Stock prices leapt higher in Asia overnight after China moved to cut tariffs on some US goods.
China’s Ministry of Finance said on Thursday it would reduce tariffs on about $75bn (£58bn) of goods imported from the US. A selection of imports facing levies of 10% will see the tax fall to 5%, while 5% levies on other imports will fall to 2.5%.
China said the tariff roll-back was “to promote the healthy and stable development of Sino-US economic and trade relations”. The changes will take effect from 14 February.
“The news overnight that China is to halve tariffs rates on $75bn of imports from the US beginning on February 14 has seen markets in Asia push on further this morning,” Deutsche Bank analysts said in a note on Thursday morning.
“That being said it shouldn’t be surprising news as this comes after both nations had agreed in Phase 1 negotiations that they would reduce tariffs on each other’s goods as part of the deal.”
China and the US signed a ‘Phase 1’ trade deal in January.
European and US stocks were trading higher in the wake of the tariff cut announcement. The FTSE 100 (^FTSE) opened up 0.4% in London, the German DAX (^GDAXI) was 0.8% higher in Frankfurt, and the CAC 40 (^FCHI) in Paris rose 1%.
China’s move to cut tariffs comes at a time when the country is battling a deadly outbreak of novel coronavirus that experts warn will hit economic growth.
Authorities said overnight that deaths in mainland China from coronavirus have now risen to 563. The number of confirmed cases has risen by 3,694 to 28,018. Millions of people remain under lockdown across China and travel restrictions are in place.
Goldman Sachs analysts said earlier this week they expect the epidemic to knock 1.6 percentage points off China’s forecast first quarter GDP growth. UBS said it expects annual GDP growth of just 3.8% in the first quarter, down from 6% in the fourth quarter of 2019, and forecast Chinese GDP growth of just 5.4% for 2020, which would be a 30-year low.