Japan Nikkei falls on global economic growth, US-China trade talks woes

Xi Jinping and Donald Trump last met at a G20 summit in Buenos Aires

Xi Jinping and Donald Trump last met at a G20 summit in Buenos Aires

There had been speculation that Trump might meet the Chinese leader after he flies to Vietnam in late February for a summit with North Korea's Kim Jong Un.

The report comes just a day after White House economic advisor Larry Kudlow said there is a "pretty sizable distance to go" before China and the US reach a deal.

Time is running out for the USA and China to reach an agreement before the deadline the Trump administration has set to more than double tariffs on US$200 billion (S$271 billion) of Chinese goods. The benchmark 10-year yield slid 4 basis points to 2.66 percent, the lowest in almost a week.

It's not clear what will happen if a trade deal isn't struck by the deadline.

Mnuchin and US Trade Representative Robert Lighthizer are scheduled to travel to China next week to continue for the third round of trade negotiations.

The US has threatened to increase tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent if a deal is not reached by March 2.

Last week, Trump and Chinese officials had expressed optimism during the second round of talks in Washington about chances of striking a bargain but they released few details about progress in their talks.

Trump's announcement on Thursday was a reversal for the President, who said last week that he planned to meet Xi to resolve any "final issues" before the trade deal.

"They're hoping for more success", he said. It is also expected that the situation will negatively affect the USA stock market. They include USA demands that China boost imports of US products, and Chinese government and corporate pressure on US firms to transfer their technology to Chinese partners.

Such reforms have been a sticking point in talks so far. While the USA has said it's a hard deadline for the tariffs, Trump has also suggested he could agree to extend negotiations beyond month's end if progress is being made. Lighthizer told reporters last week that it was not certain a deal could be reached.

"If we do make headway, and the president thinks we're close enough that he can close the deal on major issues, then I think he'll want to have a meeting and do that", he told reporters.

On Thursday, while acknowledging that Trump was still optimistic about a deal, Kudlow said, "We've got a pretty sizable distance to go here". Three sources familiar with the matter indicated that report was wrong.

The trade struggled between the United States and China, it seems, have been the mover of markets - or the thwarter of markets - many times in the past few months, and Friday seems to be no exception.

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