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Cautious hopes before new round of US-China trade talks
BEIJING, July 28, 2019 (BSS/AFP) – US trade negotiators return to China
this week for a fresh round of talks in a new city, but experts warn a change
of air is unlikely to quickly solve an impasse between the world’s two
biggest economies.
The meetings in Shanghai on Tuesday and Wednesday will be the first face-
to-face discussions since negotiations collapsed in May after President
Donald Trump accused China of reneging on its commitments.
Washington and Beijing have so far hit each other with punitive tariffs
covering more than $360 billion in two-way trade in the tense stand-off.
Despite an agreement by Trump and President Xi Jinping at the G20 in Japan
to cease hostilities, there has been little progress since — and the US
leader has irritated the Chinese side by claiming the slowing economy is
forcing them to make a trade deal.
The dispute has centred on US demands for China to curb the alleged theft
of American technology and provide a level-playing field to US companies in
the Asian country.
Trump has also angered China by blacklisting telecom giant Huawei over
national security concerns.
“Basically China tried to take this as a pure economic affair and just
wants to make a deal, but on the US side it seems … (they) try to connect
the trade affairs with a strategic rivalry,” Wang Chuanxing, professor at
Tongji University, told AFP.
“The common ground is that both of the sides want to strike a deal, so
this is very important.”
– Symbolic venue –
The re-starting of talks is seen as a positive step, and the change of
location to the country’s leading city of commerce Shanghai is also
suggestive.
“It could be an attempt to distance the consequences of the negotiations
from Xi Jinping and the people immediately around him,” said Michael Pettis,
finance professor at the Guanghua School of Management at Peking University.
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Holding talks in Shanghai is also a nod to a time of better relations, as
the home of the 1972 Shanghai Communique — an important step in building
diplomatic relations between the US and China.
“There’s a significance to (China) of the Shanghai Communique and the
symbolism obviously of that important agreement,” US Treasury Secretary
Steven Mnuchin told CNBC, adding that he would take the invite to Shanghai as
“good news that we will be making progress next week”.
However Mnuchin, who will be joined by US trade representative Robert
Lighthizer in Shanghai, warned there were “a lot of issues” and he expected
follow-up talks in the US.
“It’s not likely (they will sign a deal) this week,” said Shanghai-based
professor Shen Dingli.
The Global Times, a state-run nationalist daily, said in an editorial on
Friday that it is “widely believed that trade talks will take a long time”
and the chance of getting a deal could be missed if Washington continues to
put pressure on Beijing.
Further lowering expectations was Larry Kudlow, director of the US
National Economic Council, who told CNBC on Friday that he “wouldn’t expect
any grand deal.”
“Talking to our negotiators, I think they’re going to reset the stage and
hopefully go back to where the talks left off last May,” he said, adding that
the two sides still need to address key structural issues such as
intellectual property theft and forced transfers of technology.
– New places, new faces –
As well as a fresh location, the new round of trade talks seem set to give
a more prominent role to the Chinese Commerce Minister Zhong Shan.
While Vice Premier Liu He will likely lead the talks for China again, the
addition of Zhong could change the tone of the discussions as he is seen as a
hardliner.
“On the one hand maybe in his speeches he might express something tough,”
Wang said.
“But on the other hand we can also think that China is making more efforts
to strike a deal, because Zhong Shan is a man with much expertise in this
area.”
There is also a suggestion that Beijing is deliberately delaying the
process until the next US election, in the hope of finding a more
conciliatory leader to deal with.
It will be tougher for Xi to push reforms following US criticism of
Beijing’s human rights record and an open letter signed by retired US
military officials urging Trump to maintain a hard line against Communist
China, said Larry Ong, senior analyst with political risk consultancy
SinoInsider.
“Xi’s rivals and other (Communist) Party hardliners will seize on the
aforementioned developments as proof that the US wants to defeat the CCP in a
Cold War-style conflict, not reach a ‘win-win’ trade agreement and revert the
Sino-US relationship to the engagement era,” Ong said.
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