MNI EXCLUSIVE: China Trade Advisors Think Trump Will Blink

By Wanxia Lin

     BEIJING (MNI) - Chinese government advisors told MNI they expect President

Donald Trump to eventually make concessions in trade talks for domestic

political reasons, but said his G20 meeting with China's Xi Jinping is unlikely

to produce much beyond a resumption of stalled formal negotiations.

     Trump is unlikely to go ahead with his threat to impose additional tariffs

on $300 billion in Chinese imports ranging from mobile phones to clothing, as

the U.S. economy and stock market would be hit hard, said Wang Haifeng, director

of International Trade and Investment at the Chinese Academy of Macroeconomic

Research, run by the National Development and Reform Commission (NDRC). Mei

Guanqun, deputy researcher at the China Center for International Economic

Exchange, agreed, explaining that Trump would seek a deal to further his 2020

bid for re-election.

     "It is possible that Trump could make concessions to reach a deal, even if

he's not happy about it," said Mei, whose government-backed think tank is

managed by the NDRC, noting that the U.S. leader could wait until he has secured

a second term in office before questioning the implementation of a future

agreement with China. A deal could also encourage Beijing to help resolve the

U.S. nuclear dispute with North Korea, potentially delivering another electoral

boost to Trump, Mei said.

     While no substantive accord is likely at the G20 meeting in Osaka, the two

heads of state may agree on principles for restarting negotiations, said Wang,

adding that China could also seek to return to common ground reached before the

breakdown of talks.

     But Mei said China, which could also bring up U.S. moves against tech giant

Huawei at the G20, was resisting U.S. pressure to return to its earlier stance.

     "If the two sides restart trade negotiations, they could last until the end

of this year," he said.

     In the event the U.S. proceeds to hike tariffs, Wang said he would advise

against China retaliating by restricting its exports of rare earth minerals,

which can be sourced from other countries, or by devaluing the yuan. Access to

China's huge market is a more potent weapon, said Mei, who said the government's

plans for a list of "non-reliable entities" targeting foreign companies which

have damaged Chinese interests would be an effective tool for putting pressure

on the U.S.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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

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