MNI EXCLUSIVE: China Not To Bend On Trade Before U.S. At G20

--China Questions Trump Reliability Ahead of Mid-term Elections

--But Some In Beijing Claim Trump May Be Seeking A More Positive Path

By Iris Ouyang

     LONDON (MNI) - Doubts in Beijing about U.S. President Donald Trump's

sincerity means his administration will need to come forward with compromises in

trade talks before the China can be expected to make any major concessions,

trade advisors to the Chinese government told MNI Friday.

     "Comprises should be two-way," said Wang Haifeng, director of International

Trade and Investment at the Chinese Academy of Macroeconomic Research, run by

the National Development and Reform Commission. "As the States is the initiator

of the whole trade and economic conflict, it's hard for us to advance the

negotiation process if the U.S. does not compromise while we already have done a

lot such as lowering tariffs and further open up."

     Wang's comments came after Chinese President Xi Jinping and Trump had a

phone conversation on Thursday, with both sides expressing a willingness to keep

open their communication on the trade conflict, increasing optimism for a

meeting on the sidelines of the G20 Summit in Argentina at the end of this

month.

     Liu Hong, a director with China Association of International Trade, a think

tank of the Ministry of Commerce, expressed similar sentiments in an interview

with MNI. Citing much the same reasoning - as the Trump Administration started

the trade spat it should first undo what it has done - Liu said: "It's not like

we compromise then the U.S. will stop its trade action. This logically is not

right."

     "Whether we retaliate or not, the Trump administration will continue its

aggressiveness, so China now finds little room to make concessions," Liu told

MNI. "But if the U.S. made an announcement to stop or escalate the trade spat,

we will also stop or escalate it."

     Media reports earlier today said Trump, following his call Xi, had ordered

officials to draft a trade agreement which could be presented at the G20 meeting

with his Chinese counterpart. The reports cited four people familiar with the

matter.

     ELECTIONEERING TRUMP

     Most Chinese trade advisors who spoke to MNI expressed a guarded

interpretation of Trump's motives behind inviting Xi to Thursday's call and the

rumors that have swirled since which hint about drafting a possible trade deal.

They suggest Trump - on the campaign trail - is playing gesture politics chiefly

aimed at enhancing support for the Republicans in the mid-term elections on

November 6.

     But there are others in Beijing, including a Ministry of Commerce official,

who see in Trump's latest posture the prospect of a more positive direction for

U.S.-China trade that the U.S. president himself is seeking. For Liu, "Trump

wants to deliver a message that he can control the negative impacts of the trade

war to the U.S."

     Although the stock and currency markets have been boosted by the call

between Trump and Xi and suggestions about U.S. government departments drafting

a trade deal, some experts advising the Chinese government indicated that the

conversation between the two leaders does not reflect any real change in the

status of the trade conflict. They note that only this week the U.S. government

increased sanctions on Chinese companies, including a semiconductor company in

Fujian on intellectual property, and issued fresh threats that Washington will

slap tariffs on all Chinese exports in early December if the G20 meeting of the

two leaders failed.

     "It's easy to reach a consensus" at the G20 summit, Wang said. "But the key

is how to implement related statements," echoing a commentary published by the

official Xinhua News Agency hours after MNI's interview with Wang which said

"action outweighs languages" and "we hope the U.S. values its promises and keep

its words."

     "How the Trump administration can win our trust is questionable," Mei

Xinyu, a researcher at the Chinese Academy of International Trade and Economic

Cooperation under the Ministry of Commerce, told MNI.

     "Trump wants to win China's support to tackle the North Korea

denuclearization problem by easing trade tensions, but its flip-flops have

happened too many times," Mei said. "If it wants to reach a deal it has to give

some posture (to show sincerity)."

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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