China says it will strive to reach ‘phase one’ trade deal with US

China's Ministry of Commerce spokesperson Gao Feng attends a news conference at the commerce ministry in Beijing, China, 19 June 2018 - Reuters

Beijing (Reuters): China will strive to reach an initial trade agreement with the United States as both sides keep communication channels open, the Chinese commerce ministry said on Thursday, in an attempt to allay fears talks might be unravelling.

China is willing to work with the United States to resolve each other’s core concerns on the basis of equality and mutual respect, and will try hard to reach a “phase one” deal, Gao Feng, spokesman at the ministry, told reporters.

“This is in line with the interests of both China and the United States, and of the world,” Gao said.

Economists warn that the prolonged trade dispute between China and the United States is escalating risks to the global economy by disrupting supply chains, discouraging investment and dampening business confidence.

Completion of a phase one deal could slide into next year, trade experts and people close to the White House told Reuters previously, as Beijing presses for more extensive tariff rollbacks and the US administration counters with heightened demands of its own.

China has invited top US trade negotiators for a new round of face-to-face talks in Beijing, the Wall Street Journal reported on Thursday, citing unnamed sources, adding Beijing hopes the round of talks can take place before next Thursday’s Thanksgiving holiday in the United States. 

US officials have indicated they would be willing to meet in person but have not committed to a date, the report said, and they would be reluctant to travel for the talks unless China makes it clear it would make commitments on intellectual property protection, forced technology transfers and agricultural purchases.

Global equities retreated on Thursday due to concerns that the ‘phase one’ deal would be delayed. The trade jitters also sent the 10-year US Treasury yield down to near its lowest levels in three weeks. The Chinese yuan also softened against the dollar.

Officials from Beijing had suggested that Chinese President Xi Jinping and US counterpart Donald Trump might sign a deal in early December.

Some experts said the next date to watch was 15 December, when US tariffs on about $ 156 billion in Chinese goods are set to take effect, including holiday gift items such as electronics and Christmas decorations.

In a dinner speech in Beijing on Wednesday, Chinese Vice Premier Liu He said he was “cautiously optimistic” on a phase one deal, Bloomberg News said, citing people who attended the event ahead of a forum organised by Bloomberg LP.

Liu, China’s chief negotiator at the trade talks, separately told one of the attendees that he was “confused” about the US demands, but was confident the first phase of a deal could be completed nevertheless, Bloomberg added.

Gao, when asked about sticking points and whether they were related to Washington’s demand for China to buy more US farm goods and the tariff rollbacks, said he did not have more information to disclose beyond the fact that both parties would continue to communicate, and “outside rumours are not accurate.”