This is the last thing investors worried about slowing growth in China wanted to see.

Stocks took another leg lower Tuesday afternoon after the Financial Times reported that the US had effectively canceled the next round of US-China trade talks, which were expected to take place between senior officials. The talks were expected to set the table for a visit by a delegation led by China's Liu He later this month. The report also calls into question President Trump's rosy outlook on the trade talks.

This week’s planned trip by Wang Shouwen and Liao Min was intended to pave the way for a higher-level meeting in Washington on January 30 and 31 by Liu He, China vice-premier, and Robert Lighthizer, US trade representative.  But, according to people briefed on the negotiations, US officials cancelled this week’s face-to-face meetings with Mr Wang, a vice-minister of commerce, and Mr Liao, a vice-minister of finance, because of a lack of progress on “forced” technology transfers and potentially far-reaching “structural” reforms to China’s economy. 

The US refused the offer because Beijing has refused to offer concrete proposals about how they would curb IP theft and also implement certain structural reforms.

Trump’s negotiators wanted Mr Liao, one of Mr Liu’s closest aides, and Mr Wang to come to face-to-face talks in Washington with a written offer outlining how Beijing intended to address US complaints about technology transfers and structural reforms.

But, according to the people briefed on the stalemate, Mr Xi’s negotiators are refusing to alter their long-standing position that foreign companies are not forced to transfer technology to Chinese companies.

They also argue that Beijing’s recent offer to improve market access for foreign investors in certain sectors — and strengthen protection of intellectual property — should address US concerns.

Notably, the report follows a WSJ report earlier in the day which cited the work of independent business groups who found that China is moving ahead with its "Made in China 2025" initiative despite rumors late last year that China would move away from the policy. The Trump administration has repeatedly criticized the policy as an example of anti-competitive state support for the domestic industry.

Dow futures are down over 400 points, accelerating losses on the trade headlines...

(Click on image to enlarge)

And the two-day gains from last week on trade hopes are almost entirely erased...

(Click on image to enlarge)

Yuan is dropping back towards the day's lows...

(Click on image to enlarge)