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U.S. Trade Negotiators Heading to China Monday for Talks

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U.S. Trade Negotiators Heading to China Monday for Talks

  • Meeting in Shanghai will involve a broad discussion of issues
  • China Commerce Minister Zhong Shan to join talks next week
Robert Lighthizer and Steven Mnuchin
Robert Lighthizer and Steven Mnuchin Photographer: Andrew Harrer/Bloomberg
Robert Lighthizer and Steven Mnuchin
Photographer: Andrew Harrer/Bloomberg

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U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to China Monday for the first high-level, face-to-face trade negotiations between the world’s two biggest economies since talks broke down in May.

The White House confirmed Wednesday an earlier Bloomberg report that senior officials will be in Shanghai next week to cover a range of issues including intellectual property, agriculture and the trade balance.

President Donald Trump and Chinese counterpart Xi Jinping met at the Group of 20 summit in Japan last month and declared a tentative truce in their year-long trade war. The leaders directed their negotiators to resume trade talks. Since then Mnuchin, Lighthizer and their Chinese counterparts have spoken by phone.

The Chinese requested that the meeting take place in Shanghai, rather than Beijing, Bloomberg reported Tuesday. The location has significance and symbolism for Chinese leaders, Mnuchin said in an interview with CNBC Wednesday. He also said the meeting will hopefully yield progress but that many issues remain.

Follow-Up

“My expectation is there’ll be a few more meetings before we get a deal done,” Mnuchin told reporters Wednesday in Washington. “My expectation is there’ll be a follow-up meeting back here shortly thereafter, assuming things go as we expect them to be.”

The Chinese foreign affairs and commerce ministries didn’t immediately respond to a request for comment.

The talks will restart at a sensitive political moment, as Xi gathers party elders in the Yellow Sea resort area Beidaihe for an annual policy retreat.

Read More: China Approves Tariff-Free U.S. Soybean Purchases as Goodwill

The American negotiators will be returning to a country that has seen criticism of the U.S. escalate markedly since their last visit, as the Communist Party grows more impatient with what it sees as the Trump administration’s meddling in its internal affairs. On Tuesday, China’s foreign ministry accused the U.S. of being a “black hand” behind Hong Kong unrest while the military said in a sweeping white paper that Washington had “undermined global strategic stability.”

Stocks jumped on the news Tuesday with the S&P 500 closing up almost 0.7% in New York. Chinese stocks gained Wednesday with all major indexes jumping in the morning on the news of renewed talks before pulling back later in the day.

Structural Issues

U.S. officials have played down the likelihood of a quick deal with China.

“It is impossible to judge how long it will take when the president’s objective is to get a proper deal or go ahead with tariffs,” Secretary of Commerce Wilbur Ross told Bloomberg TV on Tuesday. “What is important is if we make a deal, it’s a proper deal, a really good deal. That’s his overriding objective. And that’s much more important than exact timing.”

The sides remain at odds over significant issues like Washington’s demands for structural reforms to China’s economy and Beijing’s call for the U.S. to remove existing punitive tariffs on imported Chinese goods.

The talks in recent weeks have focused on Huawei licenses and agriculture purchases, and lacked engagement on structural issues that the U.S. wants addressed in any trade deal.

Trade Negotiators

People familiar with next week’s meeting say it’s a positive step for talks overall but caution that it’s likely to feature a wide-ranging discussion of where things stand, rather than a chance for substantive negotiations. It’s still unclear what the starting point will be for deeper discussions. Talks collapsed in May because the two countries disagreed on draft terms of a deal.

Chinese Commerce Minister Zhong Shan will be part of the core group of negotiators, which on the Chinese side has been led by Vice Premier Liu He. Zhong was part of the Chinese team at previous rounds of negotiations, but recently he’s been specifically mentioned in the official readouts of phone calls between the two sides, spurring speculation that he may now have a more prominent role in the talks.

Zhong is seen as more of a hardliner than Liu and some China watchers say he was added to the talks to ensure that a more hawkish view is represented at the table. Zhong is a known quantity for many U.S. officials, including Lighthizer who has met him several times over the past two years at international meetings such as Asia-Pacific Economic Cooperation summits.

Read more: Trump Agrees to Timely Decisions on Huawei as China Talks Near

On Monday, Trump and senior White House officials, including Mnuchin and Lighthizer, met with chief executives of U.S. technology companies in a step toward easing a ban on sales to China’s Huawei Technologies Co., which has been another point of tension in the relationship.

National Economic Council Director Larry Kudlow told reporters Tuesday that the meeting was positive and cited it as one reason he’s optimistic that in-person talks with China were likely to resume soon.

— With assistance by David Westin, Ryan Haar, Amanda Wang, and Josh Wingrove

(Updates with Mnuchin comments in fifth paragraph.)