China yesterday said it would spare some US products from punitive new tariffs, an apparent olive branch ahead of high-level talks next month to resolve the two nations’ protracted trade war.
However, the goods do not include big-ticket agricultural items that could be crucial to the ultimate success of any agreement between the two sides, whose stand-off is dragging on the global economy.
The exemptions will become effective on September 17 and be valid for a year, according to the Customs Tariff Commission of the State Council, which released two lists that include seafood products and anti-cancer drugs.
The lists mark the first time Beijing has announced products to be excluded from tariffs.
Other categories that will become exempt include alfalfa pellets, fish feed, medical linear accelerators and mould release agents, while the commission said it was also considering further exemptions.
In a tweet early yesterday, US President Donald Trump noted the tariff exemptions, saying the trade war was proving more costly for China than previously thought.
Trade negotiators have said they will meet in Washington in early October, raising hopes for an easing of tensions between the world’s two biggest economies.
Both sides imposed fresh tit-for-tat tariffs on September 1 in the latest round of levies, which now cover goods worth hundreds of billions of dollars.
“These adjustments signal that China is more willing to make progress in the October trade talks, likely toward striking a ‘narrow’ agreement that involves China buying more US goods in exchange for the US suspending further tariff hikes,” Barclays analysts said in a research note.
It said Beijing had been sounding a more “constructive” note in recent weeks over trade relations.
But US businesses in China are increasingly pessimistic about their prospects, with a report released yesterday saying growing numbers of companies expect their revenues and investment in the local market to shrink.
The American Chamber of Commerce in Shanghai said just 47% said they expected to increase their investments in China in 2019 – down from 62% last year – while three-quarters of businesses surveyed said they opposed the use of punitive tariffs by the United States to force China into a trade deal.
In a sign of the economic pressure being felt by China, the central People’s Bank of China said on Friday it would cut the amount of cash lenders must keep in reserve, allowing for an estimated $126bn in additional loans to businesses.
China’s economy grew 6.2% on-year in the second quarter, the lowest rate in nearly three decades.
Auto sales in China fell by 6.9% in August compared with the previous year, an official industry association said Wednesday, extending a slump in a massive auto market that has long been a cash cow.
This was the 14th consecutive monthly drop.
Trump has said the protracted trade war is damaging China more than the United States.
“China is eating the tariffs,” he tweeted Friday, repeating his claim that higher duties mean Washington is collecting billions of dollars from the Asian nation, without passing costs on to US consumers.
But experts have warned there are signs the US is also feeling the pinch, with job creation slowing across major industries last month.
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