MNI INTERVIEW: G20 To Restart US Talks: Ex-China Vice-Minister

     BEIJING (MNI) - Chinese President Xi Jinping and Donald Trump should agree

to restart stalled trade talks later this month, but, while Washington faces

domestic pressure to reach an agreement, Beijing is increasingly looking beyond

its traditional commerce to prioritise the continent-spanning Belt and Road

infrastructure drive and yuan internationalisation, a former deputy Chinese

trade minister told MNI.

     A positive result from the meeting set for the G20 summit in Osaka at the

end of the month should come even as China sticks to calls for the U.S. to

remove tariffs imposed on Chinese goods and to drop unrealistic demands for

purchases of American products, Wei Jianguo, who served as a deputy minister at

the Ministry of Commerce from 2003 to 2008, said in an interview.

     "The meeting during the G20 is likely to yield to an agreement in line with

the world's expectations, as well as with the will expressed by the two

countries," Wei said, adding that averting tariffs on an additional USD325

billion of Chinese goods as threatened by Trump would be a pre-condition for

returning to the negotiating table, and that the U.S. leader should "pull back

the horse before the precipice."

     The U.S. is eager for a deal, with fears by American companies and farmers

that they will lose access to the Chinese market likely to be a concern for

Trump as he seeks re-election, and China also desires an agreement that

addresses its concerns, said Wei, now a vice chairman at the Chinese Center for

International Economic Exchanges, a think tank under the National Development

and Reform Commission.

     "China needs an equal and fair deal based on mutual respect, not one

imposed on us violating our sovereignty and core interests," Wei said, noting

that Xi will insist on China's core interests relating to sovereignty and

territorial integrity, national security including energy, the internet, defence

and food, as well as its right to develop its economy.

     --BELT AND ROAD

     A good outcome from the meeting would strengthen confidence in the global

economy and even prevent a potential recession that could have resulted from

escalating confrontation between the two economies. Yet at the same time the

realisation is growing within China that its massive Belt and Road

infrastructure drive is key to its economic future. This makes yuan

internationalisation more important, in order to reduce Chinese companies'

foreign exchange risk, Wei said, noting that nearly 1,000 Belt and Road projects

in Africa involving 3,500 Chinese firms rely on the U.S. dollar.

     Increased cooperation with global financial hubs, such as the

Shanghai-London Stock Connect program launched Monday, should further this end,

boosting the yuan's roles in global trade settlement, reserves and payment, Wei

said.

     "The program will be a significant driver to accelerate yuan globalisation

and improve the credibility of the currency," Wei said, adding that: "A stable

and even strong yuan benefit China's development and also global growth, even

though a weaker yuan could bolster our exports."

     China is further opening up its financial markets, setting up more offshore

yuan hubs, increasing currency swaps with other countries and encouraging its

currency's inclusion in central bank reserves and commodities pricing, said Wei,

adding that Beijing will seek to ease controls on its capital account while

ensuring financial stability and security, Wei said.

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

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

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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