MNI SOURCES: China Pushes For Xi State Visit To Clinch US Deal

--Deal Would Likely See Many Tariffs Remain

     BEIJING (MNI) - China is pushing the U.S. to grant President Xi Jinping a

state visit to seal a high-stakes trade deal, which is likely to leave tariffs

on $50 billion in Chinese goods in place and only reduce levies on another $200

billion in imports despite recent progress in talks, sources from both sides

with knowledge of the discussions told MNI.

     "We hope there will be a formal state visit by Xi to the U.S. to sign the

deal," a source on the Chinese side told MNI. "This would require an invitation

from Washington, as a meeting in Trump's Mar-a-Lago club would be more of a

private meeting, and show China in too humble a light."

     To China, a state visit would both end the months-long trade war and send a

signal to the world that the two countries' relations had entered a new stage,

the source said, adding that anti-China groups are lobbying against any "overly

indulgent" move towards Beijing.

     The U.S. is reluctant to accede to the request, a source close to U.S.

negotiators said. This was for fear of offending allied countries which have not

received such an invitation, the source said. So far during the presidency of

Donald Trump only French President Emmanuel Macron has made a state visit to the

U.S.

     "The presidential meeting is most likely to happen at the G20 (in June in

Japan) because it poses the lowest risks for both sides," the source added.

     --MANY TARIFFS TO STAY

     A deal is unlikely to undo all the tariffs enacted by the two sides, the

sources said. The U.S. is insisting that it keep 25% duties on $50 billion of

Chinese imports, which were imposed in the opening shots of the dispute in the

middle of last year, both to compensate for what it claims are unfair practices

and as a way of ensuring that Beijing keeps to any commitments.

     Officials are discussing ways to reduce another round of 10% levies, which

were placed by Washington on $200 billion of Chinese goods. One possible

approach would be for the U.S. to take some Chinese product categories off the

$200 tariff list, the two sources said. The source from the Chinese side said

the 10% rate could be reduced.

     "There's a very big chance that some products in the $200 billion

categories could be removed," the source close to the Chinese side said. "Now

that both sides are willing to sign the deal, then let's sign it. As long as we

have a general consensus for a deal that's the main thing, we don't have to

haggle over every detail."

     Discussions are also ongoing about mechanisms to enforce a deal, both

sources, plus a third source briefed by both sides, said.

     The source close to the U.S. side said Trump wants a deal before mid-May,

and that U.S. officials plan to finish a legal review of the proposed text by

roughly the end of this month.

     But the Chinese source said Beijing would prefer a state visit before the

G20 summit in Osaka, and that Trump wanted to avoid news of the deal breaking

before May.

     "It may be less likely that a deal is finished by the end of this month,

but it could be at the end of May," if the two presidents are set to meet, the

source said.

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

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