More signs of improved business sentiment in China helped push the country’s main stock benchmark past its highest level since March of last year on Wednesday, as investors continue to warm to an optimistic view of the engine of global growth.
Caixin’s China General Services Business Activity Index rose to 54.4 in March, from just over 51 in February, following an unexpectedly strong result in the same research group’s manufacturing sector index. A reading above 50 on the survey reflects expectations of business expansion among respondents.
The Shanghai Composite Index led gains in major Asian benchmarks, up 1.24%.
Adding fuel to the rally in Shanghai were comments from the Donald Trump administration’s economic adviser Larry Kudlow on Tuesday that there was a “certain amount of optimism” surrounding trade talks with China.
Analysts note that the survey results, which represent sentiment and not hard economic data, might be colored by headlines coming out of the trade talks.
“We expect to make more headway. I can’t report any of the details, but it’s a larger, grander discussion than anything we’ve had before in US-China trade relations, and there’s a certain amount of optimism,” Kudlow said, speaking at the US Chamber of Commerce.
Kudlow also told reporters Wednesday that the trade talks could be extended into the weekend.
Reports have indicated that the two sides are still trying to move past disagreement on how to enforce the terms of a deal and the related question of whether US tariffs already imposed on Chinese goods will be lifted immediately.
US Trade Representative Robert Lighthizer has suggested in public comments that regardless of whether current tariffs stay in place, terms that allow the US to impose new tariffs unilaterally in response to a breach of contract are a potential enforcement mechanism. The Chinese said that any arrangement must not be one-sided.
President Trump recently commented to reporters that the existing tariffs would not be lifted initially as part of a deal.