President Donald Trump yesterday said Chinese and American officials were working towards meaningful progress in trade talks, boosting hopes for a detente in the two economies’ damaging trade war.
As negotiators concluded a second day of talks, Beijing and Washington appeared close to announcing an incremental bargain, marking a positive turn after a summer of acrimony and escalation.
The good mood was a rapid improvement after a week in negotiations had appeared headed for a dead end as Washington blitzed China with aggressive manoeuvres tied to ethnic persecution in Xinjiang and other matters.
For the moment, US tariffs on hundreds of billions of dollars in Chinese merchandise are due to rise on Tuesday.
But even a partial win would be a boon for Trump, who faces an impeachment firestorm and a stinging criticism in Congress for his treatment of Kurdish allies in Syria, only the latest episodes of the White House’s perpetual turmoil.
A cheerful morning tweet from Trump fed a rally in stocks, with Wall Street erasing the week’s losses as investors bet a partial pact would see the United States postpone next week’s scheduled tariff increases on hundreds of billions of dollars in Chinese imports.
“Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days,” Trump said on Twitter shortly after officials resumed negotiations for a second day.
“All would like to see something significant happen!”
Trump was scheduled to meet with Beijing’s top trade envoy Liu He later yesterday in a sign the two sides expect to make a positive announcement.
The president added in a later tweet he would also be able to skip the process of congressional approval: “When the deal is fully negotiated, I sign it myself on behalf of our Country. Fast and Clean!”
Congress has yet to ratify a revamped North American trade pact which Trump signed last year.
Since the China trade war began last year, moments of comity and cheer have more than once been shattered, giving way to jolting deteriorations in relations between the two sides.
In the spring, officials said a deal was more or less at hand, only to have Washington resume tariff increases in May, accusing Beijing of reneging on core commitments already put down in writing.
In Beijing, Foreign Ministry Spokesman Geng Shuang also told reporters yesterday that China hoped “to promote positive progress” in the talks.
Media reports this week have drawn the contours of a partial deal that, while not addressing Trump’s biggest gripes about China’s trade practices, would offer something for both sides.
China will continue to increase purchases of US farm exports and pledge to refrain from currency manipulation while Washington will suspend a tariff increase, Bloomberg reported.
Myron Brilliant, head of international affairs at the US Chamber of Commerce, told reporters on Thursday he had spoken with both sides and that an agreement on currency could emerge this week.
“I think that could lead to a decision by the US administration not to put forward a tariff rate hike on October 15,” he said.
The US Treasury in August branded China a currency manipulator, accusing Beijing of deliberately weakening the RMB to gain unfair trade advantages, making good on a Trump campaign pledge.
Where matters go from there remains to be seen, however.
China has so far balked at Trump’s demands for profound changes in the way Beijing manages its economy, which analysts say could politically undermine the Communist Party. In an editorial yesterday, the party-owned China Daily said a partial deal “is a more feasible objective and one that would be in the common interests of both sides.”
Meanwhile, the Trump administration has continued to examine ways in which it could exert more pressure on Beijing beyond simply taxing Chinese imports.
Washington accuses China of attempting to dominate global industry through massive state intervention in markets, theft of intellectual property, hacking and subsidies, accusations shared by Europe and Japan.
Larry Kudlow, a top White House economic aide, said this week this could include heightened regulatory scrutiny of Chinese companies operating in the United States.
Liu He, China’s vice premier (centre), talks to Robert Lighthizer, US trade representative (left), and Steven Mnuchin, US Treasury secretary, before a meeting at the Office of the US Trade Representative in Washington, DC, yesterday. As negotiators concluded a second day of trade talks, Beijing and Washington appeared close to announcing an incremental bargain, marking a positive turn after a summer of acrimony and escalation.
