■ US Trade Representative Katherine Tai delivered a speech outlining the US approach to its bilateral trade relationship with China at CSIS yesterday. ■ She reiterated the view that China has not fulfilled its commitments in Phase 1 of the trade deal. She said that the US will use the full range of tools and develop new tools as needed to defend American economic interests from harmful policies and practices. ■ However, Ms Tai also mentioned that the US will not seek an economic decoupling from China, but instead will seek a “recoupling”. The US will start "a targeted tariff exclusion process" for exemptions from customs tariffs imposed on US$370bn worth of imports from China. She said she is set to speak to Vice Premier Liu He soon. ■ The message from Ms Tai, in our view, indicates that concerns about an escalation of the China–US trade conflict will ease further in the near term, which is positive for some non-TMT export names. But we maintain the view that localization remains a key direction for China TMT (both hardware and software). ■ The analysis in this report is based on industry and macro figures and may differ from the views of individual analysts, in some cases.