Gao Feng, spokesman for the Chinese Commerce ministry, knows better than anyone that saying anything too definitive about the Sino-US trade talks is a fool’s errand.
It was Gao who, on November 7, said both sides had agreed to lift tariffs in phases as an agreement between the world’s two largest economies progresses.
“If China [and the] US reach a phase-one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously based on the content of the agreement, which is an important condition for reaching the agreement”, he said, a month ago nearly to the day.
US officials subsequently confirmed Gao’s remarks, although nobody wanted to go on the record.
For his part, Donald Trump was coy. And for the past four weeks, the US president has oscillated between striking a kind of generic, upbeat tone on the talks, to lobbing veiled threats. On Tuesday, he suggested it might be “better” to wait until after the election. Believe it or not, the S&P’s three-day losing streak (which was snapped on Wednesday), nearly erased the entirety of the gains logged following Gao’s tariff rollback remarks on November 7.
There is still no definitive word on whether tariffs will be rolled back or even whether the planned December 15 escalation will be canceled, as markets expect.
On Thursday, Gao offered thin gruel at the Commerce ministry’s regular briefing. China and the US “are in close contact” on trade negotiations, he said, without offering anything in the way of further details.
“Tariffs should be rolled back accordingly if there is a phase one deal”, he managed.
Less is apparently more when it’s impossible to determine what Trump might say, do or tweet next. Indeed, there’s a very real sense in which getting out ahead of things risks irritating the Oval Office’s irascible occupant, prompting another escalation.
Meanwhile, there’s some speculation that the vaunted “National Team” is at work in Chinese markets suppressing volatility, although daily swings look much more animated on the Shanghai Composite than they do on the S&P.
“In the run-up to the December 15 deadline, it could be that China is quietly calming domestic markets”, Justin Tang, head of Asian research at United First Partners, told Bloomberg Thursday.
“If the Shanghai Composite declines, Trump can use it as a negotiation tactic against China, and China wouldn’t like that”, Tang added.
After a blistering start to 2019, Chinese equities have underperformed the S&P, handing Trump a “win” on the financial asset front, something he has habitually used as leverage.