(Oct 11): President Donald Trump said the first day of high-level trade negotiations between the US and China on Thursday went “very well” and that he plans to meet with the top Chinese negotiator Friday.
The talks between Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to resume Friday, Trump told reporters as he left the White House. It’s the first senior-level in-person talks since late July to try and end an 18-month trade war that is taking a toll on the global economy and US manufacturing.
“We just completed a negotiation with China, we’re doing very well, we’re having another one tomorrow. I’m meeting with the vice premier over at the White House, and I think it’s going really well,” Trump said Thursday. “We’re going to see them tomorrow, right here, and it’s going very, very well.”
The US and China have both appeared willing to work toward a partial deal, and leave the more controversial issues for later discussions. However, Trump repeated on Wednesday that he would prefer a complete agreement. The core US demands would commit China to cracking down on the alleged theft of intellectual property and stop forcing US companies to hand over their commercial secrets as a condition of doing business in China.
Without progress, the US is due to increase tariffs on about US$250 billion ($345 billion) of Chinese imports to 30% from 25% on Oct 15. More duties on US$160 billion of Chinese imports are due Dec 15.
“Unlike much of this week’s noise, the announcement of a meeting tomorrow is significant,” Clete Willems, a partner at Akin Gump who served previously served as a trade adviser to Trump. “I’ve been in that room in the past, and the president’s direct involvement has always helped move things forward.”
The S&P 500 Index closed higher for a second day, rising 0.6% on Thursday, while stocks in Asia gained on optimism that a truce can be achieved. Treasury yields steadied after jumping overnight.
Currency Deal
Bloomberg reported Wednesday that the White House is looking at rolling out a previously agreed currency pact with China as part of a preliminary deal that could also see next week’s planned tariff increase suspended, according to people familiar with the plans.
Separately, Bloomberg is reporting that China plans to ask the US to lift sanctions on its biggest shipping company, citing people familiar with the matter.
A Chinese official said Wednesday the country was still open to reaching a partial trade deal with the US that may include large purchases of American commodities, but added that success was contingent on Trump halting further tariffs.
Trump last week approved licenses for some American companies to sell nonsensitive goods to Huawei Technologies Co., the New York Times reported, citing people familiar with the move. While Trump committed to the move after meeting President Xi Jinping in June, no licenses have been issued yet.
Still, in the increasingly hostile political climate toward Beijing, it’s not clear how long any truce could last.
“Even if the president agrees to rolling back tariffs, he’s likely to change his mind early next year if the deficit expands again or the Democrats become more effective in criticizing his China policy,” Derek Scissors, a China expert at American Enterprise Institute, said in an interview.
Further Sanctions
The discussions around an interim deal come as the Trump administration this week further ramped up pressure on Beijing by blacklisting Chinese technology firms over their alleged role in oppression in the far west region of Xinjiang, as well as placed visa bans on officials linked to the mass detention of Muslims. At the same time, a fight over free speech between China and the NBA, triggered by a tweet backing Hong Kong’s protesters, has underscored the heated tensions.
According to people familiar with the currency language, the pact – first announced in February – largely resembles what the US agreed to in a new trade agreement with Mexico and Canada and also incorporates transparency commitments included in Group of 20 statements.
The US-Mexico-Canada Agreement, which lawmakers in Washington have yet to ratify, says the signatories “should” maintain a market-set exchange rate; refrain from competitive devaluation, including through intervention; and strengthen underlying economic fundamentals in pursuit of economic and currency stability.
