SINGAPORE (Jan 10): UOB Global Economics & Markets Research says bilateral trade relations between the US and China will be “fraught with difficulties” despite the positive steps made with their first face-to-face meeting since their 90-day truce, which concluded on Jan 9 after a one-day extension.
Both parties released short statements following the meeting indicating they resolved to work towards some resolution.
Based on a Jan 9 statement released by the Office of the United States Trade Representative (USTR), the negotiations took place with a view to achieving “needed structural changes” in China with respected to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft of trade secrets for commercial purposes, services and agriculture.
“The meeting outcome suggests there will not be any escalated deterioration in US-China trade ties in the near-term, but the way forward remains fraught with difficulties given the focus on structural changes that are expected from China,” comments UOB economist Ho Woei Chen in a Thursday note.
Ho nonetheless notes that given the low expectations going into the meeting, several factors were taken positively by markets as efforts to make the negotiations work.
This included the meeting extension itself; a “surprise attendance” by China Vice-Premier Liu He; as well as the large size of the Chinese delegation at the meeting, which reportedly exceeded 100.
As the next meeting approaches the half-way mark to its March 1 deadline, Ho believes that it is crucial to note the timing of its occurrence.
“While there is still the possibility of extension of this deadline, how proactive the parties approach negotiations should provide some indication of the eventual outcome,” says Ho.
“US Trade Representative Robert Lighthizer is expected to meet with China Vice Premier Liu He later this month, while there is some speculation that US President Trump and Chinese Vice President Wang Qishan may meet at the World Economic Forum in Davos, Switzerland (22-25 Jan) where Wang would deliver a keynote speech,” she notes.
