China trade talks extend into evening of second day

Roman Schwartz
January 12, 2019

The statement came as trade talks between China and the United States were under way in Beijing, the first round of face-to-face discussions since both sides agreed to a 90-day truce in a trade war that has roiled worldwide markets.

The talks "improved mutual understanding and laid a foundation for resolving issues of mutual concern", the ministry said.

"On whether this operation will affect the ongoing trade talks between the two sides, I believe proper resolution of trade disputes is conducive to the world".

The U.S.is looking to crack down on China's business practices, including allegations of technology theft along with slashing the trade deficit and getting more access to Chinese markets. Traders took this as a positive sign, but a standoff over a partial U.S. government shutdown that appears far from being resolved limited gains. US officials have repeatedly accused China of not fulfilling agreements, with Ross saying on Monday that "the real issue is what are the enforcement mechanisms, what are the punishments if people don't do what they were supposed to do?"

The second day of trade negotiations coincided with an unannounced visit by North Korean leader Kim Jong Un for talks with Xi in Beijing, amid speculation of a second meeting between Kim and Trump. The U.S. and China have slapped a tariffs on a combined $360 billion in each other's imports since July. He believed it meant the two sides had divergent views that needed more discussion to reach a breakthrough.

Almost halfway into the 90-day truce, there have been few concrete details on any progress made.

Trump has said he would increase those duties to 25% from 10% if no deal is reached by March 2, and has threatened to tax all imports from China if it fails to cede to USA demands.

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On Monday, U.S. Commerce Secretary Wilbur Ross predicted that Beijing and Washington could reach a trade deal that "we can live with".

China also restarted purchases of American soybeans last month, providing relief for a crop hit by Chinese retaliatory tariffs.

The two sides might be moving toward a "narrow agreement", but "U.S. trade hawks" want to "limit the scope of that agreement and keep the pressure up on Beijing", said Eurasia Group analysts of Michael Hirson, Jeffrey Wright and Paul Triolo in a report.

China, which illegally claims control of the disputed islands, denounced the patrol as a "provocation" and said it "gravely infringed upon China's sovereignty".

The indication that some progress was made on trade issues but not on structural ones would help explain why it was the United States' agricultural representative at the talks who characterized the discussion as "a good one for us".

It softened its stand by offering a mix of concessions by resuming purchases of United States soybeans, suspended punitive tariffs on imports of USA cars and toned down its "Made in China 2025" plan, which aimed at breaking the country's reliance on foreign technology and pull its hi-tech industries up to western levels. "I really believe they want to make a deal". Chinese pledges to increase USA imports would naturally center on a boost in agricultural products sent to China.

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