MNI POLICY: Expectations Low For Pompeo Meet-China Advisors

     BEIJING(MNI) - An upcoming meeting between U.S. State Secretary Pompeo and

a top Chinese top diplomat will touch on Beijing's moves to extend its national

security legislation to Hong Kong but is unlikely to cover trade as the two

countries try to patch up frayed relations, policy advisors told MNI.

     While the bilateral relationship has been at its low ebb in decades, some

signs of rapprochement have emerged ahead of the meeting between Pompeo and

State Councilor Yang Jiechi, including an announcement by the U.S. Department of

Commerce that it would allow U.S. companies to work with Huawei on 5G standards

and Beijing's decision to permit American carriers to resume flights to China.

     "The meeting should only ease the tension for a week," said Shi Yinhong, a

U.S. expert with Renmin University and an advisor to the government, "the two

countries have engaged in confrontation on all fronts, on issues like Taiwan,

Hong Kong and the South China Sea."

     No concrete result is likely from the meeting, whose date and location have

yet to be confirmed, and which Shi said is unlikely to touch on trade issues.

     A source close to the government had a similar reading .

     "The meeting itself should be seen as deliverable and expectation for the

meeting should not be very high," said the source, requesting anonymity.

     "Beijing will reassure the U.S. it will keep Hong Kong's independent

judiciary and explain its reasoning behind the law," the source said, "it gives

both countries an opportunity to express their stances."

     --TRADE

     Daunting issues including the phase 1 trade deal between the U.S. and China

are likely to be left for other meetings. While the coronavirus pandemic mean

China would struggle to meet commitments for purchases of U.S. goods under the

deal, American producers might be unable to produce enough for them to do so

anyway, due to virus disruption, advisors said.

     "The most urgent issue is, I think, for both sides to sit down renegotiate

some terms of the deal. There should be significant delays for its

implementation period," said Lv Xiang, an expert on Sino-U.S. relationship with

Chinese Academy with Social Sciences.

     There is little immediate prospect of talks on a more ambitious phase 2

deal, which would involve industrial subsidies many Chinese economists see as

core to their country's development. Any cuts to these would be impossible at a

time of high unemployment, the source close to the government said.

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

[TOPICS: M$A$$$,M$Q$$$,M$U$$$,MC$$$$,MT$$$$,MGQ$$$,MGU$$$]