U.S. equities were up again on news that trade talks are indeed taking a turn for the better. Chinese Commerce Minister Gao Feng said that “China has ample means for retaliation, but the question that should be discussed now is about removing the new tariffs to prevent escalation.” That’s a far cry from Beijing’s defiant tone of the past weeks and months.
Even Global Times editor and prolific twitter user Hu Xijin, the State Council’s attack dog mouthpiece on trade matters, has been muzzled for now, with no tweets on trade since his already noticeably calmer “Based on what I know” tweet on the 26th.
In short, these are the sour fruits of China’s “can’t lose face, won’t lose face” trade war stance. Unfortunately for Beijing, sheer bravado is not a tenable position when facing an opponent who is also your largest trading partner, and it’s starting to show. It looks increasingly as if China wants to get back to the table, but cannot appear to make overtures.
From this gentler posture, Feng went on to say that China rejects escalation, and is “willing to negotiate and collaborate in order to solve this problem with a calm attitude.” Compared to earlier rhetoric, those statements amount to crying uncle. Beijing continues to deny that they initiated this round of talks, as Trump claimed on August 26th, despite using the same “calm resolution” language contained in Trump’s comment on the matter.
This morning President Donald Trump stated that a talk scheduled for today with China is “at a different level.” The result was that risk has been trading very well, with stocks in Europe up well over one percent, and similar gains for the three major indexes domestically, with all above 1%, and the NASDAQ leading the pack today at 1.4%.