RPT-MNI EXCLUSIVE: September China-US Meeting Likely: Advisors

By Wanxia Lin

     BEIJING (MNI) - A meeting between Chinese and U.S. trade negotiators is

likely to proceed this month, although expectations for progress should be

limited, government advisors told MNI.

     The latest round of tariff hikes by the two countries raised doubts over

whether the meeting in Washington would go ahead as scheduled. But Chen Wenling,

Chief Economist at the China Center for International Economic Exchanges, said

Vice Premier Liu He aims to "resolutely oppose trade war escalation" and that

while China will not concede its key principles, it wants to resolve disputes

rationally.

     "China's retaliatory move aims to create a fair base for the talks, not to

fight tooth and nail," she said, comparing the current situation to that before

the 11th round of talks in May when Vice Premier Liu also headed to the U.S. to

put talks back on track. But, said Chen, whose high-level think tank falls under

the National Development and Reform Commission, the meetings could prove

fruitless unless the U.S. shows some flexibility.

     Yu Miaojie, a veteran trade expert advising several government departments,

said the two countries will likely meet, and "maybe in late-September". Talks

could focus on avoiding additional tariffs on CNY550 billion of Chinese products

which President Donald Trump plans to impose on Oct. 1 and Dec. 15.

     "It is still possible for the two sides to reach a preliminary deal in the

second half of November, or December," said Yu, who is also Deputy Dean of the

National School of Development at Peking University. The two heads of state

could meet during the APEC meeting in Santiago in mid-November, he said.

     Yet Yu remains pessimistic over Sino-U.S. relations in the long run. Any

deal "could turn into a worthless piece of paper, if Trump gets re-elected in

2021," said Yu.

     Both advisors think China should look beyond tariffs as reprisals to any

future U.S. increases, to measures including a "non-reliable" entity list, along

with the export restriction of rare earths.

     "China is ready to roll out the 'non-reliable' list to target American

companies anytime," said Chen, "if they are submissive to their state power to

curb supplies to Chinese enterprises." Yu thinks FedEx would be included on such

a list, if introduced.

     China should increase stockpiles, boost domestic production and increase

imports from Europe, Japan and South Korea to replace declining agriculture

imports from the U.S, Yu said.

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

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