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China Ready to Resume Talks With US: OK, But Under What Conditions?

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Via MishTalk

Please consider China Signals It Is Willing to Return to Trade Talks With U.S.

A government policy paper on trade issues with the U.S. released Sunday accused Washington of scuttling the negotiations, which broke down in all but name last month. It said the Trump administration’s “America First” program and use of tariffs are harming the global economy and that China wouldn’t shy away from a trade war if need be.

Throughout the document and at a briefing, the government suggested a willingness to return to negotiations. “What truly matters is how to enhance mutual trust, promote cooperation and manage differences,” the paper said. Vice Commerce Secretary Wang Shouwen told reporters, “We’re willing to adopt a cooperative approach to find a solution.

The tone, if not the substance, was markedly more measured than the sharp, at times nationalistic rhetoric adopted by state media and some officials in the past three weeks, and Chinese trade experts said the point is to signal talks can resume, though the onus is on the U.S.

China “is expressing its wish to work together,” said Zhang Yansheng, a researcher at the state-backed think tank China Center for International Economic Exchanges.

Three Conditions

  1. The U.S. must remove “all additional tariffs” levied on Chinese exports
  2. Chinese purchases of American goods to help reduce the U.S. trade deficit “should be realistic”
  3. The text of a final agreement should be “balanced.”

That All?

Probably not. There is still a major issue with Huawei.

Both sides need to make concessions. The concessions can’t all be from one side,” said Mr. Wang, one of China’s negotiators with the U.S.

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Nothing Agreed Until Everything is Agreed

Mr. Wang reiterated an argument Chinese officials have made that Beijing didn’t backslide in the talks because no agreement had been completed. “At the negotiating table, everything is up for discussion. Without an agreement, there can be no so-called ‘backtracking,” Mr. Wang said. He then switched to English: “Nothing is agreed until everything is agreed.

Recall where we last heard that?

It was a line Michel Barnier, the EU’s chief negotiator kept repeating in Brexit negotiations with the UK.

Watch the Reactions

The futures are closed. It will not mean much if they open strong and close that way. That would be the expectation on fluff news like we have seen so many times before about a deal that was supposedly “close”.

It would be more telling to seem futures open lower and close that way, or open higher and close lower.

We do not know how Trump will respond either. He needs a deal as badly as China. And if he does agree to remove all tariffs and opt for a realistic, balanced agreement, then why didn’t we have a deal three weeks ago?

Meanwhile, both sides increased tariffs, and China has threatened to cut off supplies of rare earths.

Victory Party?

Will it be a victory just to return to where we were?

If so, Trump will have to back down as well, not just China.

Mike “Mish” Shedlock

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