China and the U.S. will hold talks in Switzerland beginning later this week to try to de-escalate trade tensions, although analysts say no major deal is likely from the initial meetings.
The talks were announced in statements by both the Chinese and U.S. governments. According to the Treasury Department, U.S. Treasury Secretary Scott Bessent will visit Switzerland on May 8 and meet with representatives from China. Meantime, Chinese Vice Premier He Lifeng will visit Switzerland at the invitation of the Swiss from May 9 to 12, according to China’s Ministry of Foreign Affairs, and hold talks with Bessent.
Neither side has published any more details about the meeting or meetings. In a late Tuesday interview with Fox News, Bessent said the talks will be more about de-escalation than a major deal. Still, the announcements injected a dose of optimism into Chinese stocks. The CSI 300 Index, which tracks 300 major stocks listed in Shanghai and Shenzhen, advanced as much as 1.5% during Wednesday morning trading. Hong Kong’s benchmark Hang Seng Index rose as much as 2.4%.
There is a lengthy list of issues to be discussed. Aside from lowering the punishing levies on Chinese goods—which the Donald Trump administration recently raised to as much as 145%—Beijing is also likely to ask for the loosening of various export control measures and demand U.S. lawmakers stop passing hawkish bills calling for such things as the delisting of U.S.-listed Chinese stocks, Guo Shan, a Shanghai-based partner at research firm Hutong Research, says by WeChat.
On the flip side, the U.S. probably wants China to work harder to stop the illegal flow of fentanyl into America and allow the sale of popular short video platform TikTok to U.S. investors, she says. Guo cautions that it is better to keep expectations low, as China and U.S. are just starting to engage after announcing the tit-for-tat tariffs that have rattled global markets.
The punishing duties have weighed heavily on both economies. Trade tensions have caused wild swings in U.S. financial markets and forced companies to delay or cancel orders from China amid warnings of soon-to-be-empty store shelves. American consumers have worried about mounting prospects of higher spending as companies including Procter & Gamble say they will have no choice but to raise prices to mitigate the tariff impact.
For China, the tariff war almost certainly threatens to derail its ambitious economic growth target of around 5% for this year. Gross domestic product (GDP) might be down by 1.1% in the near term if China loses half of its export to the U.S., according to a Nomura research note published on April 28. Job losses resulting from the Trump Administration’s levies might reach as high as 15.8 million, Nomura economist Lu Ting estimated in the note.
To stabilize the economy, Chinese officials announced more support measures on Wednesday. They include rate cuts and lowering the reserve requirement ratio for banks to release more liquidity. Officials also pledged to help export-oriented companies find markets elsewhere, and increase the amount of loans to high-tech sectors.
