The Financial Times reported
on Tuesday that Trump administration officials are debating removing some existing tariffs
on Chinese goods to help seal a partial deal that would pause the trade war with Beijing as early as this month.
The United States is assessing current tariffs as it works to finalize “phase one” of a trade deal, officials told CNN, but no decisions have been made beyond the tariff relief announced last month.
Meanwhile in Hong Kong, manufacturing data plunged. Growth output from the financial hub’s manufacturing sector fell in October, the latest sign that five months of massive protests are hitting Hong Kong’s economy hard. The latest purchasing managers index (PMI) fell to 39.3 in October, from 41.5 in September, according to data published by research firm IHS Markit. The protests have pushed Hong Kong into its first recession
since the global financial crisis.
IHS Markit said the rate of decline for business activity was the fastest since the survey began over 21 years ago.
The uncertainty surrounding a resolution to the political crisis “will likely mean that the Hang Seng underperforms the rest of the region for the foreseeable future, especially some of their big-name banks,” according to Jeffrey Halley, a market analyst with the research firm Oanda.
China’s Xi emphasizes commitment to global trade
Over in Shanghai, Chinese President Xi Jinping spoke at an economic event on Tuesday, where he again stressed Beijing’s commitment to a multilateral global trading system and a more integrated global economy. He also promised to further open up China’s market and improve its business environment.
One of the key messages from the event “is that China remains open for business,” said Stuart Tait, HSBC’s head of commercial banking for Asia Pacific.
“The dialogue that took place stressed the importance of reducing tariffs and setting up new free trade zones. This is music to the ears of Asian companies,” he said.
Xi’s speech came as data revealed China’s services sector grew at its weakest pace in eight months, according to private survey data released Tuesday by the media group Caixin and the research firm Markit.
The Caixin/Markit services purchasing managers’ index (PMI) dropped to 51.1 in October from 51.3 in September. That’s its lowest reading since February.
For investors though, the “fallout should be limited … as markets concentrate on the industrial PMIs and their rebound potential if an interim trade deal is signed this month,” Halley wrote in a research note.