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With the Chinese officials showing an unwillingness to back down and agree to the U.S. demands, Dow Futures, as well as the global stock markets, is already reacting before this week’s trade talks.
The U.S. and China are all set to engage in discussion this Thursday, October 10, over the year-long trade dispute between the economic giants. The world is observing these events closely as they will set the tone for the future global economic scenario.
While the Trump administration has set some demands and policy changes, China has shown a strong reluctance to it. According to the latest Bloomberg report, China has narrowed down the scope for the upcoming discussions. Beijing officials have shown strong resistance to a broader trade deal.
Vice Premier Liu He, the lead negotiator for China said that their offer to Washington doesn’t include commitments in altering the Chinese industrial policy or government subsidies. These two have been the main demands of the Trump administration over the last year.
The trade negotiators and officials from both the countries will meet in Washington ahead this week. Although officials from both countries have been working behind the scenes, they have failed to arrive at a mutual consensus.
Dow Futures Take a Dip
Soon after the Bloomberg report was out, the Dow Futures and the broader U.S. stock market showed a sharp decline. during the Asian session, futures contracts on all three exchanges showed major decline.
The futures contracts on the Dow Jones Industrial Average (DJIA) dropped by straight 186 points. At press time, the DJIA shows 123 points decline at $26400 levels. The S&P 500 futures contracts also showed a 0.4% drop to $2939 while the Nasdaq 100 mini contracts plunged to $7736.
On the other hand, with reports of Trump impeachment catch up the heat, analysts say that the Chinese are seeing this as an opportunity to strengthen their end of negotiations. Jude Blanchette, an expert on China’s elite politics said that China’s leadership is “interpreting the impeachment discussion as a weakening of Trump’s position, or certainly a distraction. Their calculation is that Trump needs a win” and so he will be willing to make some compromises.
People close to the Trump administration said that the impeachment reports have no impact on the trade talks. They said that it would be an absolute miscalculation on the part of the Chinese to think so or take the impeachment inquiry as an attempt to weaken the US hand.
The U.S. President Donald Trump said has made it clear on several occasions that they won’t back down until the deal in 100% in favor of the U.S. Speaking to reporters last Friday, Trump said:
“We’ve had good moments with China. We’ve had bad moments with China. Right now, we’re in a very important stage in terms of possibly making a deal. But what we’re doing is we’re negotiating a very tough deal. If the deal is not going to be 100% for us, then we’re not going to make it.”
The trade deal has resulted in parallel damage to both Chinese and US economies. While the US debt reaches massive heights, it is staring for a major recession ahead. On the other hand, China’s manufacturing data had crashed to a five-month low.
As it turns out, the demand for Gold continues to grow as Gold price continues to hit new highs.