The mood music heading into this week’s U.S. and China trade talks is sounding ominous, with a couple of fresh developments that won’t likely sooth sentiment around the negotiating table:
- The Trump administration is moving ahead with discussions around possible restrictions on capital flows into China, with a particular focus on investments made by U.S. government pension funds, Bloomberg’s Jenny Leonard reports, citing people familiar with the internal deliberations.
- The U.S. on Monday placed eight Chinese technology giants on a blacklist, accusing them of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang. Beijing responded with some tough talk, saying “stayed tuned” for retaliation.
- China’s outrage against the National Basketball Association is escalating. China Central Television said it will immediately halt NBA broadcasts, and celebrities and fans said they would skip exhibition games this week in China after the general manager of the Houston Rockets tweeted an image of a slogan supporting Hong Kong’s pro-democracy protesters.
While these issues have their own back story and may not be central to this week’s agenda, they will hardly do much to improve relations either. The sides also may also have different goal posts: Chinese officials are signaling they’re increasingly reluctant to agree to a broad agreement, but President Donald Trump said on Monday his “inclination is to get a big deal.”
How these negotiations play out will be of critical importance for a world economy that is spiraling into a deeper slowdown due in large part to the trade war. If the signals (or tweets) are positive, then it will buoy hope among investors and policy makers that some kind of a near-term deal is possible.
If the talks don’t go well, then the global economy and financial markets may have to assume the brace position with another U.S. tariff-hike deadline just a week away.
