China cautious on US trade deal

Beijing’s reaction to Donald Trump’s announcement of a trade pact has been markedly different.

Chinese Vice Premier Liu He listens during a meeting in the Oval Office of the White House with President Donald Trump on Friday.

China has reacted cautiously to reports that it is about to sign a trade deal with the US despite comments by President Trump that the two sides have reached “phase one” of an agreement which could be finalised within weeks.

While Trump’s comments have boosted global stock markets and have been welcomed by Prime Minister Morrison, sources in Beijing have reacted much more cautiously to the outcome of the talks in Washington between the Trump administration with Chinese officials.

After a meeting at the White House with Chinese negotiators, led by vice premier Liu He, Mr Trump indicated that a deal between China and the US could be signed at the APEC leaders meeting in Chile which takes place on November 16 and 17.

China’s national newsagency Xinhua said China and the US had “achieved substantial progress in multiple areas” after holding high level talks in Washington on Thursday and Friday.

It said the two negotiating teams had “achieved substantial progress in areas including agriculture, intellectual property rights protection, exchange rate, financial services, expansion of trade co operation, technology transfer and dispute settlement.”

It said they had “conducted candid, efficient and constructive discussions on economic and trade issues of mutual concern”.

“The two sides also discussed the arrangement for future consultations and agreed to make joint efforts toward eventually reaching an agreement,” it said.

While President Trump was quick to announce that there had been a “substantial” agreement which would see China buying some $US40 billion to $US50 billion worth of American agricultural products a year as well as an agreement on how it will managed its currency, the Chinese government had yet to officially confirm any details of what was agreed in Washington on Friday.

But in his tweets, Hu Xijin, the well connected editor in chief of China’s Communist Party owned Global Times newspaper, said Beijing was still uncertain over the situation and did not want to “raise expectations.”

He said “the initial wave of commentary in the Chinese media (about the talks) all stresses rationality and calmness.”

But he said the “official reports” of the meetings in Washington did not mention that Trump hoped to sign the trade deal at the APEC meeting next month.

“This shows Beijing’s concern over uncertainties and (that it) does not want to raise expectations,” he said.

Mr Hu said the talks in Washington, which were led by China’s vice premier Liu He, had “exceeded expectations”.

But he warned that there was “precedent on the US side in breaking an agreement.”

“Consistency of the US side’s attitude is the biggest test,” he said.

Mr Hu’s comments follow reports in May that the US and China had reached the basis of an agreement, during talks in Washington led by Mr Liu, only to find that on his return to Beijing, Chinese leaders would not agree to sign up to the extensive provisions of the agreement demanded by the US side.

The US reacted by raising tariffs on some $US200 billion worth of Chinese imports from 10 per cent to 25 per cent, while China responded with new tariffs on another $US60 billion worth of US imports.

But both sides have moved since then to get negotiations back on track following a meeting between Chinese President Xi and President Trump at the G20 summit in Osaka in June.

In a phone conversation in early September vice premier Liu He and US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin agreed to take action to establish favourable conditions for negotiations.

In late September China agreed to step up its purchases of US farm products, such as soybeans and pork, while the US listed some 400 types of Chinese products which would be exempted from additional tariffs.

With the trade war between the US and China dragging on for almost 18 months, having a negative effect on the world economy, both sides are reportedly keen to reach a deal to end the prolonged uncertainty.

A deal before the end of the year would allow Trump a victory to take into the 2020 presidential elections and would help President Xi at a time when the Chinese economy has been slowing and China is under pressure from a four month protest movement in Hong Kong which has become increasingly violent.

China sent one of its most high level delegations yet to the latest talks in Washington, indicating its seriousness in reaching a deal and providing an indication the potentially extensive nature of the agreement.

Its negotiating team included China’s Minister of Commerce, Zhong Shan, the governor of the People’s Bank of China, Yi Gang, the vice chairman of the National Development and Reform Commission, Ning Jizhe, the deputy director of the office of the Central Commission for Financial and Economic Affairs and deputy Finance Minister, Liao Min, deputy Foreign Minister Zheng Zeguang, the deputy minister of Industry and Information Technology, Wang Zhijun, the deputy Minister for Agriculture and Rural Affairs, Han Jun, and the deputy Minister of Commerce and deputy China International Trade Representative, Wang Shouwen.