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Chinese President Xi jinping and US President Donald Trump may not meet again before a March 1 deadline to reach a deal in the trade war. Photo: Reuters

‘Still chance of a breakthrough’ in China-US trade war even if Donald Trump holds off on talks with Xi Jinping

  • Chinese and American officials meeting in Beijing next week might be able to hammer out an agreement in principle to stave off tariff rises, observers say
  • That’s despite Trump saying he is unlikely to meet Xi before a deal deadline

China and the United States still might make a breakthrough when mid-level officials meet for trade talks next week in Beijing even if a presidential summit does not take place before a crucial March 1 deadline, according to Chinese government advisers.

US President Donald Trump and his Chinese counterpart Xi Jinping were expected to meet at the end of this month around the same time as Trump’s summit with North Korean leader Kim Jong-un in Vietnam.

That had raised hopes that a deal could be struck between the two countries before US tariffs on Chinese imports rise from 10 per cent to 25 per cent on March 1.

But Trump said on Thursday that it was “unlikely” he would meet Xi before the March deadline for a deal.

Asked if he would meet Xi this month, Trump responded “no” and shook his head, adding “unlikely”.

Earlier on Thursday, White House economic adviser Larry Kudlow told the Fox Business television channel that there was “pretty sizable distance” between the world’s two biggest economies on reaching and agreement.

Donald Trump admits meeting Xi Jinping before the March 1 trade war deadline is ‘unlikely’

Observers said next week’s trade talks – involving US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin – would be key in any progress.

“Trump’s remarks [of not meeting Xi] are a way to signal and to pressure on China,” said Wu Xinbo, director of the Centre for American Studies at Fudan University in Shanghai.

“So next week’s meeting in Beijing will be crucial in deciding whether a Xi-Trump meeting can be held.”

Wei Jianguo, former vice-minister of commerce and now vice-chairman of the China Centre for International Economic Exchanges, also said there was still a chance that the two leaders might meet if next week’s talks went well.

“It is still likely that the two sides can reach an agreement in principle next week [to further postpone the tariff increase] … and the leaders’ summit will be the occasion to announce the results,” Wei said.

But he also cautioned that Beijing would need to prepare for the possibility that the discussions collapsed, hitting the Chinese economy.

China has to be prepared for trade talks to collapse, according to a former Chinese commerce ministry official. Photo: AFP

Adams Lee, a Seattle-based international trade lawyer at law firm Harris Bricken, said Trump appeared to want to continue holding tariffs over China, given the “Tariff Man” title he has applied to himself.

“He wouldn’t necessarily have to escalate and increase the tariffs from 10 per cent to 25 per cent,” Lee said. “He could say China has done enough to continue talking and maintain the current status quo.

“Seems like more work needs to be done by Lighthizer and lower-level folks with technical knowledge to hammer out what specific actions China needs to do, or what the US finds lacking.”

He said US negotiators might push China for hard concessions, but Beijing would be wary knowing that Trump could undo any progress with a single tweet.

US and China may seek to extend trade war truce before Donald Trump and Xi Jinping meet to finalise deal

China and the US agreed to a 90-day truce in their trade war, putting the planned increase in tariffs on hold to hammer out a deal. If they do not reach an agreement before March 1, the tariffs will rise.

Last week, at the end of two days of talks in Washington, Trump said in a tweet: “No final deal will be made until my friend President Xi, and I, meet in the near future to discuss and agree on some of the long-standing and more difficult points.”

Renmin University international relations professor Shi Yinhong said there were deep divisions on key issues.

“On critical issues such as China’s intellectual property theft, the government’s subsidies and special treatment for state-owned enterprises, as well China’s reluctance to have a monitoring mechanism, there is still a big gap between US expectations and what China is willing to do,” said Shi, who is also an adviser to China’s State Council.

William Perry, also an international trade lawyer at Harris Bricken, said China would need to take concrete action to address long-standing US concerns.

“Look at the State of the Union. When President Trump talked about a tough trade deal with China dealing with structural issues, he received bipartisan support from Democrats and Republicans. The Dems hate Trump and yet they agree on a tough trade deal with China. That is a significant point. Trump cannot back down,” said Perry, a former Commerce Department official.

“My hope is that the Chinese government will come up with a practical solution and deal with the [intellectual property] theft and forced technology transfer.

“Lighthizer will require that any deal be enforceable. Again, promises on IP theft and forced technology transfer will not work. In fact, there is discussion of a ‘snapback’. [If] the Chinese government does not follow through with its promises in any agreement, the tariffs on the US$250 billion will snap back in place.

“No give on ‘structural’ issues, which includes IP theft and forced technology transfer, and no trade deal with the US. Some movement on these issues and yes the deal can happen. But that is the red line.”

Additional reporting by Sarah Zheng and Teddy Ng

This article appeared in the South China Morning Post print edition as: high h opes for talks despite summit blow