MNI EXCLUSIVE: N Korea Impacts On Trade Talks - China Official

--China Could Use N Korea, Iran Leverage in Trade Talks With US

--Govt Advisor Said Further Consensus Needed In US/China Talks

     BEIJING (MNI) - The continuing North Korean issues impact the ongoing

negotiations over trade between the U.S. and China, a Ministry of Commerce

official told MNI.

     Comments from U.S. President Donald Trump on Tuesday, saying he isn't

satisfied with the China-U.S. trade talks, were triggered by North Korea's

harder stance in recent days, the official said.

     North Korea has suspended the only recently reinstated communication with

South Korea and has threatened to cancel leader Kim Jong Un's summit with Trump,

scheduled for June 12 in Singapore.

     Trump's comments contrast with positive sentiment expressed by Chinese and

American officials last week, when they issued a joint statement saying the two

countries had reached an initial consensus in cutting the trade deficit, saying

they will "resolve their economic and trade concerns in a proactive manner"

following their meetings in Washington, D.C.

     "Now China and the U.S. only reached a consensus, and the two countries

will continue to negotiate," the official told MNI. The official added that how

China's promises would be implemented and what deals could be reached are

dependent on future negotiations.

     The U.S. will dispatch a team to China in order to discuss the details with

Chinese officials, according to the weekend's joint statement.

     "China may not have offered (extra) benefits to the U.S." behind the scenes

during the trade talks last week, Mei Xinyu, a researcher at the Chinese Academy

of International Trade and Economic Cooperation under the Ministry of Commerce,

told MNI. "China might showcase its ability to retaliate against the U.S. in

other areas such as politics," he noted. 

     --KOREA TALKS BAIT

     He added China could use its leverage in the North Korea denuclearization

issue or over the Iran deal.

     Mei said he still proposed that China should impose pressure on the U.S.,

not only economically but also politically -- repeating comments in his article

published by the government mouthpiece China Daily back in March.

     "Given that Trump's goal ... is not to cut off China-U.S. economic and

trade relations ... We especially need to value counterattacks in this

(political) field," Mei said in the article which was republished on his blog,

but the quote was deleted from the China Daily version.

     The MOFCOM official expressed a similar attitude, saying it's doubtful that

Trump truly wants to start a trade war with China, indicating the Trump

administration is using it as a bargaining chip to leverage China on other

issues. Thus, the official said, it's not surprising the two sides reached a

consensus last week.

     Mei also said a trade war between the two countries is unlikely as the

Trump administration would find little benefit for it or the U.S., but

small-scale conflicts are expected to continue. 

     --PATIENCE NEEDED

     Talking to the official and several government advisors, MNI learned China

is well aware that patience is needed in the trade talks, at odds with Trump who

called for accelerating the trade negotiations on Tuesday.

     "The China-U.S. trade conflicts would not be resolved in the short term,"

Liu Hong, a director with China Association of International Trade, a think tank

of the Ministry of Commerce, told MNI, suggesting both China and the U.S. should

be patient.

     In the next round of negotiations, discussing solutions to specific

problems should not come before reaching a consensus in areas the two sides have

divergent opinions, Liu stressed.

     China could make comprises on further expanding imports from the U.S. and

improving intellectual property protections, Liu noted. Additionally, China

could further reduce restrictions on foreign investment and open its market,

while also increasing investment into the U.S., he added. But China needs time

to deliver on the promises, Liu noted.  

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

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

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