Beijing’s moves to ease some key monetary policy tools to kickstart the world’s number two economy boosted hope among investors who have been left punch drunk by Donald Trump’s explosive first few months in power.
US officials said Washington has been in talks in recent weeks with numerous countries to avoid Trump’s sweeping levies, with Japan and South Korea among the first in the queue.
However, there has been no sign of engagement with China, save for a few US remarks that discussions were taking place.
However, after US markets closed, both countries announced that top representatives would hold negotiations this weekend in Switzerland, the first since Trump’s “Liberation Day” tariffs unveiling on April 2.
Treasury secretary Scott Bessent told Fox News that he and US trade representative Jamieson Greer will meet Chinese vice-premier He Lifeng to lay the groundwork for future negotiations.
“We will agree what we’re going to talk about. My sense is that this will be about de-escalation, not about the big trade deal,” Bessent told “The Ingraham Angle” show.
“We’ve got to de-escalate before we can move forward,” he said.
China’s commerce ministry vowed the country would “defend justice” and stand by its principles during the talks, adding that Washington “must face up to the serious negative impact of unilateral tariff measures on itself and the world”.
It also warned: “If the US talks in one way and acts in another, or even attempts to continue to coerce and blackmail China under the guise of talks, China will never agree.”
Trump has imposed new tariffs totalling 145% on goods from China, with some sector-specific measures stacked on top, while Beijing retaliated with 125% levies on US imports to China, along with more targeted measures.
News of the talks was met with excitement on stock markets, with Hong Kong rallying more than 1% and Shanghai not far behind. Sydney, Seoul, Wellington, Manila and Jakarta also rose.
“Just as everyone’s throwing in the towel—calling end-of-days on the ‘Trump Trade War’ – the White House quietly unleashes a ‘trade deal’ teaser to yank markets off the cliff,” said Stephen Innes of SPI Asset Management.
“Traders who’d battened down the hatches are now scrambling to hoist sails, chasing any whiff of tariff relief like it’s pure alpha,” Innes said.
Investors were also cheered by Beijing’s decision to cut a key interest rate and lower the amount of cash banks must keep in reserve – a move aimed at boosting lending – in their latest bid to reignite the stuttering economy.
The People’s Bank of China also said it would cut the rate for first-time home purchases with loan terms over five years as it continues to grapple with a property sector crisis that has hammered economic growth.
Traders are also keeping an eye on the open in Mumbai after India and Pakistan exchanged heavy artillery along their contested frontier today, after New Delhi launched missile strikes on its neighbour in a major escalation between the nuclear-armed neighbours.
In Washington, the Federal Reserve is expected to hold interest rates again later today, though traders will be keeping a close eye on its post-meeting statement for an idea about its plans in light of Trump’s tariffs and his pressure to make more cuts.