Xi pitches cooperation, friendship, and fairness amid overhanging trade war truce
- USD/CNH rises for a third session to an early-September high as Xi visits.
- Xi offers no tariff news, and the trade truce now runs only to January 10.
China's paramount leader Xi Jinping's remarks at the White House ran to 21 lines on the wires, covering friendship, artificial intelligence (AI), counter-narcotics work and fair treatment for Chinese firms, and none of them mentioned tariffs. The only figure in them was 100K young Americans invited to visit China, over a longer stretch than the trade truce now covers.
Treasury Secretary Bessent said on Wednesday that the truce struck in Busan, due to lapse on November 10, now runs to January 10, short of the six months or more many had expected. The truce keeps tariffs on Chinese goods from going back up, so a two-month extension gives exporters holding Dollars less reason to switch them into Yuan before January.
The People's Bank of China (PBoC) has also stopped firming its daily midpoint, the rate the onshore Yuan can trade 2% either side of, after ten sessions in a row. The Dollar is at its highest in nearly two months on bets the Fed raises rates again.
USD/CNH has risen three sessions in a row from the lows near 6.6900 on Monday and Tuesday, where the Yuan was at its strongest in three and a half years. Wednesday's bar, on the truce extension, was the largest of the three. The pair has taken back all of the slide that began on September 17 and reached 6.7200, its highest since early September. It's still below its 50-day Exponential Moving Average (EMA), near 6.7300, which it has traded under since the second week of July. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, has been flat just above the middle of its range since mid-September and hasn't turned up with price.
Xi Jingping highlights
- Happy to visit a 'beautiful' US
- On behalf of Chinese people, I express my greetings to US 250th founding anniversary
- China, US are both great countries, great peoples
- I'm here to pass on friendship, expand cooperation
- China, US shoulder responsibility to promote human progress
- Willing to work with Trump to steer the ship of China-US ties
- We should strengthen communication
- Candid, in-depth, sustained dialogue can promote understanding, mutual trust
- We encourage exchanges on diplomacy, trade and economy, law enforcement
- Trump and I have built personal rapport
- We should work together in good faith
- There is broad space for cooperation
- China's door is open, welcomes US firms to invest in China
- China, US are both AI powers
- Willing to step up counter-narcotics, law enforcement cooperation
- Hope Chinese firms are treated fairly in US
- We have capability, responsibility to develop, manage AI for good
- We need to co-exist peacefully
- Competition should be positive, with boundaries
- Two militaries should maintain regular dialogue
- China to invite 100,000 US youth to visit China in next 5 years
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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