With US tariffs looming, China drums up hope for a partial trade deal

In this photo taken on Oct 10, 2019, China's Vice-Premier Liu He is flanked by US Trade Representative Robert Lighthizer (left) and Treasury Secretary Steve Mnuchin before the two countries' trade negotiations in Washington.
In this photo taken on Oct 10, 2019, China's Vice-Premier Liu He is flanked by US Trade Representative Robert Lighthizer (left) and Treasury Secretary Steve Mnuchin before the two countries' trade negotiations in Washington.PHOTO: REUTERS

BEIJING (REUTERS) - A Chinese state newspaper said on Friday (Oct 11) that a "partial" trade deal would benefit China and the United States, and Washington should take the offer on the table, reflecting Beijing's aim of cooling the row before more US tariffs kick in.

Both sides have slapped duties on hundreds of billions of dollars of goods during the 15-month trade dispute, which has shaken financial markets and uprooted global supply chains as companies move productions elsewhere.

As top US and Chinese negotiators wrapped up a first day of trade talks in more than two months on Thursday, business groups expressed optimism the two sides might be able to ease the conflict and delay a US tariff hike scheduled for next week.

China's top trade negotiator, Vice-Premier Liu He, said on Thursday that China is willing to reach agreement with the United States on matters that both sides care about so as to prevent friction from leading to any further escalation.

He stressed that "the Chinese side came with great sincerity".

Adding to that, the official China Daily newspaper said in an editorial in English: "A partial deal is a more feasible objective."

"Not only would it be of tangible benefit by breaking the impasse, but it would also create badly needed breathing space for both sides to reflect on the bigger picture," the paper said.

Chinese officials are offering to increase annual purchases of US agricultural products as the two countries seek to resolve their trade dispute, the Financial Times reported on Wednesday, citing unnamed sources.

 
 
 
 

The US Department of Agriculture (USDA) on Thursday confirmed net sales of 142,172 tonnes of US pork to China in the week ended Oct 3, the largest weekly sale to the world's top pork market on record.

A US-China currency agreement is also being floated as a symbol of progress in talks between the world's two largest economies, although that would largely repeat past pledges by China, currency experts say, and will not change the dollar-yuan relationship that has been a thorn in the side of President Donald Trump.

PESSIMISM 'STILL JUSTIFIED'

Analysts have noted China this time sent a larger-than-normal delegation of senior Chinese officials to Washington, with Commerce Minister Zhong Shan and deputy ministers for agriculture and technology also present.

The sudden optimism about a potential de-escalation is in stark contrast to much more gloomy predictions in business circles just days ago on the heels of a series of threatened crackdowns on China by the Trump administration.

On Tuesday, the US government widened its trade blacklist to include Chinese public security bureaus and some of China's top artificial intelligence start-ups, punishing Beijing for its treatment of Muslim minorities.

Surprised by the move, Chinese government officials told Reuters on the eve of talks that they had lowered expectations for significant progress.

Friday's China Daily editorial also warned that "pessimism is still justified", noting that the talks would finish just three days before Washington is due to impose harsh new tariffs on US$250 billion (S$343 billion) worth of Chinese imports.

The negotiations were the "only window" to end deteriorating relations, it added.

Mr Trump said on Thursday that the talks had so far gone very well. But he has previously insisted he would not be satisfied with a partial deal to resolve his two-year effort to change China's trade, intellectual property and industrial policy practices, which he argues cost millions of US jobs.

There have also been reports that the Trump administration is readying further measures aimed at China, with unknown consequences for trade negotiations.

Such wildly shifting expectations have been a persistent feature of the trade war, and observers remained cautious over what might emerge from this week's talks.

"China wants peace, but I don't think China will give more," one Chinese trade expert said on condition of anonymity.