U.S. President Donald Trump attends a bilateral meeting with China's President Xi Jinping during the G-20 leaders summit in Osaka, Japan, June 29, 2019. Kevin Lamarque | Reuters

Intellectual property still a big sticking point



The problem is that China sees little reason to give in to U.S. demands to change is domestic laws in order to increase intellectual property protections for foreign, particularly American, companies.



It's a key sticking point for the Trump administration. The president's decision in May to hike tariffs to 25% on $200 billion in Chinese goods came after Beijing allegedly back tracked on key commitments under a draft deal, including intellectual property protection.



Indeed, China's Vice Premier Liu He has only reiterated Beijing's position that a deal must be balanced and "expressed in terms that are acceptable to the Chinese people and do not undermine the sovereignty and dignity of the country." According to Boockvar, asking China to make changes to its domestic law would be like Beijing asking the U.S. to make constitutional changes to meet its economic demands. "The U.S. is gonna have to accept that China is not going to put IP protection into law," Boockvar said.



But the Trump administration doesn't appear ready to give in on that point. U.S. Trade Representative Robert Lighthizer has rejected China's calls for a balanced deal, citing intellectual property as the reason.



That leaves the market largely where it was when Trump accused China of breaking its commitments in May, Boockvar said. The only difference is that the Fed is going to cut rates, he added, which wasn't a possibility at that time. "No substantive progress was announced on the main issues in the dispute," Goldman Sachs made clear in a note published on Saturday.

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