate seat being vacated by Pat Roberts (R-Kan.).


Panel chairwoman urges extension of proposed food stamp rule. Rep. Marcia Fudge (D-Ohio), chairwoman of the House Agriculture Subcommittee on Nutrition, in a letter urged USDA Secretary Sonny Perdue to extend by 60 to 120 days public comment for a proposed rule to restrict waivers to states for certain food stamp work requirements. USDA will take comments until April 2 on a proposed rule to restrict waivers that allow states to exempt single able-bodied adults without dependents from food stamp work requirements and from time limits on their food benefits.


A troubling by-product of changing trade patterns is turning up deep in ears of corn in western Thailand. Researchers there confirmed a highly voracious pest native to South and Central America has turned up in Asian crops, the Wall Street Journal reported (link). This is raising worries that the advance of the fall armyworm is “a foretaste of how invasive species will spread as trade between developing economies grows. Such infestations have long been a concern in shipping, where close attention to pallets and agriculture shipments are part of the trade landscape. But south-south trade, as economists call trade between developing nations, has more than doubled its share of global trade in the past 25 years, and is continuing to rise. Corn production in India is falling, in part because of the caterpillar, while some African countries hit hard by the pest are importing maize to make up the shortfall.”


West Texas Intermediate futures hit the highest level since November this morning, with a barrel for March delivery rising as high as $55.75.


The Dow on Friday gained 64.22 points, 0.26%, at 25,063.89. The Nasdaq lost 17.87 points, 0.25%, at 7,263.87. The S&P 500 added 2.43 points, 0.09%, at 2,706.53.


For the week, the Dow gained 326.69 points, or 1.3%, while the S&P 500 rose 1.6% and the Nasdaq Composite climbed 1.4%. The Dow gained 7.2% last month, its best January since 1989.


China's services sector maintained a solid pace of expansion in January even though growth moderated slightly, offering some support for the world’s second largest economy as manufacturing cools. Caixin/Markit's services PMI dipped to 53.6 from 53.9 the previous month, but well above the 50.0 mark separating growth from contraction. The data contrasted with official figures from Thursday, which pointed to a faster expansion in the non-manufacturing sector.




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