China Market gains after report U.S. considering easing China tariffs

Mainland China equity market surged on Friday, 18 January 2019, amid optimism for progress in U.S.-China trade talks after a report that American officials may be weighing the possibility of easing tariffs on China. In afternoon trade, the benchmark Shanghai Composite Index advanced 0.8%, or 20.13 points, to 2,579.76. The Shenzhen Composite Index, which tracks stocks on China's second exchange, was up 0.3%, or 3.64 points, to 1,312.78. The blue-chip CSI300 index added 1.1%, or 34.04 points, to 3,145.46.

Investors risk sentiments were encouraged on reports that said American officials were weighing the possibility of easing tariffs on China, in a bid to push forward trade talks. As per reports, U.S. Treasury Secretary Steven Mnuchin proposed lifting all or some of the tariffs on Chinese imports to give Beijing a reason to make deeper concessions in ongoing trade talks between the two countries.

Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the latest round of trade talks aimed at resolving the bitter dispute between the world's two largest economies. In December 2018, Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

Indicators released recently have shown signs that the Chinese economy is losing some momentum. China will release its fourth-quarter and 2018 GDP data on Monday, along with December factory output, retail sales and fixed-asset investment.

China's fourth-quarter economic growth likely slowed to the weakest pace since the global financial crisis, as demand faltered at home and abroad. Market Experts expect the world's second-largest economy to have grown 6.4% in the October-December quarter from a year earlier, slowing from the previous quarter's 6.5% pace and matching levels last seen in early 2009. Full-year growth is expected to have cooled to 6.6%, the weakest pace in 28 years, from 6.9% in 2017. Better-than-expected GDP readings could lift stocks and global commodity prices, and boost the yuan, which has firmed this year following a sharp drop in 2018.

Chinese policymakers have repeatedly pledged more support for the economy while vowing they will not resort to "flood-like" stimulus that Beijing has unleashed in the past, which quickly juiced growth rates but left a mountain of debt. As the economy loses steam, top leaders are closely watching employment levels as factories could be forced to shed more workers.

CURRENCY NEWS: China yuan depreciated against greenback on Friday, after central bank set softer mid-point rate. Prior to market opening, the People's Bank of China set the midpoint rate at 6.7665, weaker by 73 basis points than the previous day's fix.

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