MNI EXCLUSIVE: Chance Of Partial China-US Trade Deal: Advisors

--Chance US, China Could Reach Partial Deal Before Deadline, Advisors Say

--Disagreement On Likelihood Of Deadline Extension

     BEIJING(MNI) - It is possible China and the U.S. will reach a deal to

partially resolve their trade dispute before the end of a 90-day negotiating

period, advisors to the Chinese government told MNI, although they were divided

over the likelihood that the March 1 deadline would be extended.

     An agreement will not necessarily have to wait for a meeting between

presidents Donald Trump and Xi Jinping, advisors said, after Trump told

reporters Feb. 7 that he would not see his Chinese counterpart before the

deadline. Xi is scheduled to meet with the U.S. delegation on Friday, the second

day of the high-level talks in Beijing, according to the South China Morning

Post.

     "A trade deal can be reached even if the two presidents don't meet," Tu

Xinquan, a foreign trade expert at the Advisory Committee for Economic and Trade

Policy of the Ministry of Commerce, told MNI. "When China joined the WTO,

President Clinton didn't come to China. (Former Chinese) President Jiang didn't

go to the U.S."

     Chinese officials led by Vice Premier Liu He and reportedly as many as 60

U.S. delegates will carry out the third round of trade talks since Xi and Trump

agreed on a 90-day trade truce in December before the U.S. goes ahead with

threats to boost tariffs on $200 billion in Chinese exports to 25%. Preparatory

talks among lower level officials began on Monday.

     --POSSIBLE COMMITMENT TO REDUCE SURPLUS

     "China will make bigger concessions in reducing the trade surplus,

enhancing market access for foreign investment, and further enhancing

intellectual property protection," Liu Hong, a director of the Ministry of

Commerce's China Association of International Trade, told MNI. "But it is hard

for China to compromise on U.S. demands to change our economic system."

     While Beijing will also promise to crack down on cyber attacks, sticking

points remain the U.S. insistence that China commit to structural economic

reform and the nature of the mechanism to ensure any agreement is enforced, they

said. China will also refrain from commitments to significantly reduce the role

of state-owned companies in the economy, or to reduce subsidies to SOEs, they

said.

     American negotiators are seeking a mechanism which automatically increases

tariffs if China's exports to the U.S. continue to rise, according to the New

York Times, citing sources earlier this week.

     "I expect this time there will be no consensus on this mechanism," said Jin

Canrong, deputy director of the National Association of International Studies

and an advisor to several governmental departments. "It's because the U.S. wants

unilateral supervision of China without our being able to impose any such

obligation on them."

     --DEADLINE

     Jin saw a 70% chance that the deadline for a deal would be extended to June

1.

     "The trade deal could be signed in the second half of this year," he told

MNI, adding: "By then, the U.S. economy could have slowed down more and China's

economy is expected to tick up. That will benefit China in the negotiations."

     Wang Huiyao, a former official at the commerce department and president of

the Center for China and Globalization, agreed that an extension was likely,

telling MNI that "more haste less speed" was needed in the talks. But Tu and Liu

disagreed.

     "It would bring more uncertainties to the market if it's extended" when

both sides want to calm things down, Tu said, adding that China and the U.S.

would instead settle for reaching a partial deal before March 1. "The officials

are likely to create a road map and a direction to solve the remaining problems

such as structural changes," he said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

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