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Liu He (centre-left), who led China’s delegation, listens to President Donald Trump during the talks in the Oval Office on Thursday. Photo: Bloomberg

China and US upbeat on progress after Washington trade talks

  • Beijing hails ‘frank, concrete, and constructive discussions’ following Vice-Premier Liu He’s visit, as Donald Trump welcomes ‘tremendous progress’
  • US Trade Representative Robert Lighthizer set to travel to China after Lunar New Year to resume discussions

China and the US were upbeat on progress towards settling their trade disputes after wrapping up two days of tough negotiations in Washington, sending Chinese markets higher ahead of a deadline to avoid additional tariffs.

Both sides signalled developments on bilateral sticking points beyond their trade imbalance – with a focus on structural issues and an enforcement mechanism – after talks led by Chinese Vice-Premier Liu He and US Trade Representative Robert Lighthizer concluded on Thursday. Follow-up discussions are slated for early February in Beijing.

The talks covered a wide range of issues, including forced technology transfers, intellectual property protection, market access, the trade deficit, cybertheft, government subsidies to China’s state-owned enterprises, and currency controls, the White House said. But they did not discuss the US indictment against Chinese telecoms giant Huawei Technologies and its chief financial officer Sabrina Meng Wanzhou.

With the March 1 end to a 90-day truce on tariffs looming – and the threat of more US duties on US$200 billion worth of Chinese goods – both sides have been keen to make progress to stave off a further escalation of their trade war. US President Donald Trump on Thursday said he looked forward to meeting Chinese leader Xi Jinping to iron out the final details of an agreement at an unspecified date.

Wei Jianguo, a former Chinese vice-commerce minister, said the terms of a potential deal could be better than expected – not only halting additional tariffs but also easing existing ones.

“An agreement would resolve misunderstandings on both sides and find a path for them to go forward, so it would be a very high quality agreement,” he said.

Lighthizer said there would be a “brief pause” for the Lunar New Year, but that both sides were in the early stages of drafting a negotiating agreement that would not require congressional approval.

“Both sides agree this agreement is worth nothing – if we can get an agreement, it’s worth nothing without enforcement,” he said.

One possibility would be a memorandum of understanding, Bloomberg reported.

China’s foreign ministry spokesman Geng Shuang told reporters on Friday that both sides had a clear timeline and road map for the next steps, adding that Xi was “also willing to maintain close contact with Trump through various methods”.

In a statement published by state news agency Xinhua, the Chinese delegation said the “frank, concrete, and constructive discussions have made important progress”.

Trump earlier hailed the “tremendous progress” he had seen from China towards reforming its laws on forced technology transfers and intellectual property protection, as well as an agreement for China to buy 5 million tonnes of US soybeans.

Donald Trump hails trade talks’ progress, says meeting Xi Jinping ‘possible’ on trip to meet Kim Jong-un

But a key question was still a mechanism for enforcement – a word Lighthizer repeated multiple times on Thursday – to ensure China followed through on structural commitments, observers said.

Alan Beebe, president of the American Chamber of Commerce in China, said the promise to buy more US soybeans was “really low-hanging fruit”, and that a binding agreement with an enforcement mechanism for Chinese structural reform was needed. That could mean the use of tariffs to ensure progress or seeing “sufficient teeth” in regulations and laws for structural reforms, he said.

“What we would consider a best-case scenario is that there’s something written in binding form with sufficient specificity, with clear timelines on the sort of comprehensive steps that China would take in order to resolve many of the long-standing issues – but we recognise that it’s not easy,” he said.

Chinese Vice-Premier Liu He, central bank governor Yi Gang and their delegation spent two days in negotiations with US officials. Photo: AFP

But analysts were optimistic, noting the latest talks reflected considerable progress towards a deal, even if implementation would take time.

“There is a high possibility of reaching a deal before the deadline,” said Li Mingjiang, an associate professor at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore. “But implementation will be a big challenge if China and the US can reach a satisfactory agreement. It would be an all-encompassing deal ... this problem cannot be resolved over a short period of time.”

Liu Weidong, a Sino-US expert at the Chinese Academy of Social Sciences, said both sides may not have fully revealed their positions in negotiations yet.

“While they were still reaching out to find the bottom line this time around, they are more clear on it than they were before,” he said. “The work that needs to be done now is to further understand their respective situations, as the basis for their decision-making.”

Donald Trump says trade war will ‘hopefully’ be resolved before March – but not before he’s met Xi Jinping

Fu Mengzi, vice-president of the China Institutes of Contemporary International Relations in Beijing, added that progress had been made, but more negotiation was needed on the key issues of forced technology transfers and intellectual property protection.

“If both sides can have a pragmatic and active attitude, the February negotiations in Beijing may still yield an agreement,” he said. “But some structural problems will need a transition plan, and it is not realistic to expect them to be resolved overnight.”

For US businesses in China, Beebe said optimism remained that trade tensions would ease. “Most people are hopeful, but we advise our member companies ... that hope is not a strategy,” he said. “Of course it’s good to hope for the best, but in a way, one needs to plan for the worst.”

This article appeared in the South China Morning Post print edition as: h opes rise for trade deal to be struck ahead of deadline
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