About three hours ago, as US stocks were beginning a run back toward their highs of the session, a frequently used mouthpiece for the Communist Party dropped a hint that all was not well in the ongoing US-China trade talks, and that some disappointing (for equity bulls) news might be imminent.
Hu Xijin, the editor of the English language Global Times, affirmed that talks were making progress, but said that China kept its statement on this week's talks brief because it "doesn't want to raise the public's expectations."
Chinese side only released this brief news, scarce information from Chinese media also. I think this shows the cautious attitude of Chinese side. Talks have made new progress, but Chinese side doesn't want to raise public's expectation on the agreement now. https://t.co/h00TPxoMv9— Hu Xijin 胡锡进 (@HuXijin_GT) March 29, 2019
A few hours later, the Nikkei Asia Review has published what appears to be a Beijing-directed leak confirming that the removal of US tariffs, which President Trump insisted earlier this month could be kept in place for a "substantial period of time", has become a major obstacle in the negotiations, even as both sides vaguely insist that "progress" is being made.
Furthermore, according to an anonymously sourced report in the Nikkei Asia Review, Beijing feels it has already made concessions to Washington by passing laws cracking down on IP infringement and forced tech transfers. Now, it wants to see the US show a little trust, and agree to lift the tariffs that have become a headwind for Chinese economic growth.
China has not backed down on its stance. U.S. and Chinese leaders agreed to work on removing all additional tariffs in December, Vice Commerce Minister Wang Shouwen said. President Xi Jinping's standing could be undermined if some duties remain.
Beijing has made some concessions, establishing laws to address U.S. concerns about intellectual property infringement and forced technology transfers. The China Securities Regulatory Commission said Friday that it would allow JPMorgan Chase to set up a brokerage joint venture, demonstrating the country's efforts to open its financial market.
Chinese officials fear, however, that they will draw Xi's ire if they receive nothing from the U.S. in return.
Given the difficulty of reaching a compromise, "Xi is wary about a summit with Trump," said a diplomatic source in Beijing.
Anonymous US officials acknowledged that tariffs were an issue in reports on the talks published earlier this week, but they seemed confident that China would eventually accept the fact that some of the levies would need to remain in place for a period, for purposes of accountability.
They may have spoken too soon.