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China hails 'new consensus' on trade, though deal not ready yet

Apr 05 2019 10:29
Margaret Talev, Justin Sink, Andrew Mayeda and Xiaoqing Pi, Bloomberg

China and the US claimed progress in talks to end their trade war, with President Xi Jinping pushing for a rapid conclusion and President Donald Trump talking up prospects for a “monumental” agreement that may still be some weeks away.

Through a message passed to Trump via Vice Premier Liu He, Xi called for an early conclusion to negotiations and said that strategic leadership was needed to ensure healthy and stable US-China relations, the official Xinhua News Agency said. Liu, who took part in talks this week in Washington, said the two sides had “reached new consensus on such important issues as the text” of a trade agreement, according to Xinhua.

Trump said any trade deal with China was probably still weeks away, although both sides were making progress on an accord that could be “very monumental.”

“We have a ways to go,” Trump told reporters at a meeting Thursday with Liu at the White House. “We are rounding the turn.”

Liu met with the president after two days of talks between Chinese and American trade negotiators in Washington. Trump didn’t announce a summit with Xi - a meeting Trump has said is critical to finalising an agreement. A month ago, Trump was touting the idea of a “signing summit” with Xi, with aides suggesting the meeting could take place at Trump’s Mar-a-Lago resort in Florida.

“If we have a deal, then we’ll have a summit,” Trump said. It might take four weeks to put together a framework for the deal and two weeks more to get the details on paper, he said.

Trump’s remarks prolong the uncertainty over whether the world’s two-biggest economies can end their nine-month trade war, which has disrupted supply chains, whipsawed markets, and weighed on the world economy. International Monetary Fund Managing Director Christine Lagarde this week warned both sides to avoid the “self-inflicted” wound of a protracted trade conflict.

“Trump is pressing China at the last stage of the talks, requiring it to offer greater concessions on market opening and strengthen the supervision over the implementation of promises,” said Li Yishuang, a Shanghai-based economist at China Securities Finance Co. who specialises in international trade. “But these issues are all at the implementation level. A deal in principle is still likely to be reached by the end of April.” 

Japanese shares and US equity futures edged up alongside Treasury yields following the remarks out of both China and the U.S. Asian trading volumes were muted, with China and Hong Kong shut for a holiday. European futures were little changed.

An administration official, who spoke on the condition of anonymity, said that talks would continue in Washington on Friday. There’s no timetable for further negotiations after that, the official said.

Not Easy

“Nobody thought these talks would be easy, but as they enter these final stages, we’re encouraged by the continued progress towards detailed text on both structural and enforcement issues,” Linda Dempsey, a vice president at the National Association of Manufacturers, said in an emailed statement. “Those issues are critical: Manufacturers in the United States have long been harmed by China’s unfair trade practices.”

Trump said the remaining sticking points are intellectual-property protection, tariffs and enforcement of the deal. He said he would discuss tariffs with Liu in their meeting but didn’t elaborate. “We’ve agreed to far more than we have left to agree to,” he said.

Xinhua said in a separate commentary Friday that “the remaining issues are all hard nuts to crack.” 

2025 Commitments

Drafts of an agreement would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in the Asian nation, according to people familiar with the talks. Those would be binding pledges that could trigger US retaliation if unfulfilled, according to the people, who asked not to be identified because the talks are private.

Other non-binding promises China has offered to implement by 2029 wouldn’t be tied to potential US retaliation, they said, without elaborating.

US Trade Representative Robert Lighthizer said on Thursday that there were still major issues to resolve in the agreement. Peter Navarro, a White House trade adviser, said that “the last mile of the marathon is actually the longest and the hardest.”

The limited scope and time frame of the deal raises questions about whether it would reshape the longer-term economic relationship, rather than simply serve as a political win for Trump ahead of his re-election campaign.

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