Hopes high as US, China talk trade

US-China trade talks will resume in Washington this week, with world markets hoping for some sign of progress.

Chinese Vice-Premier Liu He. Picture: AP

US-China trade talks will resume in Washington this week, with world markets hoping for some sign of progress amid rising tensions between China and Canada in the wake of last month’s arrest of Huawei chief financial officer Meng Wanzhou.

Chinese Vice-Premier and Politburo member Liu He will travel to the US for two days of meetings, starting on Wednesday night, with US Trade Representative Robert Lighthizer — the first meeting since US trade negotiators visited Beijing in early ­January.

While no deal will be done this week, nervous world markets will be looking for signs of some progress being made and some indication of what could be included in a deal that needs to be finalised by March 1.

Reports late last week that a visit to Washington by two mid-level Chinese officials had been cancelled sent markets falling — but the White House denied the stories, saying the talks were only ever meant to be by phone.

“Mr Liu may be bringing an offer of more significant structural concessions but do not expect major breakthroughs this week,” China watcher Bill Bishop wrote in his newsletter Sinocism on the weekend.

“The deadline for this round of talks is March 1. It would be surprising if the Chinese side put its best offer on the table so far from that date.”

Composition of lastest US tariffs on Chinese exports, by value (%)

Mr Bishop said there was pressure on the Chinese delegation to “at least show the US side they are sincere”. “If Mr Liu leaves Washington and the word out of the talks is that the two sides are still far apart, then markets may get nervous,” he said.

Mr Bishop said China’s President Xi was “very motivated to make a deal”.

“The trade war is one more risk he does not want right now,” he said.

If a deal can’t be reached, US President Donald Trump has threatened to impose new tariffs of 25 per cent on another $US200 billion ($280bn) worth of Chinese exports to the US.

US Secretary of State Mike Pompeo last week voiced optimism for the success of the talks.

Speaking by video to the annual Davos summit, he said he expected a good outcome from the talks.

“I am optimistic that we will receive them [the Chinese negotiators] well and we will have a good outcome from those conversations,” Mr Pompeo said.

The director of the US National Economic Council, Larry Kudlow, said last week that the US would continue to press the Chinese on the subject of intellectual property and state intervention in markets, among other matters.

Mr Kudlow also said American officials were insisting that any agreement have teeth to ensure Beijing’s compliance.

“Enforcement is absolutely crucial to the success of these talks,” he said.

He said he did not want to predict whether the US and China would reach a deal before the March 1 deadline.

“I wouldn’t dare predict and want to make sure people understand how important that is to put it on the table.”

Secretary of State Mr Pompeo also criticised China, saying it was belligerent towards its neighbours and “embracing totalitarianism”.

But he said the trade differences between the two sides could be resolved if Beijing were to accept principles of fair and open trade and protection of intellectual property.

Mr Pompeo’s comments were in line with comments made by President Trump earlier this month, when he said the talks with China were going very well.

Uncertainties generated by the US-China trade war have caused concerns in world financial markets.