China provided a double boost to markets on Wednesday with an interest rate cut and Beijing agreeing to formally begin trade talks with the US this week.
The People's Bank of China announced a 10 basis points cut to two key interest rates, the first double-cut since late September.
Officials in Beijing also announced that the country will send a delegation to begin trade talks with the US in a third-party country, Switzerland, starting this weekend.
US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will lead the US delegation, meeting China's Vice Premier He Lifeng.
Economists said Donald Trump's team have many demands and may not have the upper hand that the US President seems to believe they possess.
Economist Kelvin Lam at Pantheon Macroeconomics said the US priorities in the talks are numerous: reducing fentanyl trade, pressuring China to buy more US goods to reduce the trade deficit, expanding market access in China’s services sector, addressing currency manipulation, forcing the sale of TikTok, securing the Panama Canal, gaining support on the current Ukraine stalemate.
"For China, the key asks would be: 1) lowering existing tariffs 2) lifting US technology bans 3) clarity on the Taiwan issue 4) reducing tariffs for its satellite manufacturing economies (e.g. Vietnam, Cambodia)," Lam said.
Economist John Lonksi said: "Because Xi Jinping and the Chinese communist party face no political opposition, China can take its sweet time when negotiating on trade.
"To the contrary, the US is not a totalitarian state. Domestic politics will figure in the US’ willingness to tolerate casualties in the ongoing trade war."