Face-to-face trade negotiations between China and the United States have been extended to an unscheduled third day amid hopes that the world’s two largest economies can reach a deal to avoid an all-out confrontation.
This week’s meetings in Beijing are the first direct talks since Chinese President Xi Jinping and his US counterpart, Donald Trump, agreed in December to a 90-day ceasefire in a trade war which has seen the two sides raise import tariffs on each other’s goods and has roiled global financial markets.
Experts say it will take months for the world’s two largest economies to resolve the causes of the dispute, which include disagreements over Beijing’s handling of technology and intellectual property.
Asian stocks markets on Wednesday rose after the extension of the talks, which began on Monday, fuelling optimism over a potential trade agreement.
Speaking to reporters, Ted McKinney, US under-secretary of agriculture for trade and foreign agricultural affairs, said Washington’s delegation in the Chinese capital was “wrapping up” meetings with Chinese officials and would return home later on Wednesday after a “good few days”.
“I think they went just fine,” McKinney said of the talks. “It’s been a good one for us,” he said without elaborating.
The comments came amid signs of progress on issues including purchases of US farm and energy commodities and increased access to China’s markets.
But people familiar with the negotiations said the two sides were further apart on Chinese structural reforms that the Trump administration is demanding in order to stop alleged theft and forced transfer of US technology and on how to hold Beijing to its promises.
“Talks with China are going very well!” Trump tweeted on Tuesday, without elaborating.
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Companies feeling the pain
The trade war has seen Washington imposing tariff increases of up to 25 percent on $250bn of Chinese imports over complaints Beijing steals or pressures companies to hand over technology. Beijing responded by imposing penalties on $110bn of US goods, slowing customs clearance for US companies and suspending issuing licenses in finance and other businesses.
The dispute weighed on economic growth and sparked volatility on global markets.
Trump is increasingly eager to reach an agreement to help lift the markets, Bloomberg reported, citing people familiar with internal White House deliberations. The S&P 500 Index has fallen about eight percent since the truce began.
A spokesperson for the US Trade Representative’s office, which is leading the US negotiating team in Beijing, said talks would continue on Wednesday and “a statement will likely follow then”.
If no deal is reached by March 2, Trump has said he will proceed with raising tariffs to 25 percent from 10 percent on $200bn worth of Chinese imports at a time when China’s economy is slowing significantly.
In the meantime, companies in both countries are feeling pain from the effects of US tariffs and retaliation from China, which are starting to mount.
Last week, US tech giant Apple rattled global markets by taking the rare move of lowering its quarterly sales forecast, citing poor iPhone sales in China.
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Signs of progress
In what is 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.
On Monday, Chinese importers made another large purchase of US soybeans, their third in the past month.
Increased purchases by China of US soybeans, oil, liquefied natural gas and financial services are viewed as easier to achieve than major changes to China’s industrial policies aimed at transferring US technology to Chinese firms.
“Overall the talks have been constructive. Our sense is that there’s good progress on the purchase piece,” one person familiar with the talks was quoted as saying by Reuters news agency. The person added that it was more difficult to determine how to hold China to its commitments to better protect intellectual property.
Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies in Washington, DC, said the two sides for the first time were discussing topics that matter most to the Trump administration. These include expanded Chinese purchases of US products, greater protections for US intellectual property, constraints on Chinese industrial policy, and enforcement and verification of follow-through by China.
“The minimum baseline for judging whether this week is a success is whether they can have an in-depth conversation on those areas,” Kennedy told Reuters, adding that an announcement of another round of talks would be a positive outcome.