Chinese oil and chemical companies remain cautious as uncertainties in US-China trade relations persist despite high-level talks scheduled for this weekend. Both countries’ leaders are attempting to mend ties, but industry analysts maintain that expectations should be tempered. Discussions, which will feature Vice Premier He Lifeng from China and US officials including Treasury Secretary Scott Bessent, come after US President Donald Trump announced tariffs in early April.
The upcoming talks are significant as they represent the first engagement since tariffs began impacting trade flows, leading to a predicted 3.7% GDP growth for China—down from earlier estimates of 4.2%. Additionally, oil demand growth forecasts have been revised drastically from 270,000 barrels per day in January to just 78,000 b/d. This downturn is reflected in the purchasing managers index, which fell to 49 in April, indicating economic contraction.
The market responded to news of the talks with a slight increase in crude oil futures; however, policy experts warn that a comprehensive trade resolution remains uncertain. Analysts highlight notable differences in interests between the two nations that make any agreement complex. In light of these factors, China has suggested the US should adjust its approach to trade negotiations.
Chinese businesses, particularly those reliant on US imports for essential materials like ethane and propane, are feeling the pressure of tariffs. Some have sought exemptions from these tariffs as a matter of urgency. While discussions are taking place, companies remain anxious about future import costs and are prepared for a potential protracted conflict, reflecting a broader sentiment of uncertainty in the trading environment.