MNI EXCLUSIVE: China Optimism Ahead Of Trump-Xi Talks

--Chinese Trade Advisors, Former Officials Optimistic Ahead Of G20 Meeting

--Longer-Term, Outlook For China-U.S. Relations Is Less Certain

     BEIJING (MNI) - Chinese government advisors and former trade officials are

optimistic ahead of a meeting between President Xi Jinping and his U.S.

counterpart Donald Trump set for the end of the month, but gloomy about the

longer-term outlook for the trade dispute between two nations with very

different strategic and economic interests.

     Xi and Trump are set to meet at the G20 gathering in Buenos Aires, in what

will be their first face-to-face encounter in roughly a year.

     "The outcome of the Xi-Trump meeting will certainly be positive," a former

high-level Ministry of Commerce official told MNI, requesting anonymity. The

meeting is so high profile that a failure would embarrass both sides, the

official said, adding that it was less certain whether lower-level talks

following the G20 meeting would be fruitful.

     --POSITIVE SIGNALS

     Chen Jian, a former vice commerce minister, also expressed optimism about

the meeting between the two leaders of state, noting that references by Xi in a

speech at the APEC forum in Papua New Guinea over the weekend to China's

determination to further open up its markets, promote competition and enhance

the protection of intellectual property could be a signal of areas in which he

is prepared to make progress with Trump.

     Xi's comments were followed by tough language from U.S. Vice President Mike

Pence, who said in his own APEC speech that the U.S. would not back down from

its policy of confronting China over its economic practices.

     But Chinese government advisors, former Ministry of Commerce officials and

stakeholders in the talks who spoke to MNI said they did not think Pence's

stance augured ill for the Xi-Trump meeting.

     "The Americans' drama has so many characters," said Wang Haifeng, director

of International Trade and Investment at the Chinese Academy of Macroeconomic

Research, run by the National Development and Reform Commission, saying Pence

was playing "bad cop" to put pressure on China ahead of the G20, where Trump,

who has called Xi a "friend" in the past, would act as "good cop".

     His views were echoed by others MNI spoke to on the sidelines of the China

Outbound-Inbound Forum held by the Center for China and Globalization, including

Wang Huiyao, vice president of the China Association for International Economic

Cooperation under the Ministry of Commerce, and Chen Wenling, chief economist of

the China Center for International Economic Exchanges, which is managed by the

NDRC.

     --LIST OF POSSIBLE COMPROMISES

     Another source, familiar with preparations by both countries, said China

has given the Trump administration a list of items on which it can compromise,

as well as issues it is working on, and U.S. demands it cannot meet.

     While claiming no knowledge of specific items on the list, the source said

the two presidents would focus on liberalizing market access, levelling the

playing field for foreign companies, enhancing intellectual property protection,

and discussing China's industrial policies and subsidies for certain industries

and state-owned enterprises.

     The G20 meeting will at least shed light on the willingness of China and

the U.S. to proceed towards further talks, most of those who spoke to MNI said.

     But differences between the world's two largest economies over key issues

such as technological transfer, intellectual property protection and industrial

policies represent barriers for a longer-term trade truce.

     "In the short term, we have reasons to be optimistic," Chen Wenling of NDRC

CCIEE said at the forum. "But in the long term, I'm very concerned" -- due to

the stance of both U.S. Democrats and Republicans towards China, and because it

is unlikely the U.S. will cease to regard China as a strategic rival.

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

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

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