MNI EXCLUSIVE:Ex-Trade Advisors See Only Partial China-US Deal

By Evan Ryser

     WASHINGTON (MNI) - Former U.S trade advisors say a partial trade deal with

China may be the most to expect ahead following next week's 13th round of talks

in Washington.

     "At this point in time, whether it's the 13th, 14th, or 27th [negotiation

round], I'm not sure how much talking does for anybody. As you see over time,

the consensus is getting stronger and stronger for decoupling from China,

treating them more like the relationship we had with the USSR as opposed to with

the European Union, or Australia, or Canada, or Mexico," Dan DiMicco, senior

trade and economic adviser to Donald Trump during the 2016 presidential

campaign, told MNI.

     "I'm not a big believer that these talks are going to lead to anything

positive," said DiMicco, former CEO at Nucor Steel.

     "A partial deal is now what this is all about."

     Chinese Vice Premier Liu He will lead the Chinese delegation for the Oct.

10-11 talks, Vice Commerce Minister Wang Shouwen said over the weekend. Earlier

this year, Liu visited Washington as "special envoy," but was stripped of that

title later after Communist Party hardliners pushed back on concessions to which

he had agreed.

     Welles Orr, assistant U.S. Trade Representative during the George W. Bush

administration, noted that President Donald Trump is feeling the pressure from

weakening manufacturing data, a sliding stock market, and an impeachment inquiry

in Congress.

     "I'm optimistic that this administration may be looking to get some sort of

an interim deal because they badly need it right now. I think there is nothing

like an economic downturn to get the President's attention that he needs a

political win more than anything," Orr told MNI.

     The notion, however, that President Trump and the White House would ditch

demands for China to address what trade advisor Peter Navarro calls the "seven

deadly sins" -- intellectual property theft, forced technology transfer,

hacking, dumping, subsidies for state-owned enterprises, exporting fentanyl, and

currency manipulation -- would likely be met with deep consternation by Trump's

political base.

     --LONG-TERM DISPUTE

     The broader tussle between the two nations would continue regardless of any

settlement to parts of their trade dispute, DiMicco said.

     "[President Trump] is a firm believer in the existential threat that China

poses, not only to our economy and our national security, but to the world, and

he is not going to give in on the basis of some partial deal where we get to

sell so many soybeans, or corn, or whatever else."

     During a news conference at the White House alongside Australian Prime

Minister Scott Morrison Sept. 20, Trump said he was "looking for complete deal"

with China.

     But reports last week said the White House is weighing restrictions on U.S.

investments in China. The discussion includes delisting Chinese companies from

American stock exchanges and preventing U.S. government pension funds from

investing in the Chinese market, according to the report, which the

administration has denied.

     If this is accurate, any actions to delist Chinese companies from American

exchanges and limit portfolio flows into China would likely be kept on a

separate track from the trade negotiations, Orr said.

     "I think that got floated out there. I'm not sure there's real truth to

that," Orr said. "I think the U.S. side thinks they've gotten that in their back

pocket if things were really to go south, but I'm not sure how serious that

really is."

     DiMicco urged that China should not be allowed to use U.S. capital markets

to attain "dominance in the world," which he likened to "being at war with

somebody and handing them the gun with the barrel pointed at you."

     "My take is that [the White House] is not going to say anything about what

is or is not on the negotiating table with respect to their strategy," DiMicco

said. "My own personal opinion is they should be talking about it."

     White House trade advisor Peter Navarro on Monday called the reports "fake

news", and over the weekend a Treasury Department spokeswoman said the

administration was not contemplating blocking Chinese companies from listing

shares on U.S. stock exchanges "at this time."

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

[TOPICS: M$U$$$,MT$$$$,MX$$$$,MGU$$$]