Top Chinese and US envoys discuss next step in trade war talks

  • High-level contact suggests both countries keen to keep up momentum despite arrest of Huawei executive Sabrina Meng Wanzhou, analyst says
PUBLISHED : Tuesday, 11 December, 2018, 10:19am
UPDATED : Tuesday, 11 December, 2018, 11:22pm

Top Chinese and US trade negotiators have discussed plans for renewed trade talks, the first time senior officials from both countries have had official contact since the presidents of China and the United States reached a truce on tariffs earlier this month.

Despite tension over the arrest of a Huawei executive in Canada at Washington’s request, Chinese Vice-Premier Liu He, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer discussed the plans over the phone on Tuesday morning in a sign that the two nations still want to engage in trade talks.

In a brief statement, the Chinese Ministry of Commerce said the three men exchanged views on the next step in a road map for consensus.

The talks follow a decision by Chinese President Xi Jinping and his US counterpart Donald Trump in Argentina two weeks ago to hold off on further trade war tariffs for 90 days.

China also planned to send a 30-member delegation to the US this week as a follow-up to the Xi-Trump meeting, but a US business sector source said the trip might be delayed due to complications over the trade talks.

Huawei case forces China to walk tightrope in US trade talks

Even with the truce, uncertainty hangs over the China-US trade relationship. Washington insists China has to tackle a wide range of trade disputes such as forced technology transfer by March 1. If there is no deal at the end of the 90 days, the US will raise tariffs on US$200 billion worth of Chinese goods from 10 per cent to 25 per cent.

Trump imposed the tariffs not only to try to force Beijing to take measures to close a decades-old US trade deficit with China but also with the aim of giving US companies easier access to Chinese markets.

Beijing responded with pledges to raise foreign ownership caps in its financial sector and to import more soybeans, but Trump’s team rejected these measures as inadequate.

Ties have also been complicated with the arrest in Canada of Sabrina Meng Wanzhou, the chief financial officer of Chinese telecom giant Huawei. The US has requested that Meng be extradited, accusing her of fraud by covering up Huawei’s links to a company that traded with Iran in breach of US sanctions.

What the US wants from China during the 90-day trade war truce

Chinese analysts said the contact between Liu, Mnuchin and Lighthizer was to send a message that both sides had not wavered from the agreement reached in the Buenos Aires.

Zhang Yansheng, chief researcher at the China Centre for International Economic Exchanges, said he believed an understanding had been reached and this would not be derailed by the Meng arrest.

“Although it would be very difficult for the Chinese side to accept what the US has done in the Meng incident, this would not overturn the agreement made during the head-of-state meeting in Argentina,” Zhang said. “Meng’s case has only just started, while the trade war discussion is a different issue that has been ongoing.”

It’s Huawei, all the way, as Meng’s supporters converge on Canadian court

Zhang Zhexin, research fellow at the Shanghai Institutes for International Studies, echoed this view, saying the phone conversation showed that the trade talks were progressing.

“This is reassurance of the will to work towards reaching a common goal, and discuss the substantial details of the steps of future negotiations,” he said.

Zhang Zhexin said that although Meng’s arrest was meant to put pressure on China in the 90-day grace period, “more of [the incident] would still be related to independent actions from the US Department of Justice”.

But, observers are split on whether 90 days is long enough for the two sides to resolve t heir trade differences.

Mnuchin warned after the Xi-Trump meeting that Beijing should avoid “soft commitments” in talks, according to the Financial Times. “There is a 100 per cent unanimous view on our economic team that this needs to be a real agreement,” Mnuchin was quoted as saying.

US sets 90-day deadline for China to agree comprehensive trade deal

The White House said in a statement after the Xi-Trump meeting that the countries would talk to address non-tariff market barriers, cyber theft and forced technology transfer – the latter two of which Beijing denies take place.

Additional reporting by Wendy Wu