The U.S. Commerce Department is expected to extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from U.S. companies so that it can service existing customers, two sources familiar with the situation said.
The "temporary general license" will be extended for Huawei for 90 days, the sources said.
Commerce initially allowed Huawei to purchase some American-made goods in May shortly after blacklisting the company in a move aimed at minimizing disruption for its customers, many of which operate networks in rural America.
An extension will renew an agreement set to lapse on August 19, continuing the Chinese company's ability to maintain existing telecommunications networks and provide software updates to Huawei handsets.
The situation surrounding the license, which has become a key bargaining chip for the United States in its trade negotiations with China, remains fluid and the decision to continue the Huawei reprieve could change ahead of the Monday deadline, the sources said.
U.S. President Donald Trump and Chinese President Xi Jinping are expected to discuss Huawei in a call this weekend, one of the sources said.
Huawei did not have an immediate comment. China's foreign ministry did not immediately respond to a faxed request for comment.
When the Commerce Department blocked Huawei from buying U.S. goods earlier this year, it was seen as a major escalation in the trade war between the world’s two top economies.
The U.S. government blacklisted Huawei alleging the Chinese company is involved in activities contrary to national security or foreign policy interests.
As an example, the blacklisting order cited a criminal case pending against the company in federal court, over allegations Huawei violated U.S. sanctions against Iran. Huawei has pleaded not guilty in the case.
The order noted that the indictment also accused Huawei of “deceptive and obstructive acts”.
At the same time the United States says Huawei's smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.
The world's largest telecommunications equipment maker is still prohibited from buying American parts and components to manufacture new products without additional special licenses.
Many Huawei suppliers have requested the special licenses to sell to the firm. Commerce Secretary Wilbur Ross told reporters late last month he had received more than 50 applications, and that he expected to receive more.
Out of $70 billion that Huawei spent buying components in 2018, some $11 billion went to U.S. firms including Qualcomm, Intel and Micron Technology.
The Commerce Department late on Friday declined to comment, referring to Ross’s comments to CNBC television earlier this week in which he said the existing licenses were in effect until Monday.
Asked if they would be extended he said: “On Monday I'll be happy to update you.”
Google and its operations in China have come under the spotlight in the past few days.
Billionaire investor Peter Thiel last week accused the U.S. technology giant of working with the Chinese military and called for the U.S. government to investigate Google. In response, President Donald Trump said his administration will “take a look” into Google.
The tech giant has denied working with the Chinese military.
Still, the controversy has sparked interest in what Google is doing in China. CNBC took a closer look at Google’s business dealings in China.
Google ended its search product in China in 2010 and is effectively blocked in the country. However, a report emerged last year that the search giant was looking to launch a censored version of its search app in China. The initiative, which the company acknowledged publicly, was in its early stages. In China, all internet services are required to censor information which the government deems sensitive.
However, Vice President for Government Affairs and Public Policy at the company, Karan Bhatia, said this week that Google had abandoned plans for “Project Dragonfly,” the name of its China search product initiative.
So right now, Google is still blocked in China and can only be accessed via a virtual private network (VPN), which helps mask a user’s internet location.
One of Thiel’s accusations is that Chinese spies have infiltrated Google’s artificial intelligence (AI) projects, but he did not provide any evidence.
Google does have AI projects in China though. In 2017, the company opened up an AI research center in China.
On its website, Google says AI research in China is focused on education and so-called natural language understanding — which refers to an AI technique focused on getting machines to understand human language. Google is looking to apply AI to auctioning so that the bidding process for ads can be more efficient. This could be important for Google, which operates an advertising marketplace.
In China, the work is also contributing to AI products that Google makes available globally, such as TensorFlow. This is an open source library that can help other companies develop AI products.
Technology giants such as Alibaba and Tencent dominate the cloud market in China. So Google’s tactic is to try to sell its cloud products to Chinese firms that have international operations in Southeast Asia and elsewhere.
A search of Google job postings in China showed the company is looking for cloud computing engineers, data managers, sales and business development roles across Beijing, Shanghai and Shenzhen.
The company is also hiring people to target customers in specific industries — from media and entertainment to manufacturing.
Google sells a number of hardware products including smartphones, smart speakers and thermostats, under the Nest brand that it owns. Some of that is manufactured in China.
The company is currently advertising roles for engineers to test products and for manufacturing and supply chain managers. On LinkedIn, a number of Google employees in Shenzhen, a key technology hub in China, listed their jobs as hardware-related.
However, Bloomberg reported in June that Google was moving the production of some Nest thermostats and server hardware out of China to avoid tariffs from the U.S.
App developers and the Google Play Store
The Google Play Store, the company’s app store, is blocked in China. So Google is trying to work with app developers in China to help them bring their products onto the Play Store in international markets.
Under its job listings, Google advertised for two roles for a business development manager related to the play store.
“As a Business Development Manager of Google Play, you will empower developers to build successful businesses on Play/Android globally, and inspire the ecosystem to innovate on/invest in Android and Play,” the job description reads.
Google also has individual roles for the gaming section of the Google Play store. Games are a huge part of its app store.
Advertising is a core part of Google’s revenue but because its services are blocked in China, it can’t really sell ads on those platforms there. So the company focuses on Chinese businesses looking to advertise on Google platforms abroad, whether that is on its search engine, YouTube or something else.
One job that’s being advertised is for a business development consultant in Shanghai who will be “responsible for driving business growth and attracting new medium to large size advertisers for Google.” There are also people focused on getting advertisers from specific industries like retail or entertainment.
Overall, Google’s business in China is mostly aimed at getting Chinese companies to use its products outside of China.
Credit: CNBC AFRICA
The United States and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing.
China agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table. No deadline was set for progress on a deal, and the world's two largest economies remain at odds over significant parts of an agreement.
The last major round of talks collapsed in May.
Financial markets, which have been rattled by the nearly year-long trade war, are likely to cheer the truce. Washington and Beijing have slapped tariffs on billions of dollars of each other's imports, stoking fears of a wider global trade war. Those tariffs remain in place while negotiations resume.
"We're right back on track," Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping at a summit of leaders of the Group of 20 (G20) major economies in Osaka, Japan.
"We're holding back on tariffs and they're going to buy farm products," Trump said, without giving details about the purchases.
Trump tweeted hours later that the meeting with Xi went "far better than expected."
"The quality of the transaction is far more important to me than speed," he tweeted. "I am in no hurry, but things look very good!"
The U.S. president had threatened to slap new levies on roughly $300 billion of additional Chinese goods, including popular consumer products, if the meeting in Japan proved unsuccessful. Such a move would have extended existing tariffs to almost all Chinese imports into the United States.
In a lengthy statement on the two-way talks, China's foreign ministry quoted Xi as telling Trump he hoped the United States could treat Chinese companies fairly.
"China is sincere about continuing negotiations with the United States ... but negotiations should be equal and show mutual respect," the foreign ministry quoted Xi as saying.
Trump offered an olive branch to Xi on Huawei Technologies Co [HWT.UL], the world's biggest telecom network gear maker. The Trump administration has said the Chinese firm is too close to China's government and poses a national security risk, and has lobbied U.S. allies to keep Huawei out of next-generation 5G telecommunications infrastructure.
Trump's Commerce Department has put Huawei on its "entity list," effectively banning the company from buying parts and components from U.S. companies without U.S. government approval.
But Trump said on Saturday he did not think that was fair to U.S. suppliers, who were upset by the move. "We're allowing that, because that wasn't national security," he said.
CHEERS FROM CHIP MAKERS
Trump said the U.S. Commerce Department would study in the next few days whether to take Huawei off the list of firms banned from buying components and technology from U.S. companies without government approval.
China welcomed the step.
"If the U.S. does what it says, then of course, we welcome it," said Wang Xiaolong, the Chinese foreign ministry's envoy for G20 affairs.
U.S. microchip makers also applauded the move.
"We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president's remarks on Huawei," John Neuffer, president of the U.S. Semiconductor Association, said in a statement.
Republican U.S. Senator Marco Rubio, however, tweeted that any agreement to reverse the recent U.S. action against Huawei would be a "catastrophic mistake" and that legislation would be needed to put the restrictions back in place if that turned out to be the case.
Last month, Rubio and Democratic U.S. Senator Mark Warner urged Trump to not use Huawei as a bargaining chip for trade negotiations.
Huawei has come under mounting scrutiny for over a year, led by U.S. allegations that "back doors" in its routers, switches and other gear could allow China to spy on U.S. communications.
The company has denied its products pose a security threat. It declined to comment on the developments on Saturday.
The problems at Huawei have filtered across to the broader chip industry, with Broadcom Inc warning of a broad slowdown in demand and cutting its revenue forecast.
Trump said he and Xi did not discuss the extradition proceedings against Meng Wanzhou, Huawei's chief financial officer, who was arrested in Canada in December on charges alleging she misled global banks about Huawei's relationship with a company in Iran.
RELIEF AND SCEPTICISM
Scores of Asia specialists, including former U.S. diplomats and military officers, urged Trump to rethink policies that "treat China as an enemy," warning that approach could hurt U.S. interests and the global economy, according to a draft open letter reviewed by Reuters on Saturday.
Investors, businesses and financial leaders have for months been warning that an intractable tit-for-tat tariff war between the United States and China could damage global supply chains and push the world economy over a cliff.
International Monetary Fund Managing Director Christine Lagarde on Saturday urged G20 policymakers to reduce tariffs and other obstacles to trade, warning that the global economy had hit a "rough patch" due to the trade conflict.
Although analysts cheered a resumption of talks between Washington and Beijing, some questioned whether the two sides would be able to build enough momentum to breach the divide and forge a lasting deal.
"Translating this truce into a durable easing of trade tensions is far from automatic ... especially as what's in play now extends well beyond economics to include delicate national security issues of both immediate- and longer-term nature," said Mohamed El-Erian, chief economic adviser at Allianz.
The United States says China has been stealing American intellectual property for years, forces U.S. firms to share trade secrets as a condition for doing business in China, and subsidizes state-owned firms to dominate industries.
China has said the United States is making unreasonable demands and must also make concessions.
The negotiations hit an impasse in May after Washington accused Beijing of reneging on reform pledges made during months of talks. Trump raised tariffs to 25% from 10% on $200 billion of Chinese goods, and China retaliated by raising levies on a list of U.S. imports.
Mexican and U.S. officials were preparing on Sunday for upcoming talks aimed at averting a major trade clash after U.S. President Donald Trump vowed to impose punitive tariffs on all Mexican goods in an intensifying dispute over migration.
Mexican Economy Minister Graciela Marquez said on Sunday she would meet with U.S. Commerce Secretary Wilbur Ross in Washington on Monday, as the two governments begin holding talks to resolve the issue in the U.S. capital in the coming week.
Trump says he will apply tariffs of 5% on Mexican goods on June 10 if Mexico does not halt the flow of illegal immigration, largely from Central America, across the U.S.-Mexican border.
The U.S. president lashed out on Twitter on Sunday morning, calling Mexico an "abuser of the United States, taking but never giving," and repeating his tariff threats. He doubled down a few hours later.
"Mexico is sending a big delegation to talk about the Border. Problem is, they've been 'talking' for 25 years," Trump wrote. "We want action, not talk. They could solve the Border Crisis in one day if they so desired. Otherwise, our companies and jobs are coming back to the USA!"
The tariffs will gradually rise to 25% if Mexico does not comply with Trump's demands. That threatens major economic damage to Mexico, which sends about 80% of its exports to the United States.
Mexican President Andres Manuel Lopez Obrador hinted on Saturday that his government could agree to tighten migration controls to defuse Trump's threat, and said he expected "good results" from the talks in Washington.
Speaking on Sunday afternoon at an event to mark the start of construction on an oil refinery in southern Mexico, Lopez Obrador did not refer directly to the trade dispute, but said he wanted to send a "memorandum" to the American people.
"The Mexican government is a friend of the United States government. The president of Mexico wants to stay friends with President Donald Trump. But above all, we are friends of the American people," Lopez Obrador said.
In words directed at the U.S. public, he added: "We want nothing and no one to break our beautiful and sacred friendship."
Foreign Minister Marcelo Ebrard is heading the Mexican delegation, which includes Marquez. Marquez said she spoke to Ross during the inauguration of El Salvador's new president on Saturday, without giving details.
Ebrard is expected to meet U.S. Secretary of State Mike Pompeo for talks on the crisis on Wednesday, although Mexican officials say they will be holding other meetings beforehand.
Trump's ultimatum has hurt Mexican financial assets and global stocks, but it met resistance from U.S. business leaders and lawmakers worried about the impact of targeting Mexico, one of the United States' top trade partners.
In his Sunday Twitter broadside, Trump also hit out at U.S. companies operating in Mexico.
"Our many companies and jobs that have been foolishly allowed to move South of the Border, will be brought back into the United States through taxation (Tariffs)," Trump wrote. "America has had enough!"
Lopez Obrador said on Saturday that Mexico would not engage in a trade war, but noted that his government had a "plan" in case Trump did apply the tariffs, without providing details.
He also noted that Mexico reserved the right to seek international legal arbitration to resolve the dispute.
Some Mexican business groups have urged the government to strike back against any Trump tariffs.
On Friday, Mexico's top farm lobby said Lopez Obrador should target agricultural goods from states that support Trump's Republican Party if the U.S. president carries out his threat.
Apprehensions at the U.S. border with Mexico have surged in recent months, although Mexican data also show more deportations and detentions at Mexico's southern border with Guatemala, mostly of Central Americans trying to reach the United States.
The bulk of migrants are fleeing widespread violence and poverty in Guatemala, Honduras and El Salvador. Many seek asylum in the United States when they cross the border.
Trump is pushing Congress to change U.S. law to make it more difficult for the migrants to claim asylum.
China will never surrender to external pressure, the government said on Monday, though stopped short of announcing how Beijing will hit back after Washington renewed its threat to impose tariffs on all Chinese imports in an escalating trade dispute.
The trade war between the world's top two economies jumped up a gear on Friday, with the United States hiking tariffs on $200 billion worth of Chinese goods after President Donald Trump said Beijing "broke the deal" by reneging on earlier commitments made during months of negotiations.
Trump also ordered U.S. Trade Representative Robert Lighthizer to begin imposing tariffs on all remaining imports from China, a move that would affect about an additional $300 billion worth of goods.
Beijing has vowed to respond to the latest U.S. tariffs, but has announced no details yet.
"As for the details, please continue to pay attention. Copying a U.S. expression - wait and see," foreign ministry spokesman Geng Shuang told a daily news briefing.
"We have said many times that adding tariffs won't resolve any problem. China will never surrender to external pressure. We have the confidence and the ability to protect our lawful and legitimate rights," Geng added, responding to a question on Trump's threat of putting duties on all Chinese imports.
State media also kept up a steady drum beat of strongly-worded commentary on Monday, reiterating that China's door to talks was always open, but vowing to defend the country's interests and dignity.
"At no time will China forfeit the country's respect, and no one should expect China to swallow bitter fruit that harms its core interests," China's top newspaper, the ruling Communist Party's official People's Daily, said in a commentary.
State television said in a separate commentary that the effect on the Chinese economy from the U.S. tariffs was "totally controllable".
"It's no big deal. China is bound to turn crisis to opportunity and use this to test its abilities, to make the country even stronger."
Ahead of talks last week, China wanted to delete commitments from a draft agreement that Chinese laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers. That move dealt negotiations to resolve the trade dispute a major setback.
Trump has since defended the tariff hike and said he was in "absolutely no rush" to finalize a deal.
White House economic adviser Larry Kudlow said on Sunday that there was a "strong possibility" Trump will meet Chinese President Xi Jinping at a G20 summit in Japan in late June.
China's Huawei Technologies called on Washington to drop the "loser's attitude" and once again rubbished U.S. allegations its gear could be used by Beijing for spying, as its network business weakened amid mounting global scrutiny.
"The U.S. government has a loser's attitude. It wants to smear Huawei because it cannot compete against Huawei," Guo Ping, rotating chairman of the world's top producer of telecoms equipment and No.3 maker of smartphones, said on Friday.
"I hope the U.S. can adjust its attitude," Guo said at a press briefing that was attended by more than 100 journalists from across the world.
The U.S. embassy in China declined to comment.
Huawei reported a slower pace of profit growth for 2018 as its network business saw its first drop in revenue in two years, overshadowing a robust 45 percent jump in its smartphone unit.
Huawei's outlook has come under a cloud over the past year with the United States voicing concerns that its equipment could be used for espionage. Washington has also urged its allies to ban Huawei from building next-generation 5G mobile networks.
The latest blow for the company came on Thursday when Britain rebuked it for failing to fix long-standing security flaws in its mobile network equipment and revealed new "significant technical issues".
For 2018, the Shenzen-based firm reported a net profit of 59.3 billion yuan (£6.9 billion), up 25 percent from a year ago, versus a 28 percent rise in 2017. Revenue from its carrier business fell 1.3 percent to 294 billion yuan, which it blamed on telecommunications industry investment cycles.
However, the surge in its consumer business sales to a record 348.9 billion yuan, driven by demand for its premium smartphone models such as the P series and Mate series, helped push global revenue to above $100 billion for the first time.
Its total revenue rose nearly 20 percent to about 721 billion yuan, marking the fastest pace of growth in two years. The performance of consumer business was in line with what Huawei flagged in January, when it also said it could become the world's biggest-selling smartphone vendor this year.
Guo said he expects all three business groups - consumer, carrier and enterprise - to post double-digit growth this year, although he did not provide a specific number. The company has previously said it was targeting total revenue of $125 billion this year, a record high.
"Moving forward, we will do everything we can to shake off outside distractions, improve management and make progress towards our strategic goals," Guo said.
Huawei has "prepared some inventories for uncertainties" that has reduced its net cash position, Guo added, without giving any details.
SPYING WOULD BE "SUICIDE"
To fight global concerns over its gear, Huawei has launched an unprecedented media blitz by opening up its campus to journalists and parading its typically low-key founder, Ren Zhengfei, in front of media.
It has stepped up the campaign in recent months after Meng Wanzhou, Huawei CFO and Ren's daughter, was arrested in Canada in December at U.S. behest on charges of bank and wire fraud in violation of U.S. sanctions against Iran. She denies wrongdoing.
The company has said the spying concerns are unfounded.
"Spying would be equal to suicide," said Song Liuping, Huawei's chief legal officer.
"We have no intention of committing suicide."
Huawei derived 48.4 percent of its business from overseas markets in 2018, versus 49.5 percent a year earlier. The company's fastest growing region was Europe, Middle East and Africa with a growth of 24.3 percent, followed by Americas with a growth of 21.3 percent.
A top company executive said earlier this week that the U.S. campaign against Huawei was having little impact on its sales and that it was unlikely many countries would heed the U.S. call to ban its gear.
U.S. President Donald Trump said he had asked China to immediately remove all tariffs on U.S. agricultural products because trade talks were progressing well.
He also delayed plans to impose 25 percent tariffs on Chinese goods on Friday, as previously scheduled.
“I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions,” Trump said on Twitter, pointing out that he had not raised tariffs on Chinese goods to 25 per cent from 10 per cent on March 1 as planned.
“This is very important for our great farmers – and me!” Trump said.
Farmers are a key constituency for Trump’s Republican Party, and the U.S. president’s trade war with China has had a heavy impact on them. Beijing imposed tariffs last year on imports of soybeans, grain sorghum, pork and other items, slashing shipments of American farm products to China.
U.S. Agriculture Secretary Sonny Perdue said this week that U.S. trade negotiators had asked China to reduce tariffs on U.S. ethanol, but it was not immediately clear whether Beijing was willing to oblige.
Trump’s post on Twitter came several hours after the U.S. Trade Representative’s office said that it would delay the scheduled hike in tariffs on $200 billion worth of Chinese goods.
The notice, due to be published in the Federal Register next Tuesday, says it is “no longer appropriate” to raise the rates because of progress in negotiations since December 2018. The tariff would remain “at 10 percent until further notice.”
In a statement on Saturday, China said it welcomed the delay.
Speaking at a separate briefing in Beijing, a Chinese government official said both countries were working on the next steps, though he gave no details.
“China and the United States reaching a mutually-beneficial, win-win agreement as soon as possible is not only good for the two countries but is also good news for the world economy,” said Guo Weimin, spokesman for the high profile but largely ceremonial advisory body to China’s parliament.
A tariff increase to 25 percent from 10 percent was initially scheduled for Jan. 1, but after productive conversations with Chinese President Xi Jinping, the Trump administration issued a 90-day extension of that deadline.
Trump had said on Sunday he would again delay the increase because of progress in the talks.
President Donald Trump said on Friday there was "a very good chance" the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese President Xi Jinping.
U.S. and Chinese negotiators had made progress and will extend this week's round of negotiations by two days through Sunday, Trump told reporters at the White House as he met with his top negotiators and their counterpart, Chinese Vice Premier Liu He.
"I think that we both feel there's a very good chance a deal will happen," Trump said.
Liu agreed there had been "great progress".
"From China, we believe that (it) is very likely that it will happen and we hope that ultimately we'll have a deal. And the Chinese side is ready to make our utmost effort," he said at the White House.
The Republican president said he probably would meet with Xi in March in Florida to decide on the most important terms of a trade deal.
Extending the deadline would put on hold Trump's threatened tariff increase to 25 percent from 10 percent on $200 billion (153 billion pounds) of Chinese imports into the United States. That would prevent a further escalation in a trade war that already has disrupted commerce in goods worth hundreds of billions of dollars, slowed global economic growth and roiled markets.
Optimism that the two sides will find a way to end the trade war lifted stocks, especially technology shares. The S&P 500 stock index reached its highest closing level since Nov. 8. Oil prices rose to their highest since mid-November, with Brent crude reaching a high of $67.73 a barrel.
Trump and Treasury Secretary Steven Mnuchin said the two sides had reached an agreement on currency. Trump declined to provide details, but U.S. officials long have expressed concerns that China's yuan is undervalued, giving China a trade advantage and partly offsetting U.S. tariffs.
Announcement of a pact aimed at limiting yuan depreciation was putting "the currency cart before the trade horse," but would likely be positive for Asian emerging market currencies, said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.
"How can you agree to avoid excessive Chinese yuan depreciation or volatility if you have not made an agreement on trade that could have huge FX implications?" Ruskin asked in a note to clients.
In a letter to Trump read aloud by an aide to Liu at the White House, Xi called on negotiators to work hard to strike a deal that benefits both country.
Trump said a deal with China may extend beyond trade to encompass Chinese telecommunications companies Huawei Technologies and ZTE Corp.
The Justice Department has accused Huawei of conspiring to violate U.S. sanctions on Iran and of stealing robotic technology from T-Mobile US Inc.
Chinese peer ZTE was last year prevented from buying essential components from U.S. firms after pleading guilty to similar charges, crippling its operations.
MEMORANDUMS NO MORE
Trump appeared at odds with his top negotiator, U.S. Trade Representative Robert Lighthizer, on the preliminary terms that his team is outlining in memorandums of understanding for a deal with China. Trump said he did not like MOUs because they are short term, and he wanted a long-term deal.
"I don't like MOUs because they don't mean anything," Trump said. "Either you are going to make a deal or you're not."
Lighthizer responded testily that MOUs were binding, but that he would never use the term again.
Reuters reported exclusively on Wednesday that the two sides were drafting the language for six MOUs covering the most difficult issues in the trade talks that would require structural economic change in China.
Negotiators have struggled this week to agree on specific language within those memorandums to address tough U.S. demands, according to sources familiar with the talks. The six memorandums include cyber theft, intellectual property rights, services, agriculture and non-tariff barriers to trade, including subsidies.
An industry source briefed on the talks said both sides have narrowed differences on intellectual property rights, market access and narrowing a nearly $400 billion U.S. trade deficit with China. But bigger differences remain on changes to China's treatment of state-owned enterprises, subsidies, forced technology transfers and cyber theft of U.S. trade secrets.
Lighthizer pushed back when questioned on forced technology transfers, saying the two sides made "a lot of progress" on the issue, but did not elaborate.
The United States has said foreign firms in China are often coerced to transfer their technology to Chinese firms if they want to operate there. China denies this.
The U.S. Chamber of Commerce on Friday urged the U.S. government to ensure the deal was comprehensive and addressed core issues, rather than one based on more Chinese short-term purchases of goods.
China has pledged to increase purchases of agricultural produce, energy, semiconductors and industrial goods to reduce its trade surplus with the United States.
China committed to buying an additional 10 million tonnes of U.S. soybeans on Friday, U.S. Agriculture Secretary Sonny Perdue said on Twitter. China bought about 32 million tonnes of U.S. soybeans in 2017. The commitments are a "show of good faith by the Chinese" and "indications of more good news to come," Perdue wrote.
China was the top buyer of U.S. soybeans before the trade war, but Beijing's retaliatory tariffs on U.S. soybeans slashed business that had been worth $12 billion annually.
Oil traded near the highest level since November on optimism the U.S. and China can reach a trade deal and as an outage at the world’s largest offshore field in Saudi Arabia signaled tightening supply.
Futures in New York rose as much as 1 percent after advancing 5.4 percent last week. President Donald Trump said talks with China were “very productive” as his team returned from Beijing and readied for another round of discussions in Washington this week, raising hopes that a trade war between the world’s largest economies will ease. The Saudis, meanwhile, were said to be repairing a damaged power cable that’s curbed output at the Safaniyah field.
Crude’s surged about 24 percent this year as Saudi Arabia and Russia pledged to expand their output cuts, easing concerns that record U.S. production would result in a global glut. More supply is being threatened because of American sanctions against Venezuela and Iran. Reports that the U.S. and China had reached consensus in principle on the main topics in their negotiations further helped boost investors’ risk appetite.
“Markets are astonished by the amount of production cuts and the further reductions Saudi plans to make,” said Howie Lee, a Singapore-based economist at Oversea-Chinese Banking Corp. “Even though there was no conclusive trade deal from Beijing, the already bullish oil market took no news as good news.”
West Texas Intermediate for March delivery rose as much as 54 cents to $56.13 a barrel on the New York Mercantile Exchange and traded 49 cents higher at $56.08 at 7:34 a.m. in London. Transactions will be booked Tuesday for settlement because of the U.S. President’s Day holiday. Prices last week posted their biggest gain in more than a month.
Brent for April settlement was at $66.65 a barrel, up 40 cents, on the London-based ICE Futures Europe exchange. It gained 6.7 percent last week. The global benchmark crude’s premium over WTI for the same month narrowed to $10.19, after widening to the biggest spread in more than three months on Friday.
Also Read: Trump, Xi Hail Progress in Trade Talks as Tariff Deadline Nears
Conciliatory signals from the world’s two biggest economies are calming fears Washington will ratchet up tariffs before a March 1 deadline. “Big progress being made on soooo many different fronts!,” Trump said on Twitter Sunday.
Worries about the trade war worsening a global slowdown are receding at a time when OPEC and its allies are accelerating their implementation of the oil-production cuts agreed in December. The Organization of Petroleum Exporting Countries reported a strong start to the latest round of supply reductions, with the Saudis pledging to cut beyond agreed levels.
The impact of the outage at Safaniyah, which has the capacity to pump 1.2 million to 1.5 million barrels of mostly heavy-sour crude a day, could be damped as seasonal refinery maintenance works across Asia and the U.S. typically peak around now. Saudi Arabian Oil Co. said in statement that all its facilities were “safe and normal,” without elaborating on the situation at Safaniyah.