MNI EXCLUSIVE: Chances Of US-China Deal Rise-Chinese Advisors

By Iris Ouyang

     BEIJING(MNI) - Trade talks between China and the U.S. later this month will

be detailed and technical, boosting the chances of a comprehensive deal within a

90-day truce period, Chinese policy advisors told MNI after a round of

negotiations between the two countries concluded in Washington on Thursday.

     "In this round of trade talks, the U.S. showed its sincerity," Mei Xinyu, a

researcher at the Chinese Academy of International Trade and Economic

Cooperation under the Ministry of Commerce who is often more pessimistic than

other observers and advisors, told MNI. "It's more likely that both sides can

reach a temporary deal by March 1. But that will certainly not be the end of

this matter, it will take time for the two nations to implement any agreement."

     "The two sides will divide each goal into many steps and both will make

sure everything agreed is enforced," Mei said.

     It is becoming less likely that the Trump administration will go ahead with

threats to hike tariffs on $200 billion Chinese products to 25% from the current

10%, Yu Miaojie, a veteran trade expert who advises the Ministry of Commerce,

the Ministry of Finance and the State Council's Counsellors' Office, said in an

interview.

     "Trump's planned visit to China shows both countries' sincerity and efforts

to avoid further escalation," Yu said, referring to a meeting between President

Donald Trump and President Xi Jinping now likely at the end of February, after

the U.S. leader meets North Korea's Kim Jong Un.

     --LONGER TRUCE?

     The most likely outcome now would be a one-year pause in any further tariff

rises, Yu said, adding that an extension of talks beyond the March 1 deadline

set by Trump and Xi at their G20 meeting in December is also possible.

     Upcoming negotiations in early February when U.S. Trade Representative

Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit Beijing will

focus on detailed technical issues, in contrast to this week's talks, which were

more strategic and aimed to define a framework for a possible deal, said Wang

Haifeng, director of international trade and investment at the Institute for

International Economic Research, affiliated with the National Development and

Reform Commission.

     While it is hard to know what target might be adopted to reduce the U.S.

trade deficit with China, means to ensure compliance in agreements the U.S. has

reached with South Korea and with Canada and Mexico could serve as a model, Wang

said.

     Both sides hailed this week's talks as detailed and constructive, but major

sticking points remain, particularly U.S. demands for "structural" changes by

China including a reduction in subsidies to state industry and better protection

for intellectual property. Yu indicated that the U.S. might now be prepared to

be more patient.

     "The U.S. has realized it's not practical to demand that China makes

structural adjustments within three months," Yu told MNI.

     Chinese officials have promised to purchase substantial amount of American

farm, energy, and manufactured goods, as well as more U.S. services, although

details remain unclear.

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

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