The heads of state of China and the United States met in Busan, South Korea, and in just a few hours, the global capital market was shaken. Not because of the "handshake peace", but because the two sides announced: suspend a number of trade restrictions for one year.
This is a "short and fast" relaxation, but the signal released is very clear: short-term "fight without breaking", long-term "build walls".
The core content of this round of Sino-US economic and trade easing:
To put it simply, take a step back and stabilize the situation first.
China and the United States have reached a consensus on phased détente
The Sino-US economic and trade talks have made some positive progress and are constructive as a whole. According to the Ministry of Commerce of China, the two sides have reached the following main results:
1. Tariffs:
The United States agreed to reduce the "fentanyl tariff" on China from 20% to 10%; The original 24% equivalent tariff will continue to be suspended for one year without leviing.
2. Export control:
The United States suspended the implementation of the "50% penetration rule" proposed on September 29 (that is, restricting the sale of equipment containing more than 50% of American technology to China) for one year; China has also suspended the rare earth export control measures originally scheduled to be implemented on October 9 for one year.
3. Industry investigation:
The United States suspended the "301 investigation" and sanctions against China's maritime, logistics and shipbuilding industries for one year; China has also suspended corresponding countermeasures for one year.
In addition, the two sides also agreed on the following issues:
strengthen anti-drug cooperation to combat fentanyl abuse; expanding U.S. agricultural exports to China; properly handle the specific problems of some enterprises; Negotiations will be made to resolve TikTok's operations in the United States.
In general, both sides temporarily "took a step back", suspended some confrontational measures, bought time for subsequent negotiations, and also released a signal of détente.
The tariff reduction is good for exports and boosts RMB expectations
The reduction of "fentanyl tariffs" is expected to reduce the cost of trade between China and the United States, which is good for China's exports and the yuan.
According to the U.S. Department of Commerce, the actual average U.S. tariff on Chinese goods in 2024 is 10.7%. This time, the "fentanyl tariff" was reduced from 20% to 10%, which is expected to slightly reduce the overall US tariff on China.
Some institutions estimate that if based on past experience (exports are very sensitive to tariffs), this 10 percentage point tax cut may increase the growth rate of China's exports to the United States by about 15 percentage points a year. Considering that China's exports to the United States account for 14.7% of total exports, this can probably drive China's overall export growth rate to increase by about 2.2 percentage points.
However, since the beginning of this year, China's exports themselves have performed well and are very resilient, so the actual pulling effect of this tax cut may be weaker than estimated.
Overall, the reduction in export costs to the United States will enhance the competitiveness of Chinese products, and also give the market more reason to be optimistic about the RMB and promote the expected appreciation of the RMB.
There is a deep meaning behind China's economic and trade "quarreling quickly and reconciling quickly"
The recent round of Sino-US economic and trade frictions, from escalation to easing, has been very rapid, indicating that the relationship between the two countries is forming a new rhythm of "rapid balance". Although in the long run, both sides will pay more attention to "do it yourself" (strengthen independent innovation), the short-term relationship may be more stable.
Friction escalates quickly and cools down quickly
On October 10, Trump said he would impose tariffs of up to 100% on Chinese goods, and the situation was tense; But just a few days later, on October 18, the two sides agreed to restart negotiations as soon as possible; By October 25-26, China and the United States will hold economic and trade talks in Kuala Lumpur; On October 30, the two heads of state met, and relations eased rapidly.
This time it took less than three weeks from "quarrel" to "peace", much faster than previous rounds. And the final agreement also takes more care of China's concerns.
China's exports are becoming more and more "bearing"
In the past, when the United States added tariffs, China's exports were impacted. But now it's different: even as the U.S. pushes some tariffs close to the "limit" level, China's exports remain strong this year. In the first nine months, exports in US dollars increased by 6.2% year-on-year, and the growth rate in the third quarter was 1.7 percentage points faster than in the second quarter.
Why is it so stress-resistant? There are two reasons:
1. Cyclical factors: RMB depreciation, products are cheaper This
year, the US dollar has weakened, and the RMB has depreciated by about 4% against a basket of currencies as a whole, especially against the euro by nearly 9%. This gives Chinese goods a price advantage in the international market. At the same time, the AI boom has driven strong global demand for semiconductors and electronic products, and the Asian industrial chain (including China) has directly benefited.
2. Structural changes: China's industrial upgrading and market diversification
High-end manufacturing exports have increased: for example, the trade surplus of automobiles and electrical equipment has increased by 28% and 15% respectively this year; The market is no longer solely dependent on the United States: China cooperates more closely with the Belt and Road Initiative and countries in the Global South such as Africa and Latin America. For example, exports to Africa have soared by 28.3% this year (much higher than the average of 6.4% in the past few years), mainly selling large equipment such as bulldozers, excavators, automobiles, and ships.
It is difficult to "decoupling" between China and the United States, and there is a foundation for cooperation
In the final analysis, the economic structure of China and the United States is complementary:
The United States is now engaged in loose fiscal and monetary policies, and the people have money to spend, and the demand for imports will rise; China is the world's largest producer of goods, so it can naturally benefit from it; In high-tech fields such as AI, the United States also has bottlenecks, which are inseparable from Asia's manufacturing capabilities. Therefore, it is difficult for China and the United States to completely "decouple" in general commodity trade.
Even if there is friction, it will be like this time, and it will sit down and talk quickly after the quarrel.
Jingtai view
In the short term, Sino-US economic and trade relations have a "bottom line", and as soon as there is friction, both sides will quickly adjust to avoid losing control; In the long run, both countries will increase investment in independent innovation, but cooperation is still the general trend.
Short-term: Layout of the "tariff benefit chain"
directly benefits: industries with a high proportion of exports to the United States: home appliances, textiles, consumer electronics; Fentanyl-related pharmaceutical intermediate companies (compliance required).
Logical benefits: RMB appreciation expectations → good for airlines (foreign currency liabilities) and outbound travel; foreign trade logistics enterprises (expected to pick up orders).
Long-term: bet on "autonomy + globalization" two-wheel drive
Autonomy: semiconductor equipment, materials, EDA tools; Industrial software, high-end machine tools.
Globalization: new energy vehicles going overseas (BYD, NIO); infrastructure going overseas (Sany Heavy Industry, Zoomlion); The digital economy goes overseas (SHEIN, Temu, TikTok Shop).
