MNI EXCLUSIVE: China-US Deal Likely By Mid-Year:China Advisors

By Iris Ouyang

     BEIJING (MNI) - A deal between China and the U.S. to resolve their

year-long trade dispute is likely to come by the end of June, although the

timing of a proposed presidential summit to seal an agreement is still unclear,

Chinese trade advisors told MNI.

     "There's around a 70% chance of a deal in the first half of the year, and a

30% chance of a deal in the next three to four weeks," said Wang Haifeng,

director of International Trade and Investment at the Chinese Academy of

Macroeconomic Research, run by the National Development and Reform Commission.

     Media reports have cited sources saying U.S. trade negotiators will resume

talks with Chinese officials next week in Washington.

     "I'm relatively optimistic as economic and trade conflicts do no good to

either side," Wang said, adding that he saw an 85% chance of a deal this year.

"Even if Trump makes a surprising decision due to domestic pressure or other

factors ... the two countries won't decouple as they are so interconnected."

     Yu Miaojie, a veteran trade expert who advises the Ministry of Commerce,

the Ministry of Finance and the State Council's Counsellors' Office, told MNI he

saw an agreement in two to three months.

     "China wants to end the trade war as soon as possible, and the U.S. is even

more anxious," said Yu. "The trade war is increasingly having an impact on U.S.

CPI, while Trump has a very big task to finish trade negotiations with Japan

before year-end when Republicans need to step up preparations for the next

presidential election. Trump has to finish the China-U.S. trade talks to leave

enough time for U.S.-Japan trade negotiations."

     --G20 MEETING?

     The G20 Summit in Japan at the end of June would provide a likely venue for

the U.S. and Chinese presidents to meet and put their seal on an agreement, Tu

Xinquan, a foreign trade expert at the Advisory Committee for Economic and Trade

Policy of the Ministry of Commerce, told MNI.

     "It would be hard to reach a deal in three to four weeks," as Trump said

last Thursday, Tu said, "Because the schedules of the two presidents are hard to

match."

     "It wouldn't be appropriate for China to send President Xi to the U.S. only

to sign a deal, and there are still specific issues the two sides haven't

reached consensus on," he said, adding that a meeting at the G20 would avoid the

risk of embarrassment for Beijing if no agreement were reached.

     All three advisors pointed to other policy measures taken by China to

support its economy even if a trade deal continues to be delayed.

     "The trade talks with the U.S. are not a matter of death or life," Tu said.

"It would be best to sign a deal sooner, but it would not be a big problem if

it's signed later. But for Trump, it's more important than signing a deal with

North Korea."

     U.S. eagerness for an end to the dispute would probably secure an

agreement, he said, despite fears by Chinese officials that Trump could walk

away from a deal when meeting with President Xi.

     The advisors agreed that China will not accept an enforcement mechanism

which bars it from retaliating with tariffs should Beijing fail to meet goals

agreed in a trade deal. Sources have told MNI that the U.S. is pushing for such

a mechanism.

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

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

[TOPICS: M$A$$$,M$Q$$$,MT$$$$,MX$$$$,MGQ$$$]