US-China extend trade talks

| | Washington
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US-China extend trade talks

Sunday, 24 February 2019 | AFP | Washington

US President Donald Trump on Friday  said a trade summit with Chinese leader Xi Jinping was likely to  occur next month, and hailed two days of “very good talks” by negotiators. The talks were extended through Sunday as officials race to reach  a deal ahead of a deadline next week when US duty rates are due to  rise sharply.

But Trump again said he was considering pushing back the deadline  for raising tariffs on more than USD 200 billion in Chinese exports. “We expect to have a meeting sometime in a not too distant future,”  he said of the meeting with Xi.

“Probably fairly soon in the month of March.” Details remained  scant about any concrete progress in the seven-month-old trade war,  which has rattled the global markets and prompted stark warnings  about the risks to the world economy.

“I think there is a very, very good chance that a deal can be made,”  Trump told reporters at the White House on a second day of trade  negotiations with Chinese officials.

“If we are doing well, I could see extending that” deadline for  the end of the three month tariff truce. And Trump said an agreement on currency manipulation will be included  in the trade pact. Officials from Beijing also expressed optimism  about a positive outcome.

“From China, we believe that it is very likely that it will happen,”  Chinese trade envoy Liu He said, speaking through an interpreter.

Global stock markets were higher on expectations the two sides  would avoid further deterioration in their trade relations. Analysts say the two sides are likely to trumpet mutual agreements  to resolve the easier parts of the trade dispute -- increasing purchases of American goods, more open investment in China and tougher protections  for intellectual property and proprietary technology. The harder parts covering issues like scaling back China’s ambitious  industrial strategy for global preeminence, are another question.

Christine Lagarde, head of the International Monetary Fund, again  warned that the US-China trade tensions a “major risk” to world economic  growth. Since July, the countries have hit out with tariffs on more than  $360 billion in two-way trade.

While the tariffs alone are having “minimal” effect on global trade,  they are damaging business confidence and weighing on stock markets,  Lagarde told the US radio program Marketplace on Thursday.

“I cross my fingers every morning and my toes every evening because  I hope that it is going to end up with a way to fix the system, not  break it,” she said The IMF has cut its forecast for global growth  this year due to the combined impact of the trade war.

Beijing reportedly has proposed an increase in its imports of US  energy and agricultural exports significantly. US Agriculture Secretary  Sonny Perdue tweeted that China has committed to buying “an additional”  10 million metric tons of soybeans as a “show of good faith,” but  he did not give any details or specify the timeframe.

Still, a broader deal could be difficult given the US demands for  far-reaching structural changes.

Gary Clyde Hufbauer, a trade expert at the Peterson Institute for  International Economics, said China may have to remove its tariffs  in order to increase purchases of US goods, but Trump may feel no  pressure to roll back the duties he imposed last year.

“The big surprise would be a complete removal of tariffs by Trump  but I’m expecting an asymmetrical removal of tariffs by China in  order to get to some of these numbers,” he said.

China’s retaliation has hit US farm exports hard. The US Agriculture  Department estimated this month that US soy exports would not turn  to their pre-trade war levels for another six years. William Reinsch, a former senior Treasury official for trade in  the administration of President Bill Clinton, told AFP a risk for  Trump is whether any agreement holds and the Chinese honor their commitments.

“If it unravels and we have a string of unmet commitments and then  US retaliation right before the election, we’re kind of right back  where we started,” he said.

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