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Analysts at TD Securities note that the risk responded positively to the news that China’s vice commerce minister is going to visit the U.S. for trade talks, the first positive sign since talks broke down in June.

Key Quotes

“At the request of the U.S., Wang Shouwen will lead a delegation in late August according to the Ministry of Commerce website, and will take place just before the next set of U.S. tariffs were scheduled to take effect.  Our view is this announcement should be taken with a heavy pinch of salt.”

“The highest level U.S. delegate to attend is the U.S. vice Treasury Secretary, David Malpass, not Treasury Sec Mnuchin, nor meet anyone of influence such as Navarro, Lightizer, Bolton or even President Trump. Wang has been critical of the U.S., noting that “For any talk to be successful, one party needs to take the gun off the head of the other party. And for any talk to be useful, one party needs to be keeping its word. If one side keeps chopping and changing all the time the talk would be pointless”.”

“Mnuchin has said that the U.S. and China can only reopen talks if Beijing is willing to make significant changes, and no sign of this so far, especially in relation to the “Made in China” 2025 policy.”