China prints better than expected figures for Manufacturing and Non-Manufacturing PMIs

The first half of November stayed positive for the U.S – China trade negotiations with both parties reiterating on multiple occasions that a phase 1 deal is soon to be signed. The last week of November, however, didn’t echo the same optimism. President Trump recently signed the prodemocracy bill in favor of the protests in Hong Kong; a move that wasn’t well-received on the Chinese end. China has expressed its disappointment in the decision and stated that it will retaliate. Xi Jinping’s government had previously accused Washington of meddling in its internal affairs.

Beijing Is Insisting The Trump Administration To Roll Back Previous Tariffs

To add to the complications, Beijing has announced on late Saturday that a delay in the December tariff hike from the United States of America is not sufficient for a trade deal. The largest Asian economy insists the White House to roll back the previously imposed tariffs in order to finalize the phase 1 deal. As President Trump has already announced a few weeks back that he doesn’t plan on turning back the previous tariffs, this could turn out to be another hiccup in the proceedings of the U.S – China trade talks.

Amidst the recent events which have the potential to turn into chaos, the figure for factory activity in China was reported green for the month of November on Saturday. In the past seven months, November’s Manufacturing PMI marks the first time that it has shown improvement. China has also printed better than expected figure for non-manufacturing PMI in November.

Analysts had forecasted the manufacturing PMI to be capped at 49.5 in November. China had recorded an even lower 49.3 in October. Printing 50.2 in November, as per China’s National Bureau of Statistics, however, the country has slowly started to climb out of the contraction phase (below 50).

Chinese Economic Growth Is Approaching The Lowest Level In Three Decades

According to the analysts, with declining industrial profits and economic growth that is approaching the lowest level in the past three decades, it is high time that China accents a more aggressive stance in adding stimulus, even if it multiplies the risk of greater debt.

In the forex market, the Chinese Yuan continues its struggle against the greenback. Opening at around 7.0320 on Friday, the pair closed the week at around the same level after printing a much lower 7.0185 for the day. The year-to-date high for the currency pair is located at around 7.1830. With a prospect of further tariff hike in the upcoming weeks, forex analysts are not seeing USD/CNY to return to this level in 2019.