SHANGHAI - Trade talks between the world’s two largest economies will continue next week in Washington as both sides indicated progress in Beijing this week.
The Xinhua news agency said Chinese President Xi Jinping met US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Friday (Feb 15) at the Great Hall of the People, telling them that China was willing to resolve trade disputes with the United States through cooperation.
But such “cooperation has to be based on principles”, the Chinese leader added. He noted the “important progress” in the talks in Beijing, and said he hoped the negotiators would “continue to work hard” to produce a mutually beneficial win-win agreement next week.
Mr Lighthizer also appeared upbeat in his assessment of the talks.
“We feel we have made headway on very, very important and difficult issues,” he told the Associated Press. “We have additional work we have to do, but we are hopeful.”
Xinhua said the US negotiators told Mr Xi they were willing to work with China to reach a deal that was in the interests of both countries.
Mr Mnuchin also tweeted yesterday saying that the talks had been “productive”.
In Washington, a White House statement, which also affirmed progress had been made in the discussions, confirmed that both sides were working towards a memorandum of understanding that could be signed by US President Donald Trump and Mr Xi at a summit later.
The White House disclosed that the US had focused on “structural issues, including forced technology transfer, intellectual property rights, cyber theft, agriculture, services, non-tariff barriers and currency” during the talks.
Both sides also discussed ways to reduce the “large and persistent” US trade deficit with China, it said.
The key sticking point in negotiations seems to be Washington’s insistence on wide-ranging structural changes to China’s trade and industrial policies as well as enforcement mechanisms to be included in any trade deal.
These are seen to be unacceptable by Beijing.
However, China is reported to be willing to end market-distorting subsidies to its state-owned enterprises as part of efforts to broker a deal. But US negotiators remain sceptical about such promises as China has never disclosed the amount of subsidies, and it will be hard to verify if they have indeed been withdrawn.
Time is running out for both sides to agree on even an interim deal to temporarily defuse trade tensions.
If no deal is reached by March 1, American tariffs on US$200 billion (S$272 billion) worth of Chinese goods will more than double from 10 per cent to 25 per cent.
Asian markets retreated on Friday as uncertainty grew about prospects for a deal by March 1. Shanghai lost 1.4 per cent, while Hong Kong was down 1.9 per cent. Tokyo closed 1.1 per cent lower, and Singapore dropped by 0.41 per cent.
Earlier, it was reported that Mr Trump was considering extending the deadline by 60 days if both sides were close to a deal.
However, on Thursday, White House economic adviser Larry Kudlow refuted the report, saying that there has been no decision to extend the deadline for a deal.
Sentiment among Chinese media of a deal remained upbeat, judging by a series of tweets by Mr Hu Xijin, the chief editor of the Global Times, a newspaper run by the Chinese Communist Party.
He tweeted: “After nearly one year of tough talks, I think the finishing line is nearly in sight.”
“There is great possibility for China and the US reaching (a) final agreement,” he added in a separate tweet.
Whatever the outcome, however, most analysts believe frictions between both countries are here to stay as their rivalry intensifies.
Beyond trade, technology is another contentious area.