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US-China trade war
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Donald Trump is due to meet Chinese Vice-Premier Liu He on Thursday. Photo: Reuters

Trade war: Donald Trump to meet Chinese Vice-Premier Liu He as negotiators eye presidential summit

  • Pair to meet on Thursday with officials said to be discussing when Trump and counterpart Xi Jinping could meet to sign a deal
  • Details of agreement still to be finalised, but China ‘has made further concessions, including greater opening of its market’

China and the United States are gaining momentum towards a deal to end their trade war, with US President Donald Trump set to meet Chinese Vice-Premier Liu He.

The meeting, to be held on Thursday, came as negotiations were said to have entered the “endgame stage” and officials from the two nations were reportedly discussing when their leaders could sit down to sign a deal.

An announcement of the summit date would mean the two sides have made a significant breakthrough towards a deal, but a lack of it would mean they needed to make a much harder effort to narrow their differences – including the verification mechanism and cutting subsidies to state-owned enterprises, analysts said.

Liu was greeted by US Trade Representative Robert Lighthizer outside the US Trade Representative office on Wednesday morning and, in a rare display of enthusiasm, Liu waved to reporters before entering the office.

A source said that China had made further concessions during this round of talks, including greater opening of its markets, and that it was pushing for a summit between Xi and Trump to sign a deal later this month. Another possible option was for the two leaders to meet in June at the G20 summit in Japan.

The talks are the latest after the countries resumed negotiations four months ago and follow two days of talks last week when Liu hosted Lighthizer and US Treasury Secretary Steven Mnuchin in Beijing.

Ministry of Commerce spokesman Gao Feng did not provide details on the progress of the negotiations on Thursday, while Foreign Affairs Ministry spokesman Geng Shuang said Xi looked forward to meeting Trump and the trade negotiations were still ongoing.

Drafts of an agreement to end a nearly year-long trade war would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in China, Bloomberg reported, citing three people familiar with the talks.

Myron Brilliant, executive vice-president for international affairs at the US Chamber of Commerce, said that negotiations had now entered the “endgame stage”.

“Both sides have been pretty clear that they would like to wrap things up in April,” he said. “Whether they can get there is going to be determined on the basis of whether they can handle these outstanding tricky issues.”

But the US demanded a mechanism by which it could retaliate if China did not live up to its reform promises, which Beijing sees as a possible erosion of its sovereignty. China also wanted all tariffs – currently imposed on US$250 billion worth of Chinese goods – to be eliminated, Brilliant said.

Even if the proposed trade deal retained existing tariffs as part of a mechanism to enforce commitments over several years, including for 2025 targets, Chinese analysts said they were optimistic that Beijing would accept some of the terms under discussion to close a deal.

Wei Zongyou, a Sino-US scholar from Fudan University, said both sides were eager to see the meeting yield a framework deal to end the escalation in their trade frictions.

“China may agree to some of the US demands, based on its own pace and requirements for reform,” he said. “But based on the principle of reciprocity, China will definitely request that the US remove existing tariffs. This is in the mutual interest of both parties.”

Zhang Zhexin, a research fellow at the Shanghai Institutes for International Studies, said he was “very hopeful” both sides would agree to the basic terms of a trade agreement soon.

“We can see more overlapping interests and appeals from both sides with each round of negotiation, as China’s concern over continued tariffs and the US concern on trade imbalances don’t necessarily contradict,” he said.

“China will make utmost efforts to reach a deal and stabilise bilateral trade relations not only for its economy but also expecting doing so to add strong momentum for deepening domestic structural reform.”

China’s economy is growing at its slowest rate in more than three decades, while investment and consumer confidence have been hit hard by the trade spat, in which the two countries have slapped tariffs on billions of dollars worth of each other’s products since last July.

Washington has sought to reduce its trade deficit with Beijing by selling more commodities to China, but it has also accused China of unfair trade practices such as intellectual property theft, forced technology transfer policies and subsidies to state firms. China, however, has denied the allegations and claimed US unilateralism violates World Trade Organisation rules.

A report published by the International Monetary Fund on Wednesday said that an escalation of the US-China trade war would drive manufacturing away from both countries and probably cause job losses, but would not change their total trade balances.

Additional reporting by Wendy Wu, Nectar Gan and Owen Churchill

This article appeared in the South China Morning Post print edition as: hopes rise with trump, liu meeting
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