After a week that has been dominated by the diplomatic crisis over the presumed murder of Saudi journalist and US resident Jamal Khashoggi, investors were wondering when the next headline about the ongoing US-China trade war would hit to redirect focus.
The answer was "today", because after a series of conflicting reports last week, the South China Morning Post reported Friday that President Trump and Chinese President Xi Jinping have "tentatively" agreed to talks in November at the G-20 summit in Buenos Aires. Notably, this apparent confirmation that the Chinese have dropped their resistance to engaging with the US over its protectionist agenda comes just hours after China reported its weakest quarterly GDP print since 2009.
If confirmed, it would be the first face-to-face meeting between the two leaders in nearly a year and suggest both Washington and Beijing were ready to de-escalate the trade tensions. According to the report, a date has been set for Nov. 29, the day before the summit formally begins.
Quoted by SCMP, Chinese Vice-Premier Liu He, one of Xi’s top economic aides, told state media on Friday that Beijing and Washington "are contacting each other at present." His comments came as Beijing is trying to shore up investor confidence in its stock market and economy. But the impact of the trade war on Chinese stocks was "more psychological than real," he said.
The (repeat) news of the upcoming meeting sent US stock futures to their highs of the day, while the US dollar weakened as a risk-on mood made a prompt return.
Of course, this is not the first time the meeting has been leaked, only to be denied after. So far, neither the White House nor China’s foreign ministry have released details of the leaders’ schedules for the G20 summit.
Derek Scissors, a resident scholar at the American Enterprise Institute, a Washington-based conservative think tank with close links to the Trump administration, said Trump and Xi "are going to have a meeting unless something happens." The US and China "are trying to have a framework coming out of the meeting," he said, without saying where he got his information.
He said he did not know how comprehensive the framework would be, but a short-term deal could be finalised in months.
"I don’t think the US could credibly promise we will not take any action against China before the election," he said, referring to possible changes before the midterm election. "I don’t think anyone would believe that."
News of a potential meeting between Xi and Trump comes amid growing hostilities between US and China on a range of issues other than the trade war, including the South China Sea, Taiwan, Xinjiang and allegations of espionage.