Stocks Surge On Reports China To “Sweeten” Trade Deal By Buying More US Ag Products

Stocks turned higher just before noon on Tuesday after the South China Morning Post published a story claiming that China is expected to agree to buy more products from American farmers in hopes of sweetening the deal and increasing the chances of an accord when the two trade delegations meet next month.

US stocks turned flat on the day, erasing earlier losses on the report, which is the latest example of optimistic trade talk coming out of Beijing.

Citing “a source familiar with the situation,” the SCMP reported that working-level officials were discussing the text of a deal, which would be form the baseline of a tentative agreement when Chinese Vice-Premier Liu He meets US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington in October.

The text is based on a draft that the two sides negotiated back in April, the anonymous sources said.

China is reportedly preparing to offer to buy more ag products in exchange for the US delaying a series of US tariffs, as well as easing the supply ban on Chinese telecoms giant Huawei.

In addition, the source said China could improve market access, offer better IP protections and reduce excess industrial capacity. On the other hand, the source said Beijing is still reluctant to compromise on subsidies, industrial policy and reforming state-owned enterprises.