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China insiders hint this round of trade talks could lead to a ‘breakthrough’

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The previous 18 months of trade talks between the U.S. and China have only led to more tit-for-tat tariffs, but this time it might be different, according to Chinese sources who seem to have inside knowledge on the trade war.

China’s Ministry of Commerce confirmed the two countries held a phone call Thursday and agreed to meet in early October in Washington. This would mark the 13th round of trade negotiations after both sides slapping tariffs on billions of dollars worth of each other’s goods.

“There’s more possibility of a breakthrough between the two sides,” said Hu Xijin in a tweet Thursday. Hu is editor-in-chief of the Global Times, a tabloid under the People’s Daily, which is the official newspaper of the Communist Party of China. His Twitter account has been followed by many Wall Street traders and market participants for insight on the trade war.

Hu has been spot on with the recent developments in the escalated trade dispute. Most recently, he had warned about the Chinese retaliation against President Donald Trump’s tariffs just hours before the Chinese made the official announcement.

“New developments”

A blog called Taoran Notes on Chinese social media WeChat has been followed by analysts covering China and market participants for cues on the trade battle. Run by a state-owned newspaper called Economic Daily, the blog has been cited by U.S. media including Bloomberg News for additional color from the China side.

On Thursday, in a 1,200-word commentary, Taoran said it’s “very likely” there will be “new developments” in the upcoming trade talks.

The blog highlighted the statement from China’s Ministry of Commerce saying both sides will make consultations in mid-September in preparation for “meaningful progress” in the ministerial-level talks in October. “Meaningful progress” is an expression that hasn’t been used at all since the talks in May fell apart, Taoran noted.

“Whether the trade war is headed in a positive direction or it will repeat again, I am afraid it still depends on how some people choose,” Taoran said.

Taoran first grabbed the attention of China observers when it emerged as the only vocal commentator on Trump’s initial threat to escalate the trade war back in May. “There’s no winner in a trade war,” Taoran warned then.

The White House did not immediately respond to CNBC’s request for comment on Hu and Taoran’s posts Thursday.

The Dow Jones Industrial Average surged more than 400 points Thursday as investors bet that there may be something more substantial to come out of these new talks.

—CNBC’s Tucker Huggins contributed reporting.

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Australian retailers suffer worst quarter in 20 years, exports shine

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Shoppers walk past a retail store in Australia.

Brendon Thorne | Getty Images

Australia’s retailers are facing a consumption drought as the country’s second biggest state locks down to fight the coronavirus and as data showed sales volumes suffered their biggest plunge in two decades in the second quarter.

Retail sales adjusted for inflation slipped 3.4% in the June quarter, Tuesday’s data from the Australian Bureau of Statistics showed, the steepest decline since the introduction of the goods and services tax in 2000. Analysts were expecting a 3.2% fall in the quarter.

The larger-than-expected drop suggests consumer spending will be a drag on gross domestic product growth in the June quarter.

The sales downturn was driven by cafes & restaurants, off 29.1%, and clothing, footwear and personal accessory, down 22%. There were also losses in food retailing.

The slump in volumes contrasts with value-based retail numbers, with June seeing a solid 2.7% jump in monthly sales and May recording a stellar 16.9% rise as shops, restaurants and pubs fully reopened across large parts of Australia.

Economists warned the outlook was clouded by a second wave of coronavirus infections in the state of Victoria, with weekly spending data by the country’s major banks already showing signs of moderation.

Victoria declared a “state of disaster” this week following a relentless surge in coronavirus infections since late June.

In contrast to retailers, Australia’s exporters have been going gangbusters thanks to demand from China for iron ore and other resources, while imports have been hammered by the lockdowns.

Separate data on Tuesday showed the trade surplus swelled to A$8.2 billion in June, taking the total for the second quarter to a whopping A$23.4 billion.

Exports rose 3% in June underpinned in part by sharply rising prices for iron ore and gold, providing a windfall to miners’ earnings and government tax receipts.

Exports to China alone hit an historic high of A$14.6 billion for the month, bringing the rolling 12-month total to A$151 billion.

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New Delhi cannot fully cut off economic ties with Beijing

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India China tensions: New Delhi cannot fully cut off economic ties with Beijing