close
Thursday March 28, 2024

US and China seek deal to prevent trade-war escalation

By AFP
February 15, 2019

Beijing: US and Chinese negotiators on Thursday kicked off two days of high-level talks that President Donald Trump says could decide whether he escalates the bruising tariff battle between the world´s two biggest economies.

Trump indicated this week he was open to extending a trade truce beyond March 1 depending on progress in Beijing. He is considering pushing the deadline back an additional 60 days, Bloomberg News reported, citing sources.

In December he postponed plans to sharply hike tariffs on $200 billion of Chinese imports to allow more time for negotiation.

The two economic superpowers have already imposed duties on more than $360 billion in two-way trade, which has weighed on their manufacturing sectors and shaken global financial markets.

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are meeting with China´s top economic czar Liu He, seeking to build on progress made in Washington last month.

We are "looking forward to discussions today", Mnuchin said as he left his hotel Thursday morning for the talks.

Expectations for a trade deal have grown as China faces pressure from slowing economic growth, and as swooning global markets pose a challenge to Trump and his economic advisors.

Data released Thursday in China showed its trade surplus with the US -- a major source of anger within the Trump administration -- narrowed in January to $27.3 billion, even as its American imports plunged 41 percent for the month from a year earlier.

Last year the surplus hit a record $323.3 billion.

China´s total imports also sank for the month, pointing to weak demand amid slowing economic growth.

Chinese President Xi Jinping plans to meet with the US officials in Beijing this week, a report in the South China Morning Post said Wednesday, bolstering hopes for the talks and world markets.

Trump also has said he expects to meet with Xi "at some point" to clinch a trade deal.

Trump told reporters in the Oval Office on Wednesday that preliminary talks in Beijing were "going along very well," Bloomberg reported.

"They´re showing us tremendous respect," he added.

"Markets will continue to watch -- and react -- closely to the ups and downs of the negotiations," said Trey McArver of Trivium Research.

"But Sino-US relations are all about the two leaders, and it will ultimately be up to Xi and Trump to come to a deal -- or not," he wrote Wednesday in a newsletter.

The two sides said major progress was made in talks last month in Washington, but a wide gulf remains on some issues.

The US is demanding far-reaching changes to Chinese practices that it says are unfair, including theft of US technology and intellectual property, and myriad barriers that foreign companies face in the Chinese domestic market.

Beijing has offered to boost its purchases of US goods but is widely expected to resist calls for major changes to its industrial policies such as slashing government subsidies.

The International Monetary Fund warned on Sunday of a possible global economic "storm" as world growth forecasts dip, citing the US-China trade row as a key pivot point.

Meanwhile, China’s trade surplus with the US narrowed in January even as its American imports plunged, buffeted by a slowing economy and the tariff battle with Washington, data showed on Thursday.

The surplus -- a major source of anger within the Trump administration, which imposed levies on hundreds of billions of dollars worth of Chinese goods -- fell to $27.3 billion, from $29.9 billion in December. Last year it hit a record $323.3 billion.

But China’s imports from the US shrank 41 percent from a year earlier, data from the customs administration showed.

Chinese buyers pulled back from purchasing American agricultural and energy commodities, which Beijing slapped with retaliatory tariffs last year.

China’s exports to the US fell more than two percent in January year-on-year.

“Based on the positive signals from the US-China trade negotiations, further tariff hikes will likely be suspended,” noted Louis Kuijs of Oxford Economics, adding he expected continued pressure on exports due to a global slowdown and the existing US tariffs.

China’s global exports -- all countries including the US -- unexpectedly rose 9.1 percent in January from a year earlier, turning a corner after exports fell in December.

“One possible explanation for January’s upbeat export data could be some re-arrangement of regional supply chains on the back of the ongoing China-US trade dispute,” said Betty Wang, an economist at ANZ bank. Exports to Europe and ASEAN countries surged, she noted.

China’s imports, however, continued to fall in January, down 1.5 percent from a year earlier, though at a slower pace than a 10.2 percent decline forecast by Bloomberg News. “The import slowdown in recent months obviously in part reflects the slowdown in China’s domestic economy,” said Kuijs.

A slew of bad economic data has added to concerns about China’s economy, which grew at its slowest pace in almost three decades last year.