Will China buy more US farm products as a compromise?

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China May Increase US Farm Product Purchases as Part of Trade Compromise

It appears unlikely that leaders from China and the United States will sign a formal trade deal this month. A more probable scenario involves China continuing to purchase US farm products while the US delays its next round of tariffs, a development markets may interpret as a de facto agreement. This arrangement could unfold as negotiations face difficulties, particularly concerning existing tariffs and recent US legislation related to Hong Kong.
Potential for Increased Agricultural Purchases

A key element of the anticipated compromise is China's continued procurement of US agricultural goods. This action is seen as a way to de-escalate tensions, even without a comprehensive agreement being officially inked. Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management, suggested this approach, where China buys more US farm products.
Postponement of Tariffs Likely

Alongside increased farm product purchases, the United States is expected to postpone its planned imposition of new tariffs. This delay is anticipated for the December 15 deadline, which targeted approximately US$156 billion of Chinese goods. Investors have been banking on this postponement, assuming a trade deal would be reached to avoid further tariffs.
Stalled Negotiations Amidst Hong Kong Legislation

The progress of trade talks has reportedly been hindered by recent US legislation supporting Hong Kong protesters. China has strongly criticized this legislation as an interference in its internal affairs. This development has added complexity to the already challenging negotiations, which have struggled to bridge differences over existing tariffs.
Market Interpretation of a "De Facto Deal"

Even without a formal signing ceremony, market participants are likely to view such an arrangement as a significant step. Ueno indicated that markets would consider the continuation of Chinese purchases of US farm products and the postponement of US tariffs as a de facto deal. This sentiment could provide some stability to global financial markets.

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Will China buy more US farm products as a compromise?

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