Trump to host dinner with Xi at G20 summit, but will there be a deal?

China has tentatively accepted US President Donald Trump’s offer to host a dinner for his Chinese counterpart Xi Jinping next month after the G20 summit in Buenos Aires, raising prospects for a truce in the trade war between Washington and Beijing.

The “meeting plus dinner”, upgraded at Trump’s request from the originally scheduled chat on the sidelines of the G20 summit, could offer more time and a better atmosphere for talks, people familiar with the arrangements told the South China Morning Post.

A source said Trump would postpone his departure from Argentina to make the dinner happen, suggesting he was keen to reach a deal with Xi.

The development comes after the two leaders spoke by telephone on Thursday.

Asian markets rose on Friday as hopes ran high that the trade war that has cast a shadow over economic growth and market sentiment in the recent month, could ease.

Hong Kong’s benchmark Hang Seng Index gained 4.2 per cent on Friday, ending the best performing week in 42 months. The Shanghai composite stock index was up 2.7 per cent, while the onshore yuan strengthened beyond the 6.9 level on Friday and recorded the biggest two-day gain since January.

Trump also asked his officials to begin drafting terms for a trade deal with China, Bloomberg reported, citing unidentified sources.

Chinese state media was positive about the prospect of talks between the two leaders.

“As long as both sides have the sincerity to have proactive dialogue ... we believe this can result in a solution that is acceptable for both sides,” a commentary in state-run Xinhua read.

But analysts said there was still uncertainty about a trade deal. After talks in Washington in May, China’s chief trade negotiator, Vice-Premier Liu He, said the two sides had agreed not to start a trade war. But Trump overthrew those agreements and slapped tariffs on Chinese products starting from July.

There are also fundamental differences between Beijing and Washington over the role of state-owned enterprises in the economy and China’s state-led technology programmes.

In addition, wider relations between China and the United States have deteriorated.  Trump and Vice-President Mike Pence have both accused China of meddling in the US elections and FBI director Christopher Wray has portrayed China as a bigger threat to American national security than Russia.

The Xi-Trump summit in Argentina on December 1 would not be able to ease these tensions, observers said.

“The best possible outcome of the Xi-Trump meeting would be a suspension of tariffs on each other, but the US would continue its all-out blockade on development of China’s technology,” Renmin University international relations professor Shi Yinhong said.

“Bilateral tensions over strategic issues such as Taiwan, the South China Sea and the arms race will continue and may be at risk of escalating.”

China signals big shift in economic course in trade war headwinds

Jake Parker, vice-president for China operations at the US-China Business Council, said Thursday’s call and the meeting only offered a chance for the two countries to discuss their long list of disputes – from the trade imbalance to China’s forced technology transfers – but none of them would be easy to resolve.

“They are maybe too complex to be solved in just one meeting,” Parker said. “But the leadership summit could lay the groundwork for how to proceed.”

In the call on Thursday, the two leaders agreed to meet in Argentina and lay the ground for further discussions on trade and North Korea.

Trump said in a tweet that he had a “long and good [phone] conversation” with Xi, adding: “We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G20 in Argentina. Also had good discussion on North Korea!”

Xinhua said Xi told Trump that “both of us have good intentions for the healthy and steady development of Sino-US relations and for growth in Sino-US trade cooperation, and we shall make efforts to turn these intentions into reality”.

Trump’s economic adviser, Larry Kudlow, said the Trump-Xi summit would be more than a meeting on the sidelines and might include a formal dinner, according to The Hill, a Washington-based news outlet.

The G20 summit will be the first face-to-face meeting between the two leaders in about a year.

The tit-for-tat trade war has targeted more than half of the goods shipped between the two countries.

In Trump’s trade war on China, the winner will be whoever can stand to lose the most

It is spurring companies to consider moving parts of their supply chains out of both the US and China over the longer term and delaying or cancelling investment in both countries, a report for the American Chamber of Commerce in South China said this week.

The dispute has also cast a shadow over the global growth outlook and soured market sentiment in China.

Additional reporting by Wendy Wu