MNI EXCLUSIVE: China In No Hurry For Phase 2 Talks: Advisors

     BEIJING (MNI) - China will focus on finalising and implementing its

preliminary trade deal reached with the U.S., rather than rushing into more

difficult phase two talks as has been suggested by President Donald Trump,

government advisors told MNI.

     "The signing of the phase one deal is not a problem," said Wei Jianguo,

former vice commerce minister, "the priority is for both sides to implement the

current accord."

     Unlike some advisors, Wei, now vice chairman of the China Center for

International Economic Exchange (CCIEE), a state-backed think tank, thinks China

will be able to increase imports from the U.S. over the next two years by no

less than $200 billion over 2017's level, as agreed with U.S. negotiators under

the phase one deal. "Though it is difficult for China, the domestic consumer

market is expanding," he said.

     While the deal, which follows 22 months of talks, should be signed once

technical issues including a legal review are resolved, He Weiwen, former

economic and commercial counsellor at the Chinese Consulate General in San

Francisco and New York, said it was uncertain whether implementation might be

affected by "U.S. domestic political needs".

     He, now a senior fellow at Renmin University's Chongyang Institute for

Financial Studies, doubted whether China, with its population near its peak and

its own significant farm production, has sufficient demand to double the

purchase of U.S. agricultural goods to $40-50 billion over two years, without

cutting imports from other sources.

     --SHALE OIL

     Chen Wenling, chief economist at CCIEE, said there was still room for

increased purchases of products such as pork, noting that the peak for Chinese

imports of U.S. farm products had been only about $30 billion. There was also

potential for the U.S. to become China's biggest energy supplier, she said,

adding that shale oil production costs in some U.S. fields could fall as low as

$15 a barrel.

     "The Americans should not be overly-focussed on agricultural exports," said

Chen. U.S. aviation and energy products have a large market in China, she said,

adding that the U.S. should relax controls on high-tech exports.

     "The largest market in China is for chips and other high-tech products,"

she said.

     Trump tweeted Friday that the second phase of talks would start

"immediately, rather than waiting until after the 2020 Election." U.S. Treasury

Secretary Steven Mnuchin said phase two may be conducted in different stages.

     "Trump said that to give himself an electoral boost," said He, who thinks

China might not rush to kick off difficult phase two negotiations. China's

demands include the removal of all tariffs imposed since the beginning of the

two nations' dispute, while the U.S. wants an end to Chinese state support for

government-owned companies.

     "The U.S. would have to remove its key arsenal -- all the additional

tariffs in the second phase, which augurs a very tough talk ahead," said He.

     Zhang Yansheng, principal researcher at CCIEE, agreed, adding that China

should take advantage of the positive signal sent to markets by the phase one

deal, and not rush into phase two.

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

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

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

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