MNI INTERVIEW:US-China Talks May Resume, Could Take Steps Back

By Iris Ouyang

     BEIJING (MNI) - China and the U.S. should eventually strike a trade deal if

the two sides treat each other with mutual respect, a former Chinese

Vice-Commerce Minister told MNI in an interview, although he noted that there

was no guarantee previously-agreed commitments would be retained if stalled

negotiations resume.

     Wei Jianguo, who served as vice commerce minister from 2003-2008, said

China will tailor retaliation against threatened U.S. tariffs to minimise harm

to its own companies.

     "We will be tough as we retaliate, but we will precisely target [specific

sectors and groups]," Wei said adding that Chinese and U.S. negotiators have not

discussed when or how to resume talks, but that he still expected a deal to be

reached eventually.

     "The negotiations haven't stopped. Both sides are willing to continue to

talk and keep channels open," he said, but noted: "They could start again from

the beginning, it could be that some previous commitments are kept, or else the

majority might be maintained."

     China has planned its response if the U.S. goes ahead with its promise to

impose extra duties on around $300 billion of Chinese imports, with tariff

increases on agricultural goods, vehicles and aircrafts most likely, said Wei,

now vice chairman of the China Center for International Economic Exchanges,

which is managed by China's economic planning body.

     Before the breakup of trade talks last week, China was set to substantially

increase purchases of such products, MNI understands.

     --FINANCIAL LIBERALISATION

     China could also raise other duties and slow moves to liberalise its

markets in favour of U.S. service imports, such as financial services and

tourism, said Wei. He said he not heard any discussion of the possibility of

limiting China's exports of rare earth minerals.

     China on Monday announced increases in tariffs on $60 billion of U.S. goods

after President Donald Trump's move to hike duties to 25% from a previous 10% on

$200 billion of Chinese imports.

     "The key to negotiations would be an agreement that can ensure both sides'

interests are protected, with equality and respect for both sides." Wei said,

saying Trump's tariff move last week inappropriately put "extreme pressure" on

China.

     A previous U.S. insistence on one-sided enforcement mechanism which would

allow Washington to monitor compliance with any agreement but not Beijing had

been unfair, he said.

     "If the U.S. doesn't change its overbearing approach, no deal is going to

be made."

     Wei denied accusations from the U.S. side that China had prompted the U.S.

move by reneging on previous commitments.

     "China didn't back out of any promise," he stressed. "We had reached an

agreement in the previous three rounds, but it was Trump who said it needs to be

renegotiated."

     "The U.S. wants to hit China at the last moment, hoping to leave China

dizzy so it agrees to terms, just as occurred with the new U.S. trade pact with

Canada and Mexico," Wei told MNI. "A businessman might be able to act like this,

but in negotiations between governments, especially with China, it's

impossible."

     But Wei said he expects a deal will be reached eventually, so long as the

U.S. respects China's interests.

     "We need to reach a deal that can benefit both sides and is enforceable for

both. As long as we are willing to talk, the deal can be reached."

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

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

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