May 5 (Reuters) – As financial markets pin their hopes on a de-escalation in the U.S.-China trade war, some experts caution that meaningful progress in striking a deal between the world’s two largest economies may still be some way off.

“For now, signs of these are sparse, presumably because the pain threshold has not been reached,” Yao said, adding that the outlook for the Chinese economy still looks positive.

China recently said it was “evaluating” a U.S. proposal to resume trade talks over Washington’s 145% tariffs. It has also created a list of U.S.-made products for exemption from its 125% retaliatory tariffs.

Sat Duhra, portfolio manager at Janus Henderson, said, “Trump will need to respond if the threat of a recession increases significantly, which the equity market, dollar and the Treasuries arguably are beginning to point to.”

He said a resolution would benefit his company’s positioning in China.

Duhra has been lapping up Chinese stocks, noting opportunities in banks, technology and sportswear among other sectors, citing higher dividends and lower valuations.

While Janus Henderson is broadly “neutral weight” on Chinese equities, Amundi holds a close to “neutral” stance, preferring domestic-oriented sectors in A-shares and AI-leading tech names in offshore stocks.

China’s blue-chip CSI300 (.CSI300), opens new tab and Shanghai Composite (.SSEC), opens new tab are down 4% and 2% year-to-date, respectively, in line with their U.S. counterparts – S&P 500 (.SPX), opens new tab and Nasdaq (.IXIC), opens new tab down 3% and 7%, respectively.

“News on tariffs have become mostly noise for the Chinese markets… They don’t set the trend anymore unless a U-turn on Trump’s policies is achieved,” Yao said, adding that China is well-positioned in terms of economic size and domestic policies to cushion the impact of external shocks.