MNI INTERVIEW Agreed Partial Trade Deal Seen Soon: Wang Huiyao

--Big US Sticking Points Could Be Tackled in China Foreign Investment Law

     LONDON (MNI) - China and the US should reach a pragmatic trade deal in a

matter of months based on progress made in the previous 11 rounds of

negotiations - and tackle some of Washington's major sticking points separately

through talks to shape Beijing's new Foreign Investment Law (FIL), a prominent

trade expert in Beijing told MNI in an interview.

     "We should see a deal within a few months as both sides are willing, but we

should not expect a perfect deal," said Wang Huiyao, President of the Center for

China and Globalization (CCG), a prominent think tank. "The best result would be

that the two sides sign up to the 90% agreement they made previously."

     Wang conceded that Washington showed significant flexibility during the

Osaka G20 at the weekend. In addition to restarting negotiations and resuming

sales of American products to Huawei, Wang said he was impressed with President

Donald Trump not setting any fresh deadline for the talks to succeed. He noted

that this was in stark contrast to the 90-day window he imposed at last

November's G20 in Argentina before applying punitive tariffs on Chinese imports.

     "Trump needs a deal with China for delivering his campaign promise and the

trade war has aroused dissatisfaction among many US firms, so he is facing more

pressure to fulfil his promise and to make a deal," Wang concluded.

     --BEIJING CONCESSIONS

     But now was the time for China to take the opportunity to clinch a trade

deal with the US by becoming more responsive on its part, Wang advised. This

would relieve the hesitancy of both Chinese and foreign entrepreneurs to invest

in and expand businesses in China, and in some cases to reverse decisions to

withdraw from China.

     Beijing could increase the purchase of the American goods, particularly

agricultural products championed by President Trump, although the volume should

not greatly exceed the level promised by Beijing at the Argentina G20 gathering

in November last year, Wang suggested. But Washington in turn should remove the

25% tariff levied on China's imports for a deal to be struck.

     He also suggested that the two countries deal with core US requirements on

protection of intellectual property, ending forced technology transfer and equal

treatment of foreign investment by addressing Beijing's newly-introduced FIL.

Such a vehicle could avoid the complicated process of revising existing Chinese

legislation.

     "Since the FIL has not been enacted yet and the detailed implementation

rules are still to be made, the US side could discuss with China's Ministry of

Commerce enhancements to the law implementation details that would narrow the

differences," Wang proposed.

     China's legislative authorities passed the FIL into law in March but it

does not take effect until the beginning of 2020. Beijing claims it already

meets some of the US demands in the areas of intellectual property, technology

transfer and overseas investment.

     Turning to US concern about enforcement terms to ensure China's compliance

with a trade agreement, Wang said the two sides could introduce a supervisory

mechanism through regular bilateral meetings or invite third party inspectors,

such as The World Intellectual Property Organization.

     --CHINA'S CHANCE

     Meanwhile, Wang hoped to see Beijing avoid any return to increased trade

tensions with Washington. He said his country should open its doors as widely as

possible to companies that benefit from the bilateral trading relationship and

consider in the future letting in more high-tech firms.

     Wang also feels that: "The 'unreliable entities list' should not be

enforced at present, because it would spook foreign investors." This follows

Beijing's tit-for-tat announcement last month that it would release its target

list of foreign firms in China soon after Huawei was designated an unreliable

entity by the US.

     For Wang, the speech that President Xi made during the Osaka G20 last

weekend has sent an impressive and positive signal for a further opening up of

China, which should improve the confidence of global investors and stabilize the

global trade outlook.

     In addition, Wang noted that both leaders agreed to personnel exchanges,

particularly for foreign students, which he also viewed as important to sooth

anxiety that the trade conflict risked expanding into other bilateral areas.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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