MNI EXCLUSIVE: China Advisors Say US Talks May Be Delayed

By Wanxia Lin

     BEIJING (MNI) - The second phase of trade talks between China and the U.S.

could be delayed until after the U.S. presidential election in November, as the

coronavirus pandemic disrupts the global economy and tensions between the two

countries escalate, government advisors told MNI, adding that meeting

commitments agreed under phase one will also be very difficult.

     China announced on Wednesday that American journalists from major U.S.

newspapers must hand over press accreditation within 10 days if their

credentials expire before the end of 2020. The move came in retaliation for

recent U.S. restrictions on Chinese state media. Rhetoric on coronavirus has

also raised temperatures, with President Donald Trump referring to a "Chinese

virus."

     He Weiwen, former economic and commercial counsellor at the Chinese

Consulate General in San Francisco and New York, said there should be no hurry

to get on with talks.

     "It's better for China to pursue the second phase trade negotiation after

the U.S. election. The current priority for both countries is to fight the

coronavirus pandemic and support their economies," He, now a senior fellow at

Renmin University's Chongyang Institute for Financial Studies, told MNI.

     Uncertainties are rising as the outcome of the U.S. election becomes harder

to call, and the U.S. economy faces recession, He said, adding that Trump could

make new demands on China if re-elected, or a Democratic president could scrap

the phase one deal. Signing the deal did not stop the U.S. from campaigning

against Chinese telecommunications giant Huawei, he noted.

     Luo Zhenxing, a researcher at the Institute of American Studies at the

Chinese Academy of Social Sciences, agreed that serious trade talks with the

U.S. may not take place until after the election. Trump may prefer to prioritise

easier deals with the U.K., Japan and Kenya, to give himself an electoral boost.

     "Second phase trade talks with China will be difficult as they will touch

on issues to do with the Chinese system, and time is tight," said Luo, noting

that travel restrictions may hinder face-to-face negotiations, at least in the

first half of the year.

     --PHASE ONE OBSTACLES

     Both advisors see obstacles for China to fulfil commitments made under the

phase one deal.

     "It's basically mission impossible for China to meet the requirement of

expanding trade in services under the current [U.S.] border policy," said Luo,

who suggested that both sides make allowances such as by permitting more imports

of manufactured goods instead, or extending the deadline by citing the

agreement's "unforeseeable event" clause.

     The sharp fall in international crude oil prices means China would have to

buy twice as much in volume terms to meet its promise of purchasing $18.5

billion of American energy products this year, He said.

     "China imported about 500 million tonnes of crude oil with an average price

of $64 dollar per barrel in 2019, but the price has almost halved now," said He,

adding "China won't give up cheap oil from the Saudi Arabia and Russia."

     Implementation of the phase one deal should be market-oriented and comply

with WTO rules, He added.

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

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

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