China Ready to Resume Talks With US: OK, But Under What Conditions?

-edited

A headline in the Wall Street Journal caught my eye today. It claims China is willing to talk with Trump.

Please consider China Signals It Is Willing to Return to Trade Talks With U.S.

A government policy paper on trade issues with the U.S. released Sunday accused Washington of scuttling the negotiations, which broke down in all but name last month. It said the Trump administration’s “America First” program and use of tariffs are harming the global economy and that China wouldn’t shy away from a trade war if need be.

Throughout the document and at a briefing, the government suggested a willingness to return to negotiations. “What truly matters is how to enhance mutual trust, promote cooperation and manage differences,” the paper said. Vice Commerce Secretary Wang Shouwen told reporters, “We’re willing to adopt a cooperative approach to find a solution.

The tone, if not the substance, was markedly more measured than the sharp, at times nationalistic rhetoric adopted by state media and some officials in the past three weeks, and Chinese trade experts said the point is to signal talks can resume, though the onus is on the U.S.

China “is expressing its wish to work together,” said Zhang Yansheng, a researcher at the state-backed think tank China Center for International Economic Exchanges.

Three Conditions

  1. The U.S. must remove “all additional tariffs” levied on Chinese exports
  2. Chinese purchases of American goods to help reduce the U.S. trade deficit “should be realistic”
  3. The text of a final agreement should be “balanced.”

That All?

Probably not. There is still a major issue with Huawei.

Both sides need to make concessions. The concessions can’t all be from one side,” said Mr. Wang, one of China’s negotiators with the U.S.

Nothing Agreed Until Everything is Agreed

Mr. Wang reiterated an argument Chinese officials have made that Beijing didn’t backslide in the talks because no agreement had been completed. “At the negotiating table, everything is up for discussion. Without an agreement, there can be no so-called ‘backtracking,” Mr. Wang said. He then switched to English: “Nothing is agreed until everything is agreed.

Recall where we last heard that?

It was a line Michel Barnier, the EU's chief negotiator kept repeating in Brexit negotiations with the UK.

Watch the Reactions

The futures are closed. It will not mean much if they open strong and close that way. That would be the expectation on fluff news like we have seen so many times before about a deal that was supposedly "close".

It would be more telling to seem futures open lower and close that way, or open higher and close lower.

We do not know how Trump will respond either. He needs a deal as badly as China. And if he does agree to remove all tariffs and opt for a realistic, balanced agreement, then why didn't we have a deal three weeks ago?

Meanwhile, both sides increased tariffs, and China has threatened to cut off supplies of rare earths.

Victory Party?

Will it be a victory just to return to where we were?

If so, Trump will have to back down as well, not just China.

Mike "Mish" Shedlock

Comments (27)
No. 1-14
Sechel
Sechel

Trump needs to define what he wants to happen?

His best argument is theft of intellectual capital. For that he would be in a stronger position if he brought the Europeans in but he's not.

Trump does not want free trade since he's already said he does not want all tariffs dropped in response to a Chinese proposal

Trump seems to want managed trade where the Chinese simply purchase more American products

Trump keeps upping the stakes and raising tensions, doubling and tripling tariffs , attacking Huwei, etc

Under these circumstances its hard to see how we come to a meaningful deal. We argue free trade and theft of intellectual capital yet negotiate for something completely different.

Sechel
Sechel

China sees that Trump is not operating from a period of strenght. Trump is engaged in trade wars on too many fronts, Europe, Mexico and China. Senate is showing its impatience. Trump doesn't know it yet, but he has weeks and not months to get results.

ksdude
ksdude

How much did the US have to pay China for this headline? Well, we're going to lose another trillion in market cap tommorow, lets offer them 50 billion to run their mouths.

Greggg
Greggg

We've agreed to trade deals before. Then 2 weeks later they start doing the same thing they agreed not to do. We probably do the same thing. Meanwhile, politicians like Diane Feinstein paved the way for her husband to profit from the shift of production to Shanghai.

Augustthegreat
Augustthegreat

Trump does not want to negotiate. He just wants every country to obey his order.

Webej
Webej

It would be a victory of sorts to return to where we were. Trump wants to make America great again, like 70 years ago. He has been bullying and sanctioning and strong-arming his way around the globe, telling everyone to capitulate or else. But back in the day when America was great, force was applied behind the scenes, enticements were offered, global institutions were put in place, diplomacy prevailed -- the exercise of power was veiled and presented as progress. Now it's just naked and capricious dictates -- not with threats of exercising power, but actual aggression.

The veil has been taken off. Nobody is capitulating. The entire globe is witnessing this revelation of raging impotence on the part of a rogue antagonist.

abend237-04
abend237-04

Maybe the Chinese are like Churchill said about us, "Americans can always be trusted to do the right thing, once all other possibilities have been exhausted."

We have legitimate gripes; they have legitimate gripes. Are there enough adults in the room to do a deal at this point? I hope so.

truthseeker
truthseeker

This may b a tiny little blink but Trump will screw it up if he thinks China is starting to cave in here. There is a lot I could say here having negotiated many deals n my life which would take a lot of time, but I’m exhausted having just returned from a long trip.To start with there are so many variables like researching the people your are going to face,, and things that have to do with giving and receiving respect and understanding where leverage may exist on both sides. Sorry to b too tired to continue, so I really hope we will begin to change our attitude so to provide an environment free of arrogance.

Mish
Mish

Editor

"Trump does not want to negotiate. He just wants every country to obey his order."

Correct

Augustthegreat
Augustthegreat

Trump to each country of the world: My Way! Or Huawei!

Casual_Observer
Casual_Observer

Both sides are playing Russian roulette. Eventually one will find the gun can actually be loaded and fire inadvertently.

Menaquinone
Menaquinone

25% tariffs got their attention. 50% tariffs can get their respect.

CKsoan
CKsoan

A big BS (bullshit by WSJ!) just like Trump.

KidHorn
KidHorn

If the Chinese would simply let their currency float, it would solve a lot of problems.