China Trade Talks End on Note of Cautious Optimism

Virginia Carson
January 10, 2019

-China Business Council. "That is very positive".

Also Tuesday, North Korean leader Kim Jong-un arrived in Beijing in a possible effort to co-ordinate with the North's only major ally ahead of a possible meeting with Trump.

The midlevel talks in Beijing concluded on Wednesday.

The meetings in Beijing were the first formal trade negotiations between the two sides since President Donald Trump and Chinese leader Xi Jinping agreed to a truce at the G20 summit in Argentina last month. US and North Korean officials are believed to have met in Vietnam to discuss a location.

Stocks rose across Asia and Europe, and equity futures indicated an increase in the USA on Wednesday, on signs the world's two largest economies are trying to resolve their trade war.

Big spending on commodities and goods would send a positive signal on China's intent to work with the United States, but would do nothing to resolve the USA demands that require hard structural change from China.

Asked about his presence on Tuesday, Lu from the foreign ministry said it wasn't surprising for Liu to be there.

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The temporary ceasefire came after the two sides imposed import duties on more than US$300 billion of each other's goods. US Secretary of State Mike Pompeo insisted that sanctions should be enforced "vigorously and without fail".

The deputy level negotiators will report back on next steps for talks, the usa statement said.

Since the two presidents met on December 1, China has made a number of concessions to US demands, including temporarily cutting punitive tariffs on USA -made cars, resuming soybean purchases, promising to open up its markets for more foreign investment, and drafting a law to prevent forced technology transfers.

The chief obstacle to any deal remains the "Made in China 2025" program to accelerate China's competitiveness in key high-tech industries such as semi-conductors, commercial aircraft and electric cars.

The extra day of talks came amid signs of progress on issues including purchases of US farm and energy commodities and increased access to China's markets.

Still, the US statement said the negotiations dealt with the need for any deal with China to be "subject to ongoing verification and effective enforcement" - a comment that reflects USA frustration that the Chinese have failed to live up to past commitments.

But U.S. indexes posted modest gains. China responded by imposing penalties on $110 billion of American goods, slowing customs clearance for US companies and suspending issuing licenses in finance and other businesses.

Stock markets were roiled last week after Apple (APPL) warned it will badly miss its quarterly sales forecast because of weaker growth in China amid the trade war.

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"From what I know, the trade talks, though arduous, were conducted in a pleasant and candid atmosphere".

But much work remains before the two economic powers climb down.

The U.S. delegation was led by Deputy U.S. Trade Representative Jeffrey Gerrish and accompanied by senior officials from the White House, U.S. Trade Representative (USTR), and the U.S. Departments of Agriculture, Commerce, Energy, and Treasury, according to the USTR. Stocks rose globally after the two economic powers appeared to inch closer to an agreement, with the S&P 500 Index rising for a fourth day to the highest in nearly a month.

The truce came after both sides imposed several rounds of tariffs in 2018.

In what was widely seen as a goodwill gesture, China on Tuesday issued long-awaited approvals for the import of five genetically modified crops, which could boost its purchases of US grains as farmers decide which crops to plant in the spring.

China's foreign ministry on Monday confirmed that Wang would deliver a keynote speech at Davos, though didn't confirm any plans for him to meet Trump.

There was little market reaction to Trump's prime-time televised address where he made his case that a U.S. -Mexico border wall is urgently needed, despite opposition from Democrats.

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