Global financial markets edged up on Tuesday, with the onshore and offshore yuan surging to new highs, after the top leaders of China and the US held their first face-to-face virtual meeting on Tuesday Beijing time during which the two sides discussed trade and economic issues of mutual concern, and reached a consensus on ramping up communication about each other’s economic policies.
Bilateral business exchanges will increase, as China has agreed to upgrade a “fast-track” arrangement to create convenience for the US business community to travel to China.
As economic ties between the two countries are on a trajectory toward more cooperation, less conflict and to be navigated toward “healthy competition,” some US entrepreneurs and agricultural industry associations said they will doubled down on efforts to expand fields of cooperation with China and tap into its huge market.
The yuan’s spot exchange rate started to rise after the opening bell and at one point touched 6.36 against one US dollar on Tuesday, the highest since June 6. The spot rate stood at 6.3771 as of closing, up 32 basis points compared with the previous trading day. The offshore yuan’s exchange rate soared above the mark of 6.37 on Tuesday, a new record high since June 2.
Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times that the rising onshore/offshore yuan rates might reflect market expectations for more exports from China to the US shores in the coming months.
Global stock markets responded differently to the summit meeting. Observers saw the meeting as a boost for global financial markets, as it injected certainty into the future of China-US relations that is set to buoy market sentiment.
The European markets edged up in general, with the German benchmark DAX index rising 0.26 percent at the opening, while France’s benchmark stock market index CAC 40 opened 0.31 percent higher. The benchmark Shanghai Composite Index edged down 0.33 percent on Tuesday.
During the virtual meeting on Tuesday, Chinese President Xi Jinping described China-US economic and trade relations as mutually beneficial in nature and the two sides need to “make the cake bigger” through cooperation, a remark that analysts said sent positive signals for the future direction of economic ties between the world’s two largest economies.
Soaring air flights in the coming weeks from the US to China, plus the excitement shared among American businesspeople, all indicate a warm-up in bilateral trade and economic relations between the world’s two largest economies.
From Wednesday to November 23, the number of passenger flights, including charter flights, from the US to China, is expected to hit 37, half of the entire monthly flights in October, industry information provider VariFlight said in data sent to the Global Times, citing the flight schedule at 6 pm on Tuesday.
On the heels of the meeting, Zhang Xiaoping, greater China regional director of the US Soybean Export Council (USSEC), told the Global Times that China and the US have some areas where they can cooperate in the agricultural field, such as how the planting industry can cope with climate change, as well as research and development of agricultural biotechnology.
In addition to agriculture, China and the US could start their economic cooperation from the area of clean energy, as the US has advanced technologies in this field. In addition, the two nations could beef up cooperation in new-energy vehicles (NEV), whether in terms of cooperation in NEV assembly lines or exports of Chinese NEVs to the US, analysts said.
Although trade and economic issues were not the focal point of the summit, the long-anticipated meeting is seen as setting the tone for bilateral trade and economic cooperation between China and the US, after softening rhetoric from Washington over the possible removal of former US president Donald Trump’s punitive tariffs on Chinese imports, analysts said.
“The meeting sets the overall direction for bilateral trade and economic cooperation between the world’s two largest economies to navigate through difficulties, and both sides have recognized common ground for economic cooperation to continue and expand,” Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing who has closely followed China-US trade negotiations, told the Global Times on Tuesday.
Gao said that more channels to strengthen communication and cooperation will be established after the summit meeting.
However, analysts noted that there remain some disputes between the two that require further negotiation. For one thing, the US side did not directly respond to China’s concern about Washington’s unilateral crackdown on Chinese high-tech enterprises.
In the face of rocketing inflation, the US called for more economic policy coordination during the meeting, while Beijing urged the US to properly manage the spill-over effect of its macro policy, analysts said, such as the Federal Reserve’s extraordinarily loose financial policy.
Chinese Vice Premier Liu He, who heads the Chinese team of the China-US comprehensive economic dialogue, was among the participants in the summit.
On the US side, US Treasury Secretary Janet Yellen was among the top economic officials in attendance.
A day ahead of the meeting, Yellen told CBS that removing tariffs that the Trump administration imposed on Chinese imports “would make some difference” on inflation, and added that US Trade Representative Katherine Tai was “revisiting” the phase one trade agreement with Beijing.