MNI INTERVIEW: China May Agree to Reform, Not Import Targets

     BEIJING (MNI) - China is expected to address U.S. demand for structural

reform and preventing forced technology transfers in the ongoing bilateral trade

talk this week, although it is unlikely to commit to specific quantities of

imports, a trade advisor for the Ministry of Commerce told MNI on Wednesday.

     "This round talks can be characterized as low-level, being

vice-minister-rank, and tentative," said Lu Jinyong, vice president of China

Association for International Economic Cooperation managed by the Ministry of

Commerce. While there are likely initial progress on certain issues, the talk's

low-rank nature means one shouldn't expect specific trade targets, he said.

     Lu's comments came after Chinese and American officials extended their

two-day trade talks to Wednesday, indicating both sides' strong willingness to

reach a consensus in their first face-to-face trade negotiation after Presidents

Donald Trump and Xi Jinping agreed to a 90-day truce in the conflict.

     "Both sides are having very serious discussions, and they are also working

hard to resolve major differences," Lu said, adding the probability of reaching

a final consensus has risen. 

     The Wall Street Journal on Tuesday night reported that the Chinese and U.S.

trade negotiators have narrowed differences and made process on China purchasing

more U.S. goods and services.

     --PARTIAL CONCESSIONS

     China is expected to make partial concessions on structural reform such as

dominance of state-owned companies, Lu said. China is likely to order local

governments not to extract technology transfer from foreign companies, although

it doesn't recognize that it has ever officially condoned such practices, Lu

said.

     China will produce a readout after the talks finish this week, China's

Ministry of Foreign Affairs said yesterday. 

     The two sides will reach consensus on several principles and some issues,

"but the language may be vague," Lu said. Both countries want to send a clear

message that the talks have produced positive results, he said.

     To reduce trade surplus with the U.S., the Chinese government is likely to

further increase imports of U.S. agricultural goods, including soybeans, beef,

fruit and dried foods, as well as machines such as autos and aircrafts, energy

products such as oil and natural gas, but specific quantity promises likely

won't be made until future negotiations, he said.

     "China may accept some 'flexible' quantity requirements, such as reducing

its trade surplus by certain percentages over some timeframe, for instance,

within a couple of years, Lu told MNI.

     --LNG, OIL

     China may agree to buy more liquefied natural gas from the U.S. despite it

being farther than other suppliers such as Russia or Asia, Lu said. It may even

propose to form partnership with the U.S. for energy exploitation, he said. 

     Major Chinese state-owned oil companies, such as China National Petroleum

Corp. and Sinopec Corp., may be directed to import more crude oil from the U.S.,

and China may agree to specific amount in future higher-level negotiations, Lu

said.

     On services, China may further increase imports of cultural products such

as films, television shows, allow more spending in tourism and education in the

U.S., and lift more market access restrictions, Lu said.

     Both sides appear more likely to agree to a final deal within the 90-day

period, though it may take longer to roll back all the trade sanctions and

existing tariffs, Lu said.

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

[TOPICS: MAQDS$,M$A$$$,M$Q$$$,MC$$$$,MI$$$$,MGQ$$$]