US President Donald Trump said a “great deal” with China was around the corner, offering fresh hope there could be a way out soon for Beijing and Washington from their stalemate.
In an interview with Fox News, Trump said the US was going to “win” the trade battle with China. His comments coincided with confirmation from a Chinese diplomatic source that Trump and China’s President Xi Jinping will meet next month.
“I can make a deal right now, I just say they’re not ready,” Trump said. “I think we’ll make a great deal with China, and it has to be great.”
The comments immediately soothed market fears that the trade confrontation between the world’s two biggest economies would become more acute, with Asian markets mostly gaining on Tuesday.
Japan’s Nikkei index reported its biggest single-day gain since mid-August while China’s benchmark Shanghai composite index gained more than 1 per cent after Trump’s comments.
”The two presidents agreed to meet” on the sidelines of the G20 summit in Buenos Aires, a Chinese diplomatic source said on Tuesday, speaking in the US on the condition of anonymity. The South China Morning Post has previously reported that the bilateral meeting is scheduled for November 29.
China’s foreign ministry spokesperson Lu Kang told a regular press briefing on Tuesday that China and US have “maintained contact” about the meeting between Xi and Trump in Argentina.
At the same time, Lu said the US should talk to China in a “serious, equal and trustworthy” manner if Washington intended to address Sino-US trade issues through talks.
US poised to extend tariffs to all Chinese imports if Trump-Xi meeting fails, hitting another US$260 billion in products
Trump’s expressed desire for a “deal” with China – although he insists that the US has to be on the winning side of that deal – has made it possible for Washington and Beijing to find common ground as the Chinese government has repeatedly said it is open for trade talks.
Xi will attend an “import expo” in Shanghai next week, an event designed to showcase Beijing’s willingness to buy more from the rest of the world and to cut its trade surplus.
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The bilateral trade imbalance between China and the US has been one of Trump’s long-standing complaints. In his latest interview, he said China “has been really hurting our country economically” and “they’ve drained our country”.
Su Hao, a professor in diplomacy at the China Foreign Affairs University, said the interview showed Trump was willing to talk and the US still valued China as “a potential economic partner”.
“Trump is willing to negotiate with China, although he will put America first in the negotiations, and a second signal is that the US will not abandon China as a potential economic partner,” Sun said.
“Some have said the US intends to sever all economic links with China … but that might be too extreme.”
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Predictions about Trump’s strategy have ranged widely. For example, Bloomberg News reported on Saturday, citing two anonymous sources, that the White House may exclude trade from the agenda of the summit between Trump and Xi in order to increase the likelihood of a bilateral deal.
Fears about the escalating trade war between China and the US has cast a shadow over markets and economic growth worldwide – and China’s growth and markets in particular have taken a hard hit.
China’s economic growth in the third quarter slowed to its lowest level since 2009 while the stock market has been one of the worst-performing in the world this year.
In the latest effort to encourage investors, China’s stock market regulator on Tuesday issued a statement trying to talk up stock prices.
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The Chinese currency’s exchange rate against the dollar has also weakened to the lowest level in a decade and is about to break the key psychological level of 7 yuan to the US dollar.
Since early July Washington has imposed tariffs on US$250 billion of Chinese imports. The US has also flagged its intention of raising the current 10 per cent tariff rate on US$200 billion worth of those imports to 25 per cent next year. China has retaliated by imposing tariffs on US$110 billion worth of US imports.
Hao Hong, head of research at Bocom International, said losses in jobs and investments in China over the long run, due to trade tensions with the US, would be particularly harmful to China’s domestic economy.
“Business will relocate … and once they leave, the damage could be permanent” to China’s domestic employment and economy, he said.
Meanwhile, Trump also said he was preparing for an escalation if he couldn’t get the deal he wanted.
China’s future rests on ‘mending fences with the United States’
“I have US$267 billion waiting to go if we can’t make a deal,” Trump said in the interview, referring to his plan to extend tariffs to all Chinese imports.
Trump plans to impose tariffs on all Chinese imports if his talks with Xi during G20 don’t go well, Bloomberg News reported earlier, citing three unidentified sources.
Wang Yong, director of the Centre for International Political Economy at Peking University, said he was suspicious about whether China and the US could reach any breakthrough in their trade talks, partly because Washington’s tough stance on trade was increasingly seen by Beijing as part of a broad strategy to contain China’s rise.
“It is highly likely that Trump will extend the tariffs to another US$260 billion [in products] because Trump’s goal is not about negotiations, but containing China,” he said.
“The trade war will expand and there could even be a partial decoupling of US-China trade relations as the US is seeking to decrease its reliance on exports to China.”
China, on the other hand, could compromise on intellectual property protection, market access and increased imports of American agricultural products and energy, but Beijing would not give up its plans to upgrade its industries, Wang said.
Lu at China’s foreign ministry said Trump’s threats would be ineffective against China.
“China has full confidence to walk its own chosen path”, even if the US chooses to end cooperation with China, he said.
With additional reporting by Robert Delaney.