US, China to resume trade talks in Washington amid low expectations

WASHINGTON (Reuters): US and Chinese officials are set to resume contentious trade talks on Wednesday under the cloud of a prediction by US President Donald Trump that there would be no real progress.

The discussions among mid-level officials could set a framework for further negotiations as each country prepares to hit the other with new tariffs on Thursday in a deepening dispute over China’s economic policies.

Trump has threatened to impose duties on virtually all of the more than $ 500 billion of Chinese goods exported to the United States unless it meets his demands.

The two days of meetings are the first formal US-China trade talks since US Commerce Secretary Wilbur Ross met Chinese Economic Adviser Liu He in Beijing in June.

After negotiations in May, Beijing believed it had assurances from the US that tariffs were off the table. But, less than 10 days later, the White House said it would push forward on punitive measures.

China has said it hopes for quiet, steady talks to get “a good result on the basis of equality, parity and trust”.

Speaking in Beijing on Wednesday, Chinese Foreign Ministry spokesman Lu Kang said that now China and the United States have already started consultations, they of course still hope for a “good outcome”.

Lu added that he didn’t want to make any statements or release any details while talks were ongoing.

“We hope that everyone can calmly sit down together and have earnest discussions towards an outcome that is beneficial to both sides.”

But Trump told Reuters on Monday that he did not “anticipate much”. In an interview, he said resolving the trade dispute will “take time because China’s done too well for too long, and they’ve become spoiled”.

Trump also accused China of manipulating its yuan currency to make up for the effect of tariffs, while arguing the US Central Bank should be more accommodating.

On Tuesday, however, Trump Administration officials were largely silent about the latest round of talks. Spokespersons for the US Treasury, the US Trade Representative’s Office and the US Commerce Department did not respond to queries about the Treasury-led meetings.

“These are working-level discussions with representatives from across the Administration,” a White House official told Reuters. The official declined further comment, but pointed out Trump’s own pessimistic comments in the Reuters interview.

“This is, to some extent, a temperature-taking exercise,” said Centre for Strategic and International Studies, Washington, Director of China Studies Scott Kennedy. “Expectations are probably low on both sides.”

Previous talks were held by cabinet-level ministers, including Chinese Vice Premier Liu He, US Treasury Secretary Steven Mnuchin and Commerce’s Ross.

The talks on Wednesday and Thursday will led by lower-level officials, Treasury Undersecretary David Malpass, and Chinese Commerce Vice Minister Wang Shouwen. Deputy USTR Jeffrey Gerrish is also expected to participate.

“The Vice Minister from Mofcom is not going to be authorised to make some great offer, but if the Chinese say one interesting thing, maybe you set up a second meeting and the level goes up a step,” said Washington think tank American Enterprise Institute China Scholar Derek Scissors.

“But, I’d say there’s an 80-90% chance they are a total waste of time, and that’s why no one in the Administration is talking about this,” he added.

Ultimately, Trump will need to personally be involved in settling the dispute with Chinese President Xi Jinping, Scissors said.