G20 meeting: Trump and Xi meeting in focus

Westpac analysts suggest that in the G20 meeting, financial markets appear to be a lot more interested in the bilateral meetings that will take place on the side, especially between US President Trump and Chinese President Xi.

Key Quotes

“Risk appetite improved last week when President Trump tweeted that the pair would have “an extended meeting.” But the schedule from the White House allows only about 90 minutes for the meeting on Saturday, before Trump is due to meet Turkey’s Erdogan. This raises the suspicion that the meeting will largely be a rubber stamp of a pre-agreed policy tweak.”

“It’s not clear how much has been agreed in advance though. Press reports suggest that “Xi plans to present Trump with a set of terms the U.S. should meet before Beijing is ready to settle a market-rattling trade confrontation”. This list includes removing the blacklisting of Huawei, lifting all new tariffs and dropping efforts to get China to buy even more US exports than was agreed at the December G20 in Buenos Aires.”

“While the US has not published a list of its demands, ending forced technology transfer, IP theft and state owned enterprise funding of foreign company acquisition would arguably top that list.”

“Thus it’s not obvious that an agreement is within easy reach in 90 minutes. However, with the US willing to suspend the threat of 25% tariffs on the $300bn or so of China goods imports that are not already subject to tariffs, there is a keen sense that both sides should be able to agree to further talks.”

“This is hardly the basis for a major improvement in the risk mood but is at least better than delivery of Trump’s 5 May declaration that the 25% tariffs would be imposed “shortly”.”

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