{"id":145810,"date":"2019-04-15T11:15:59","date_gmt":"2019-04-15T15:15:59","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=145810"},"modified":"2019-04-15T07:32:11","modified_gmt":"2019-04-15T11:32:11","slug":"us-concedes-some-ground-to-deliver-china-trade-deal","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/04\/us-concedes-some-ground-to-deliver-china-trade-deal\/","title":{"rendered":"US Concedes Some Ground To Deliver China Trade Deal"},"content":{"rendered":"
April 15, 2019<\/div>
\r\n<\/div><\/div>

By <\/strong>Orbex<\/strong><\/a><\/p>\n

Hopes of a US\/China trade deal have grown even stronger over the weekend. This comes in response to reports that the US has\u00a0moderated some of its more stringent demands<\/strong><\/b>.<\/p>\n

The US had been demanding that China cap its industrial subsidies as a requisite for agreeing on a deal. However, following strong opposition from Beijing, the Trump administration has since watered down these demands.<\/p>\n

Industrial Subsidies In Focus<\/strong><\/b><\/h2>\n

The issue of\u00a0industrial subsidies<\/strong><\/b>\u00a0is a complex one. And it\u2019s highly important to Beijing, as it involves China\u2019s official industrial policy. Beijing awards subsidies and tax breaks to\u00a0state-owned corporates,<\/strong><\/b>\u00a0as well as sectors, which are seen as integral to long-term development.<\/p>\n

Over his term as premier, Xi Jinping has strengthened the government\u2019s role in certain sections of the economy. China\u00a0gave assurances<\/strong><\/b>\u00a0earlier in the year that it would cease its market-distorting subsidies for domestic industries. However, it gave no details on how it would do so.<\/p>\n

US Makes Concessions<\/strong><\/b><\/h2>\n

As both sides are pushing to secure a deal in the next month or so,\u00a0US negotiators have apparently backed down<\/strong><\/b>\u00a0over this issue. This marks a major retreat on one of the core issues of the US negotiations perspective.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Moving focus away from capping\u00a0industrial subsidies,<\/strong><\/b>\u00a0the US is reportedly focusing more on areas where it believes it can deliver results. This includes ending forced technology transfers, building better protection for intellectual property as well as broadening market access in China.<\/p>\n

US Tariffs Removal<\/strong><\/b><\/h2>\n

The other big obstacle which remains in negotiations is that of the\u00a0removal of the US tariffs<\/strong><\/b>\u00a0currently worth $250 billion. The US has signaled that it\u00a0wants to keep some of these tariffs in place<\/strong><\/b>\u00a0as a means of ensuring that China fully co-operates with the terms of any deal. The US also wants\u00a0China to increase its purchase level of \u201cbig-ticket\u201d items to over $1 trillion in the next six years.<\/strong><\/b><\/p>\n

This demand again funnels back to the industrial of subsidies for state-owned companies. This is because it is likely these companies which will be making the purchases. Therefore, in this case, those state subsidies will directly benefit the US.<\/p>\n

The issue of\u00a0subsidies and tax breaks has long haunted US\/China relations<\/strong><\/b>, causing friction over the years. The US accuses China of failing to fulfill the obligations placed on it by the\u00a0World Trade Organisations<\/strong><\/b>.<\/p>\n

While China has made some effort to assuage some of the US concerns regarding its WTO obligations and has already tried to downplay its \u201cMade in China 2025\u201d push to assert dominance in the high-technology sector.<\/p>\n

Waiting Game<\/strong><\/b><\/h2>\n

For now, the\u00a0market waits to hear when the next round of talks will be held.\u00a0<\/strong><\/b>And\u00a0the mission to secure a trade deal continues. Trump has publicly said that he\u00a0feels an\u00a0\u201cepic deal\u201d<\/strong><\/b><\/a>\u00a0can be done in the\u00a0next four weeks<\/strong><\/b>\u00a0and so now the pressure is on to deliver said deal.<\/p>\n

However, negotiations remain tense and the risk of the deal collapsing and negotiations being pushed back is ever present.<\/p>\n

Technical Perspective<\/strong><\/b><\/h2>\n

The SPX500 continues its march back towards all-time highs at the 2939.87 level, with the September 2018 closing high of 2926.10 coming in just ahead. Any retracement lower will likely find support at the 2860.11 level.<\/p>\n

On the lower timeframes, you can see that price is currently trading along the bullish trend line from late March lows. We also have strong local structural support at the 2895.92 level where we have a raft of prior highs offering support on a retest.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex Hopes of a US\/China trade deal have grown even stronger over the weekend. This comes in response to reports that the US has\u00a0moderated some of its more stringent demands. The US had been demanding that China cap its industrial subsidies as a requisite for agreeing on a deal. However, following strong opposition from […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-145810","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/145810","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=145810"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/145810\/revisions"}],"predecessor-version":[{"id":145842,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/145810\/revisions\/145842"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=145810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=145810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=145810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}