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China Trade War Enters Final Round of Talks With Little Optimisim

12 January 2019
China Trade War Enters Final Round of Talks With Little Optimisim

The two sides might be moving toward a "narrow agreement", but "U.S. trade hawks" want to "limit the scope of that agreement and keep the pressure up on Beijing", said Eurasia Group analysts of Michael Hirson, Jeffrey Wright and Paul Triolo in a report.

The US released a statement on the meetings, alluding to at least one potential concrete commitment on the part of China.

ANALYST'S TAKE: "While there was agreement on less thorny issues such as agriculture and energy, USA demands for verification and enforceable targets on intellectual property rights, transfer of technologies and non-tariff barriers may not be that easily addressed", DBS Group Research strategists Eugene Leow and Neel Gopalakrishnan said in a commentary.

Such a move would likely prompt further retaliation by China, which has already levied tariffs on USA goods, further rattling investors who are nervous about a significant slowdown in China's economy.

In a statement that gave no specific details on the outcome of three days of talks in China's capital this week, USTR said that USA and Chinese officials discussed "ways to achieve fairness, reciprocity and balance in trade relations".

"The officials also discussed the need for any agreement to provide for complete implementation subject to ongoing verification and effective enforcement", it went on to say. A leaked photo of the first day of discussions showed Liu present at the venue, along with Commerce Minister Zhong Shan and Vice Commerce Minister Wang Shouwen (the official head of the Chinese delegation).

WALL STREET: U.S. indexes soared on Friday after the Labor Department announced that employers added a better-than-expected 312,000 jobs in December. Lu said he had no details and an official statement would be issued later.

In March, when the tariff tit-for-tat was in its infancy, President Trump suggested the USA might impose up to $60 billion worth of tariffs on Chinese goods.

China optimistic as trade negotiations with US kick off

Meanwhile, confirming the conclusion of the trade talks, China's foreign ministry spokesman Lu Kang told a media briefing that "the extension of the talks indicates that both sides are serious about this consultation". -China Business Council. "That is very positive".

China has imposed penalties on $110 billion of American goods, slowing customs clearance for US companies and suspending issuing licenses in finance and other businesses. Unfortunately, China's definition of what "should not and can not" be reformed has always included precisely the areas of most US concern. Forecasters expect American orders to slump this year. With industrial output and retail sales growth both at the weakest levels in a decade, China's woes would also mean softer demand for imports, hurting other economies including the U.S. A year ago it ended restrictions on foreign ownership of EV producers to help spur the industry's growth, and in July Tesla announced plans to build the Gigafactory 3 facility in Shanghai.

Beijing has offered concessions on investment regulations and stepping up purchases of American soybeans, natural gas and other exports, seeking to defuse complaints from the USA and other trading partners.

China defends its construction as necessary for self-defense and says that it is rather Washington that is responsible for ratcheting up tensions in the region by sending warships and military plans close to islands Beijing claims.

U.S. Undersecretary for Trade and Foreign Agricultural Affairs Ted McKinney is chased by journalists as he walks into a hotel after a second day of meetings with Chinese officials in Beijing, Tuesday, Jan. 8, 2019. Those include subsidies and other favors for high-tech and state-owned industry, rules on technology licensing and preferential treatment of domestic suppliers in government procurement.

"I think China wants to get it resolved - their economy's not doing well", Mr Trump told reporters on Sunday.

A statement from the Office of the U.S. Trade Representative didn't characterize the tone of the talks or say what would happen next.