Latest US-China trade talks increase uncertainty

US and Chinese negotiators wrapped up a brief round of trade talks on Wednesday that Beijing described as “constructive”. The first face-to-face trade talks since a ceasefire was agreed last month amounted to a working dinner on Tuesday at Shanghai’s historic Fairmont Peace Hotel and a half-day meeting on Wednesday, before US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin flew out.

China’s Commerce Ministry statement said negotiators discussed more Chinese purchases of agricultural products from the United States, which had become a bone of contention after US President Donald Trump said China had not delivered on promised purchases.

The talks began amid low expectations, with Trump on Tuesday accusing Beijing on Twitter of stalling, and warning of a worse outcome for China if it continued to do so. On Wednesday, Chinese Foreign Ministry spokeswoman Hua Chunying said that she was not aware of the latest developments during the talks, but that it was clear it was the United States that continued to “flip flop”.

“I believe it doesn’t make any sense for the US to exercise its campaign of maximum pressure at this time,” Hua told a news briefing in response to a question about the tweets. “It’s pointless to tell others to take medication when you’re the one who is sick,” she said.

The two sides will reconvene in September in the United States, the Commerce Ministry said.

The protracted trade war between the world’s two largest economies has disrupted global supply chains and shaken financial markets as each side has slapped tariffs on billions of dollars of each other’s goods. An official Chinese government survey released on Wednesday showed factory activity shrank for the third month in a row in July, underlining the growing strains the row has placed on the No. 2 economy.

The Shanghai talks were expected to center on “goodwill” gestures, such as Chinese commitments to purchase US agricultural commodities and steps by the United States to ease some sanctions on Chinese telecoms equipment giant Huawei Technologies Co Ltd, a person familiar with the discussions told Reuters earlier. Those issues are somewhat removed from the more core US complaints in the trade dispute, including Chinese state subsidies, forced technology transfers and intellectual property violations.

As talks were just beginning on Tuesday, Trump said on Twitter that China appeared to be backing off on a pledge to buy US farm goods, and he warned that if China stalled negotiations in the hope that he wouldn’t win re-election in the November 2020 US presidential contest, the outcome would be worse for China.

“The problem with them waiting ... is that if & when I win, the deal that they get will be much tougher than what we are negotiating now ... or no deal at all,” Trump said.

Trump said after the Osaka meeting that he would not impose new tariffs on a final $300 billion of Chinese imports and would ease some US restrictions on Huawei if China agreed to make purchases of US agricultural products. But so far, US semiconductor and software makers are still mostly in the dark about the administration’s plans. In Sao Paulo on Tuesday, US Commerce Secretary Wilbur Ross said decisions on license applications by US firms to resume some sales to Huawei could come as early as next week.


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