When two governments sit down to talk trade, businesses on both sides tend to watch closely and act early. That seems to be what happened in the weeks before the President welcomed Chinese leader Xi Jinping to Washington this week, Xi’s first state visit to the U.S. in more than a decade. American companies placed noticeably more orders with Chinese suppliers, a shift that caught even seasoned observers off guard.
The evidence comes from China Beige Book, a New York research firm that surveys Chinese businesses directly rather than relying only on government statistics. Between Sept. 1st and Sept. 22nd, it polled nearly 1,300 Chinese companies. Its gauge of orders from the U.S. works simply: take the share of firms reporting more orders and subtract the share reporting fewer. A positive number means more companies are seeing growth than decline. In September, that reading hit 13, up from 3 in August and from negative 12 a year earlier. The firm called the jump a surprise and tied it to China’s improving tariff position compared with other countries.
Not everything in the survey was upbeat. China’s overall domestic and export orders were still lower than a year ago, and new orders softened compared with August. American buyers, in other words, were a bright spot in an uneven picture. Other data backs up the U.S. figures, though. Chinese ports had their busiest week on record just before the summit, and Bloomberg noted that some exporters may have been rushing goods out while tariff questions remained open.
Much of the recent calm comes from a trade truce, which is essentially a promise by both governments to hold off on escalating. This week the two countries extended it by two months, to January. The truce keeps tariffs on imported goods lower than they would otherwise be, pauses Chinese restrictions on rare earth exports, and delays higher fees on ships using U.S. ports. Rare earths matter because they go into everything from smartphones to electric vehicles to defense systems, and China controls most of the world’s supply. Separately, Washington reportedly planned to hold back a threatened round of tariffs aimed at Chinese industrial overcapacity until at least after the summit.
The relief has limits. According to Barclays PLC (NYSE: BCS, LSE: BARC.L), the effective U.S. tariff rate on Chinese goods sits at around 23%, well above the average the U.S. charges its other major trading partners. Chinese exporters are in a better spot than they were a year ago, but they still face a steeper bill than most of their competitors.
Eurasia Group, a political risk consultancy, now puts the odds of continued stability between the two countries at their highest level since the President returned to office. The firm also thinks the truce extension, shorter than many expected, is unlikely to stir up fresh tensions. “Neither government has an interest in renewed escalation,” said Dan Wang, Eurasia Group’s China director. Wang expects each side to keep pressing the other for near-term commitments. Washington will likely push for faster Chinese approval of rare-earth export licenses for American users and bigger purchases of U.S. farm goods. Beijing, in turn, will expect the White House to keep its current pause on arms sales to Taiwan.
The calendar ahead offers more chances to talk. The two leaders are expected to meet again at the APEC summit in Shenzhen in November, and possibly on the sidelines of the G20 summit the U.S. is hosting in Miami in December. No meeting beyond this week has been confirmed, however.
For businesses, September’s numbers show how quickly trade responds to signals from the top. A two-month truce is a short runway, and a 23% tariff is still a real cost. Yet American buyers have shown they will place orders when the road ahead looks clear, even for a few months. Whether that confidence lasts will depend on what Washington and Beijing deliver before January arrives.
