Optimism rises as U.S.-China trade talks conclude

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Bloomberg News

Stocks around the world built on their early 2019 rally Wednesday after negotiators from the USA and China extended their trade talks to a third day, which investors took as a sign the discussions were productive even though no major breakthroughs have been announced.

U.S. and Chinese negotiators wrapped up three days of trade talks in Beijing on Wednesday as they seek a way out of the damaging trade war between the world's two biggest economies.

World markets rose on increasing optimism that the two sides would be able to hammer out a deal ahead of a March deadline and avert further import tariff hikes.

Both sides have agreed to continuously keep in close contact.

Key decisions on some of the tougher issues are expected to be left for future rounds of talks, such as United States complaints that Beijing's policies force American companies to hand over technology and unfairly boost Chinese firms with subsidies.

Chinese traders and refiners are still cautious about buying US crude until the trade problems between the world's two biggest economies are resolved, but if they are, chances are USA crude exports would get an additional boost.

Later this month, US Trade Representative Robert Lighthizer is expected to meet with Vice Premier Liu He, President Xi Jinping's top economic aide who is leading negotiations for China, a person familiar with the situation said last week.

Share prices had risen Wednesday after President Donald Trump fueled optimism about possible progress by saying on Twitter talks were "going well!" Liu made a brief appearance at the talks in Beijing on January 7, boosting optimism that China was serious about making progress on a deal. The U.S. and China have slapped a tariffs on a combined $360 billion in each other's imports since July. Japan's Nikkei 225 gained 1.1 percent and the Hang Seng in Hong Kong rallied 2.3 percent.

The World Bank this week cut its outlook for the global economy as growth in trade and investment slowed and rising interest rates sapped momentum, especially in emerging markets.

Latest US-China Trade Talks Focus on China’s Pledge to Buy More US Goods – USTR

Among their many requests, US negotiators are asking the Chinese to increase purchases of American farm and energy commodities; allow greater access into China's markets; improve and enforce property theft protections; and an end of China's policy of forcing foreign companies to hand over technology secrets.

The U.S. also said the negotiations "focused on China's pledge to purchase a substantial amount of agricultural, energy, manufactured goods and other products and services from the United States".

China says it is trying to protect its own economic interests and has accused the US of violating worldwide trading rules.

The USTR gave no indication as to what, if any, new agreements had been made during the latest round of talks, but its statement said the US side pushed verification and enforcement of previous agreements.

As the trade talks wound down, China's top economic official, Premier Li Keqiang, met with CEO Elon Musk of electric vehicle brand Tesla Inc.

"Talks with China are going very well!". Recent reports have claimed negotiators on both sides are making progress as mid-level talks continue in Beijing. "I really believe they want to make a deal". USA crude rose 4.3 percent to $51.90 a barrel in NY. Those include subsidies and other favors for high-tech and state-owned industry, rules on technology licensing and preferential treatment of domestic suppliers in government procurement.

For their part, Chinese officials are unhappy with USA curbs on exports of "dual use" technology with possible military applications.

The U.S. team in Beijing was led by Deputy U.S. Trade Representative Jeffrey Gerrish, and included under secretaries from the U.S. Departments of Agriculture, Commerce, Energy and Treasury, as well as senior officials from the White House.

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