China, US officials engage on trade while Huawei row burns

Chinese Vice-Premier Liu He spoke with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, exchanging views on pushing forward the next stage of trade talks.
Chinese Vice-Premier Liu He spoke with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, exchanging views on pushing forward the next stage of trade talks.PHOTO: REUTERS

BEIJING (BLOOMBERG) - Top Chinese and American trade officials spoke by phone on Tuesday (Dec 11), signalling that dialogue between the two nations on trade issues is at least continuing despite a diplomatic row over the arrest of a senior Chinese businesswoman

China’s Vice-Premier Liu He, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer spoke by phone Tuesday morning Beijing time, according to a statement from China’s Ministry of Commerce.

The two sides exchanged views on the timetable and road map of future trade talks, the ministry said, without providing further details. 

At a time when the status of a deal brokered between the two sides in Buenos Aires this month was already in doubt, the arrest of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou – linked to potential sanctions violations – had threatened to torpedo the progress made.

Both sides have signalled that they want to separate the two issues, with an eye on the March 1 deadline for further agreement on trade differences.

“It’s a positive signal that work is in progress” on trade negotiations despite tensions related to the arrest of Meng, said Michelle Lam, a greater China economist at Societe Generale SA in Hong Kong. 

The news of Meng’s arrest in Canada contributed to increasing alarm in financial markets about the lack of specifics in a trade truce announced after US President Donald Trump and Chinese leader Xi Jinping dined together at the Group of 20 meeting.

Under the terms disclosed, Trump agreed to pause increasing tariffs on Chinese imports for 90 days while negotiations got under way. 

S&P 500 E-Mini futures pared losses on news of the phone call and China stocks turned positive. The Shanghai Composite Index rose 0.3 per cent before falling back a little. 

Meanwhile, China has accused Canada of violating a bilateral agreement by failing to speedily inform its consulate of Meng’s arrest – an accusation the Canadian government denies.  Over the weekend, Chinese authorities separately summoned the ambassadors of Canada and the US to protest Meng’s arrest on allegations she committed fraud to sidestep sanctions against Iran.

The case has become a flash-point in ties between the US and China that’s rattled investors and sent stock markets tumbling. 

Since the Buenos Aires agreement, China has acted to meet its side of the bargain. For example, it intends to announce this month the first batch of US soybean purchases where most, if not all, will be destined for state reserves, according to government officials.