Offshore renminbi rebounds, Chinese stocks soar, and the US imposes additional tariff reductions on China?

　　The China Internet Index KWEB rose more than 6% on Thursday, and the offshore yuan continued to rebound against the dollar on Friday.

　　On Thursday, Deputy U.S. Trade Representative Sarah Bianchi said the Biden administration was considering "all options" to assess possible changes to U.S. tariffs on Chinese imports, including tariff relief and new trade deals investigation.

Subsequently, U.S. stocks continued to stage a big short, the S&P 500 rebounded by nearly 2%, and the China Internet Index KWEB rose even closer to 6%.

In the past 6 trading days, the index has soared by more than 20%.

　　But with the release of U.S. jobs data, the three major stock indexes opened with losses.

As of the press release of the first financial reporter, the Dow fell nearly 300 points, or 0.79%; the S&P 500 fell 1.39%; the Nasdaq fell 280 points, or 2.26%; the China Internet Index KWEB fell 2.24%.

　　The employment data released by the US Department of Labor on the 3rd showed that the number of new jobs in the US non-agricultural sector in May this year was 390,000, significantly higher than the expected 325,000, and the previous value was 436,000.

In May, the U.S. unemployment rate was unchanged at 3.6% month-on-month.

The year-on-year increase in the average hourly earnings of employees fell from 5.5% to 5.2%.

　　The offshore renminbi continued to rebound. As of 0:50 on June 4, Beijing time, the US dollar was at 6.6520 against the offshore renminbi. In May, the offshore renminbi once depreciated to around 6.8386.

　　Driven by a series of economic stimulus policies in China, the RMB has rebounded from the low point by nearly 2,000 points, and the Shanghai Composite Index has also rebounded from the 2,800-point range to close to 3,200 points.

At the same time, expectations that the United States may reduce tariffs on China are also rising.

Given the high inflation in the United States, the imminent review period for tariffs, and the approaching mid-term elections in the United States, most institutions believe that the possibility of reducing tariffs is indeed increasing.

The U.S. CPI growth rate in April was 8.3% year-on-year, the first month-on-month decline in eight months, indicating that inflation peaked and fell, but the relief of inflation pressure was still less than expected.

　　On Thursday, Deputy U.S. Trade Representative Sarah Bianchi said the Biden administration was considering "all options" to assess possible changes to U.S. tariffs on Chinese imports, including tariff relief and new trade deals investigation.

In an interview with foreign media, she said that the United States is seeking to solve long-term challenges from China and "get a really reasonable tariff structure."

　　U.S. President Joe Biden said he was considering rolling back some of the tariffs that former President Donald Trump imposed on hundreds of billions of dollars worth of Chinese goods in 2018 and 2019. The Biden administration is looking for ways to cool inflation, and industry has called for cuts Tariffs to reduce costs for businesses and consumers.

　　In April 2018, based on the U.S. Section 301 investigation, the U.S. first imposed the first round of tariffs on China’s $50 billion worth of strategic and industrial products. Since then, the U.S. has levied more than $300 billion in imported products including Chinese consumer goods. Tariffs, from bicycles to clothing to Bluetooth devices.

U.S. Treasury Secretary Janet Yellen argued that some tariffs hurt consumers and should be lifted.

　　Bianchi said the U.S. Trade Representative's office reinstated 352 exemptions from tariffs of up to 25 percent on specific products, slowing China's tariffs somewhat.

More than 140 MPs have called for an expansion of the list.

The Office of the US Trade Representative is conducting a statutory 4-year review of Section 301 tariffs, which could last for several months.

The agency is collecting input from industry participants in two batches, which will end on July 5 and August 22.

　　Lu Ting, chief economist at Nomura China, previously told reporters that moderate tariff relief is possible, and the removal of tariffs would be beneficial to Chinese exports.

However, he also mentioned that more attention needs to be paid to the impact of the epidemic on exports.

　　In addition to the potential impact of the virus lockdown on exports, overseas import demand may be peaking and falling.

Lu Ting said that at present, foreign consumption has shifted from durable goods to services, and the demand for durable goods has declined.

At the same time, fiscal stimulus in major economies has weakened, and new export orders to other regions have declined.

Personal protective equipment (PPE) and work-from-home (WFH) products, which have been the main drivers of China's strong exports over the past two years, are starting to lose momentum.

In terms of PPE-related products, the year-on-year growth rates of textile yarn and fabric products (including masks) and medical devices (including ventilators) were 0.9% and -10.2%, respectively, in April, and 22.2% and 4.9% in March.

　　It is worth mentioning that the market has also continued to fluctuate due to concerns that the United States has initiated anti-circumvention investigations against photovoltaic manufacturers in Southeast Asia.

American manufacturers said that Chinese manufacturers set up branches in Southeast Asia and built photovoltaic product production lines to produce battery modules and then export them to the United States, so as to avoid being levied against the anti-dumping (AD) and anti-dumping (AD) and anti-dumping measures that must be levied for exporting photovoltaic terminal products from China to the United States. Subsidy (CVD) tariffs.

　　But agencies are now also less concerned about the issue.

Zhang Wei, a senior analyst at Fullerton China, a subsidiary of Singapore’s Temasek, recently told Yicai.com that there are more than 200,000 practitioners in the entire photovoltaic industry in the United States, and 80% to 90% are concentrated in the downstream, especially relying on China’s silicon wafers and modules. equal.

Once the shutdown, employment problems will become prominent.

At present, the market believes that the situation may become clearer in July and August, and the worst case may be a symbolic 5% to 15% tax, or no tariff at all.

In addition, the recent European energy plan has greatly increased the proportion of new energy in the future, which is good for Chinese photovoltaic and wind power export enterprises. The devaluation of the RMB will also improve the performance of exports to a certain extent.