Trade talks between the US and China resumed this week in Beijing. Talks were scheduled to take place January 7-8 and extended an extra day through January 9. Most reports from the three day meeting appeared to be positive, but there are still a lot of difficult negotiations ahead.
Michael Mariana of Reuters covered the meeting between the world’s two largest economies in a piece titled, “China Has Good Faith to Fix Trade Issues as Talks With US Resume.” The Chinese Foreign Ministry said the country had “Good faith” to work with the US to resolve the trade disputes.
The meetings this week were the first face-to-face talks since US President Donald Trump and Chinese President Xi Jinping agreed upon a 90 day trade truce back in December. US Commerce Secretary Wilbur Ross told NBC last Monday that these talks will determine how the administration moves forward. Both he and President Trump appeared to feel positive about the talks. Ross said that there is,
“A very good chance that we will get a reasonable settlement that China can live with, that we can live with and that addresses all of the key issues.”
Trump feels that China is ready to negotiate because of the evident weakness in the Chinese economy.
Chinese Foreign Ministry spokesman Lu Kang said,
“From the beginning we have believed that China-U.S. trade friction is not a positive situation for either country or the world economy. China has the good faith, on the basis of mutual respect and equality, to resolve the bilateral trade frictions.”
“As for whether the Chinese economy is good or not, I have already explained this. China’s development has ample tenacity and huge potential,” Lu said. “We have firm confidence in the strong long-term fundamentals of the Chinese economy.”
Economies of Both Countries are Hurting
Trump was hoping that the import tariffs on hundreds of billions of dollars of Chinese goods would urge Beijing to change some of its practices on issues like industrial subsidies, intellectual property and hacking. The Chinese have responded with tariffs of their own.
Now, the economies in both countries are suffering. Manufacturing in both countries has slowed, but the US Labor Department reported a rise in wages and new jobs during the month of December.
Prior to the talks, Tu Xinquan, a Chinese trade expert at Beijing’s University of International Business and Economics talked with Reuters. He feels that a trade agreement would be good for both sides.
“China’s economy is significantly slowing down, and the U.S. stock market is declining quickly. I think the two sides need some kind of agreement for now.”
What’s on the Table
Talks were led by Deputy U.S. Trade Representative Jeffrey Gerrish, says AgWeb’s Marjorie Kulba. The goal is to get China to agree to structural changes for,
“Forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft of trade secrets for commercial purposes, services, and agriculture.”
The two countries are also discussing China’s promise to once again purchase US goods, products and services. US officials at the talks appear to be honoring Trump’s goal of addressing the trade deficit and resolving these structural issues.
Talks Ended Positively
The conclusion of the talks on January 9 seemed to end on a high note, according to DTN’s Washington Insider. The three days of talks appeared to have both sides leaving with cautious optimism. An official deal was not reached, but sources day that an agreement might be close.
Observers said that the two countries are aligning more closely on energy and agricultural agreements, but that they’re farther apart on the more difficult issues. When more senior negotiators meet later on, some of the more complicated matters will be addressed. Both sides appear to be serious about reaching a deal. Later this month US Trade Representative (USTR) Robert Lighthizer will meet with Vice Premier Liu He, Xi’s top economic aide who is leading negotiations for China.
Progress up to this point includes several Chinese concessions to US demands. This includes,
“Cutting punitive tariffs on U.S.-made cars, resuming soybean purchases, promising to open up its markets for more foreign investment, and drafting a law to prevent forced technology transfers.”
Stocks rose globally after the end of the talks Wednesday. All major US equities benchmarks were reported to be on the rise. This is very welcome news. The S&P 500 Index dropped about 7 percent since the two sides announced the 90 day trade truce last month.
Many in agriculture will be watching this situation closely. It appears that both sides are committed to reaching a resolution, but it sounds like there are many difficult conversations and negotiations left to be had. Even if an agreement is reached soon, many anticipate the Chinese economy to continue to decline. It is likely that China will continue to be a strong negotiator. According to China’s nationalist Global Times tabloid,
“If China was going to raise the white flag, it would have done it already.”