US, China nearing trade deal despite tensions: Sources

BEIJING/WASHINGTON • The US and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a "phase one" trade deal despite tensions over Hong Kong and Xinjiang, according to a Bloomberg report yesterday which quoted people familiar with the matter.

The people, who asked not to be named, said US President Donald Trump's comments on Tuesday downplaying the urgency of a deal should not be understood to mean the talks were stalling, as he was speaking off the cuff.

Recent US legislation seeking to sanction Chinese officials over human rights issues in Hong Kong and Xinjiang are unlikely to impact the talks, one person said.

US negotiators expect a phase one deal with China to be done before American tariffs are set to rise on Dec 15, the people said.

Outstanding issues include how to guarantee China's purchases of US agricultural goods and exactly which duties to roll back.

China's Commerce Ministry spokesman Gao Feng said at a press briefing yesterday that the two sides are "maintaining close communication", and reiterated that tariffs must be reduced as any part of the phase one agreement.

Hopes had risen that the two sides were close to reaching a mini deal, but comments from President Trump earlier this week and recent US legislation backing Hong Kong pro-democracy protests and China's Uighur minority had appeared to throw the talks off track.

On Tuesday, Mr Trump suggested that he would be happy waiting until after the 2020 presidential election before signing off on a deal. China echoed those comments on Wednesday by saying they "will not set any time limit" on signing an agreement.

After the Bloomberg report yesterday, markets rebounded amid renewed hopes of a trade deal this month. Stocks rallied in Asia and Europe, while US equities rebounded from declines on Tuesday tied to Mr Trump's comments that he did not have a deadline to sign an agreement with Beijing.

The offshore yuan was basically unchanged after reversing declines in the previous session.

Investors are closely watching for any signs of progress on a phase-one deal.

Meanwhile, China's envoy to the US on Wednesday said the two countries were trying to resolve their differences over trade. But he warned of forces he said were trying to drive a wedge between the two, without providing any details.

Ambassador Cui Tiankai, speaking at a dinner hosted by the US-China Business Council, said bilateral ties were at a critical crossroads due to trade frictions, but added that it was possible to return to a better path.

"At the same time, we must be alert that some destructive forces are taking advantage of the ongoing trade friction (through) extreme rhetoric such as 'decoupling', the 'new Cold War', and 'clash of civilisations'," Mr Cui said.

He also urged US and Chinese companies keen to expand trade between the two countries to stand up against what he called efforts to "spread hostility and even create conflict between us", as well as "fake news" about the situations in Hong Kong and Xinjiang, China's troubled western region that is home to a large Uighur Muslim minority.

The Democratic-led US House of Representatives voted nearly unanimously on Tuesday for a Bill that would require the Trump administration to toughen its response to China's crackdown on the Uighurs.

China warned earlier on Wednesday that the US legislation will affect bilateral cooperation, clouding prospects for a near-term deal to end a trade war.

Mr Cui did not echo those remarks directly, but said reports about both the situation in Hong Kong and Xinjiang had been seriously distorted. "Facts are facts no matter how much fake news is generated," he said.

BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE

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A version of this article appeared in the print edition of The Straits Times on December 06, 2019, with the headline US, China nearing trade deal despite tensions: Sources. Subscribe