Via Financial Times

Donald Trump, the US president, said he would be meeting Liu He, China’s vice-premier, at the White House on Friday, an encouraging sign for the prospects of a truce in the trade war between the world’s two largest economies.

“Big day of negotiations with China. They want to make a deal, but do I? I meet the Vice Premier tomorrow at The White House,” Mr Trump wrote in a tweet on Thursday morning.

Mr Trump’s comments came as Mr Liu began a round of face-to-face negotiations with Robert Lighthizer, the US trade representative, and Steven Mnuchin, the Treasury secretary, in Washington. 

The two sides are looking to craft a deal that would stave off higher tariffs on $250bn of Chinese goods due to kick in next week — and possibly roll back some existing US levies. 

While this would fall short of the comprehensive agreement that was being discussed this spring between Washington and Beijing, officials are resurrecting some elements of that draft text in order to craft a ceasefire.

People briefed on the negotiations said it would involve additional US agricultural purchases by China, as well as some provisions on currency, intellectual property and market access that had been discussed earlier this year between the two governments. The thorniest issues in the trade relationship — which include industrial subsidies, digital trade, and technology transfer — are unlikely to be tackled at this stage, those people said.

A breakthrough this week could potentially pave the way for a new summit between Mr Trump and Xi Jinping, the Chinese president, at the Asia-Pacific Economic Cooperation leaders’ meeting in Chile next month.

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Myron Brilliant, head of international affairs at the US Chamber of Commerce, the largest US business lobby group, said the Chinese understood that “waiting out the president’s term is not an option”, and they had come to Washington with the “intention of making progress”.

Mr Brilliant, who met Mr Liu on Wednesday, added: “I’ve heard from the US administration as well, there’s hope here that some progress will be made. We won’t get the big agreement this week . . . but that’s a step in the right direction.”

On Thursday, Mr Mnuchin said he was “looking forward” to the talks as he walked up the stairs into the US trade representative’s headquarters where the negotiations are being held. A US official said a dinner with Chinese officials would also be held on Thursday evening.

The run-up to the talks has been overshadowed by the impeachment proceedings initiated by House Democrats against Mr Trump and the National Basketball Association’s stance towards the Hong Kong protests. The US also took action targeting Chinese companies and individuals involved in human rights violations in Xinjiang, the western Chinese region, which elicited an angry reaction from Beijing.

Meanwhile, US administration officials have been considering measures to restrict capital flows between the two countries, and to crack down on parcels from China that contain contraband. The fraught signals heading into the talks had led to speculation that Mr Liu might cut short his visit to Washington, but those fears eased by Thursday morning. 

The attempt by the US and China to reach a new truce in their trade war follows months of growing concern about the impact of their economic conflict on global growth. The IMF, World Bank and other international institutions have been steadily downgrading their forecasts for output increases around the world, both this year and next, as the trade war has dragged on.

In the US economy, the brunt of the pain from the trade war has been borne by farmers hit by Chinese retaliatory tariffs on their exports, but manufacturers have increasingly suffered from lower demand from abroad, as well as the direct impact from tariffs. 

Since the trade war with China began in 2018, the US has moved to impose levies of different rates on about $360bn of Chinese imports, which is more than half of the total value of Chinese goods sent to the US annually.

If no deal is reached this week, tariffs on $250bn of those goods will rise from 25 per cent to 30 per cent on October 15, and new levies of 15 per cent will be applied to all remaining Chinese imports, including a myriad of consumer goods, starting on December 15.

China accelerated purchases of US farm products ahead of the trade talks, ordering more than 3m tonnes of soyabeans in the past few weeks and another 398,000 tonnes reported on Thursday morning. China also purchased a record 142,000 tonnes of pork last week, the US Department of Agriculture reported.

Additional reporting by Gregory Meyer in New York