As China faced one of its worst economic performance in almost three decades, officials from the country offered to boost its U.S. imports in six years. A CNBC report said Chinese officials negotiated for this offer. If the proposal materializes, China could step up its annual import of American products to a total value of $1 trillion.
In 2018, the U.S. had a $323 billion trade deficit with China. This increase in imports could erase that annual trade difference by 2024, one of the officials said in the report that cited Bloomberg as its source.
The stock market rose the day the Wall Street heard the proposal. Earlier, stocks also jumped after the Wall Street Journal published a report stating that U.S. Treasury Secretary Steven Mnuchin deemed to reduce U.S. tariffs on Chinese products.
Economists cited the trade issues between the U.S. and China as a reason why the Chinese GDP growth fell to its lowest point in ten years. For the full year, the Chinese economy expanded by only 6.6%, the slowest pace since 1990. Even before the trade dispute with the U.S. has escalated, China was already facing a slowdown in its economy.
The U.S. has placed tariffs on Chinese goods amounting to $250 billion and has warned to add more. As negotiations resumed, U.S. President Donald Trump delayed raising a 10% tariff to 25% on $200-billion worth of goods, should have been in effect this month.
A resolution on the trade tension between the two biggest economies in the world could lead to a significant relief rally in Wall Street, Larry Fink, BlackRock Chairman and CEO, said in an interview. If both sides stop imposing huge tariffs on each country’s goods, the U.S. can expect “a surge in investment sentiment,” Fink added.
On December 2018, Washington and Beijing reached a 90-day agreement to stop any new taxes to come up with a long-term deal through negotiations.
For months, investors have been worrying of a full-blown trade war between the two countries, which was reflected when the U.S. stock market encountered its worst year since the 2007 financial crisis. American companies have also aired their concern on the impact of the trade war on their business.