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     BEIJING(MNI) - The U.S. may choose to make further tariff exemptions as it
moves to defuse its trade dispute with China, a former senior advisor to the
People's Bank of China told MNI.
     In two rounds, the U.S has so far excluded a total of USD12.12 billion
worth of goods from tariffs it imposed on USD50 billion of imports from China,
according to China Academy of Social Sciences, China's top official think tank.
     U.S. President Donald Trump may calculate that it is politically more
expedient to grant further such exemptions than to be seen to be rolling back
the tariffs aimed at Beijing, said Yu Yongding, a senior fellow of the CASS and
a former member of PBOC's monetary policy committee.
     --ECONOMIC PRESSURE
     "This may be the only likely way of reaching a resolution at present, since
the Trump administration will not make concessions under political pressure," Yu
said in an interview, adding that he expected a partial deal to de-escalate the
dispute, with both nations feeling economic pressure after two years of trade
war and softening global trade flows.
     He was less optimistic about the later, so-called "phase two" and "phase
three", talks which would follow a partial deal. These would address China's
subsidies and industrial policies, which it regards as a sovereign matter and
not in violation of international rules, although Yu said Beijing might be
prepared for discussions in some areas. Yu added that China's industrial
policies need to be improved, and gave the example of its solar panel
manufacturing sector, which has crowded out global competitors.
     The two sides should put more difficult issues to one side and focus on
areas where compromise is possible, the economist suggested. Currently, they are
probably working on details of China's promised purchases of U.S. agricultural
goods, he said.
--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MT$$$$,MX$$$$,MGQ$$$]