Photo:VCG

This is a rare first time for US President Donald Trump to publicly state that both China and the US want a trade agreement. Previously, he had always stressed that China really wanted to reach a deal, but the US was not in a hurry. He even suggested that it was a good alternative for the US to impose additional tariffs.

By stressing that both sides want to reach a deal, Trump has clearly taken a more positive stance, which seems to indicate that China and the US are meeting halfway on trade.

China has remained tight-lipped about the progress of China-US trade negotiations. If the Wall Street Journal report is true that the US would cut existing tariffs on $360 billion worth of Chinese goods by 50 percent, it would be a welcome progress. If such a phase one deal is reached, it means that the trade war has taken a turn with tariffs actually lowered. In that case, we believe that Chinese society will be more active in increasing purchases of US agricultural and other goods.

However, messages from the US on trade talks with China have always been profuse, and the tones are changing all the time. The real progress on China-US trade talks could hardly count unless a final agreement is signed. 

Moreover, to end the trade war and form new, reciprocal China-US trade relations, the two sides need to make persistent efforts, moving toward canceling all additional tariffs. Since last year, China has launched a series of reforms to open the market wider. It's believed that China will carry out those reforms and keep its promises in line with the agreement with the US, as a full-scale opening-up is also in line with China's interests. And China is a country which highly values honoring its promises.

The future trade relations between China and the US have to be win-win, which is based on the reality of two nations, and that advantages outweigh the disadvantages. Since both China and the US are major countries, it is unrealistic for the two countries to work out a trade deal which reflects unilateralism even though the US is more powerful. 

The developments over the past 20 months or so show that the US tariff stick could not scare China and that these tariffs, while causing certain damage to China, are completely bearable for the Chinese economy. Conversely, the damage on the US is also gradually emerging. If the trade war continues this way, it will persist for too long to decide who wins or loses from a geopolitical perspective.

If Trump's latest tweet and the Wall Street Journal's report suggest a new direction where the US is meeting China halfway in trade, it is welcome. The surge in US stocks following Trump's tweet is a reflection of market reaction. We believe Chinese stocks will also rise on Friday morning Beijing Time.