MNI EXCLUSIVE: China-US Talks To Start Slowly: China Advisors

     BEIJING (MNI) - Next week's trade talks between China and the U.S. will

likely focus on technical issues such as establishing a detailed work plan for

future negotiations rather than augur substantive progress, though Beijing could

reduce or remove some levies on American imports as a sign of good will, trade

experts advising the Chinese government told MNI Friday.

     "It is unlikely the two sides will remove the tariffs" in the first round

of face-to-face trade negotiations since Xi Jinping and Donald Trump agreed a

trade war ceasefire in December, Tu Xinquan, a foreign trade expert at the

Advisory Committee for Economic and Trade Policy of the Ministry of Commerce,

told MNI. "The major goal of the talks is to head off the development of further

frictions and prevent more tariffs."

     China's Ministry of Commerce announced on Friday that Deputy Trade

Representative Jeffrey Gerrish will lead a U.S. delegation to Beijing from Jan.

7-8 for "positive and constructive discussions" on economic and trade issues.

The news helped lifted Chinese stocks, with the Shanghai Composite Index closing

2.05% higher on Friday. The yuan strengthened to 6.8658 to the dollar from

Thursday's close of 6.8721.

     --TALKS WILL TAKE TIME

     Other trade advisors and experts consulted by MNI echoed the view that it

will take time for U.S. and Chinese negotiators to arrive at compromises to end

their dispute.

     Liu Hong, a director of the Ministry of Commerce's China Association of

International Trade, told MNI that "the time wasn't right yet" to start winding

back tariffs.

     Tangible results are more likely in the final three weeks of the 90-day

negotiation period announced by Xi and Trump, said Wang Haifeng, director of

international trade and investment at the National Development and Reform

Commission-managed Institute for International Economic Research.

     Fifty-five days remain before the March 1 deadline set by the Trump

administration for deciding whether to increase tariffs to 25% on $200 billion

in Chinese products, in the dispute which began with U.S. accusations of unfair

trade practices, barriers for foreign companies and weak Chinese protection for

intellectual property.

     Much of next week's meeting will focus on technical issues, such as laying

out a timetable for future negotiations, the advisors said.

     "They will exchange ideas on trade, form some consensuses, but differences

are also expected to persist," Tu said, adding that China is likely to cancel

some retaliatory tariffs on American goods to show its sincerity in the talks,

as agreed by the two presidents in December.

     China's Ministry of Commerce earlier last month said "agricultural goods,

energy, and cars are specific issues China and the U.S. have been able to reach

consensus on, and that specific details will be announced shortly.

     --GOODWILL GESTURE

     Chinese state-run companies in recent weeks have resumed imports of at

least 1.5 million metric tonnes of soybeans from the U.S., with media reports

indicating that Chinese companies could buy more soy for February and March.

China's customs department announced at the end of December that it would allow

imports of American rice, before lowering tariffs on U.S. vehicles and auto

parts to 15% from the punitive 25% imposed earlier in the dispute.

     The U.S. is also expected to reduce tariffs causing a negative impact on

its economy. But Tu said the chances that Washington would back down on its

first, $50 billion round of levies, imposed on strategically-important goods,

are low, given that China does not acknowledge U.S. complaints on key sticking

points such as forced transfers of American technology.

     "The two sides have different understandings of what equal (treatment)

means," Pei Jiansuo, an associate professor at University of International

Business and Economics in Beijing who previously worked for the Ministry of

Commerce, told MNI. "For example, while China wants to open its economy at its

own pace, the U.S. demands the same openness as in the American market."

--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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