MNI EXCLUSIVE: Mexico Trade Concessions No Guide For China

By Iris Ouyang

     BEIJING (MNI) - China is unlikely to follow the lead of Mexico and make

significant concessions to reach a deal in its commercial dispute with the U.S.,

trusting in its industrial and economic clout to withstand a trade war if

necessary, experts with government connections have indicated.

     In a closed-door discussion in Beijing earlier this week, economists and

trade experts affiliated with the Ministry of Commerce and the Chinese Academy

of Social Sciences (CASS) said the government would remain firm in talks with

Washington. The discussion came after Mexico clinched a preliminary deal,

announced Monday, following compromises including agreeing to revisions to the

North American Free Trade Agreement to allow some car production to be moved to

the U.S.

     "The Chinese government has patience," Yu Yongding, former member of the

Monetary Policy Committee of the People's Bank of China and now a senior fellow

at the CASS, said at the closed-door meeting with reporters. "We should continue

to wait ... we are not rushing and should measure the strength of our

retaliatory actions."

     Wei Jianguo, former vice commerce minister, told a forum on Tuesday that

China's resilience and complete industrial complex would see the world's

second-largest economy emerge victorious from a trade war.

     Wei's public comments came as President Donald Trump threatens to increase

the tariff on $200 billion in Chinese goods to 25% from 10%. With Washington's

levies already hitting another $50 billion in goods, almost half of China's

exports to the U.S. are in danger of being affected.

     The Chinese government has promised retaliation if the U.S. goes ahead with

its threat.

     "The Mexico deal would be unlikely to prompt China to speed up negotiations

with the U.S.," especially after U.S. President Donald Trump said on Monday that

now may not be the best time to continue trade talks with China, said Wu Baiyi,

director-general of the Institute of American Studies at CASS.

     "The imbalanced trade structure between the U.S. and Mexico is different,"

Wu told MNI. "Mexico has no other choices and it's under too much pressure," he

said. Both Mexican and U.S. officials were eager to strike a deal by the end of

August in order to be able to notify the U.S. Congress in time for an agreement

to be signed by the outgoing administration of Mexican President Enrique Pena

Nieto.

     While Mexico relies heavily on trade with the U.S., China can find

substitutes for both U.S. exports and markets, Wu said.

     "The U.S. did show that it can make compromises in certain conditions," Wu

said, referring to the Mexican deal. "It thinks bilateral trade negotiations may

be more efficient than multilateral talks."

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

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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