Hopes dim as US-China trade talks get underway in tense atmosphere

WASHINGTON (Reuters) – Prospects for progress in US-China trade talks dimmed on Monday after Washington blacklisted Chinese companies over Beijing’s treatment of predominantly Muslim ethnic minorities, and President Donald Trump said a quick trade deal was unlikely.

The move by the US Commerce Department could deepen divisions between Washington and Beijing at a critical juncture in their 15-month trade war that has roiled financial markets and triggered a slowdown in the global economy.

Another flashpoint has been a widening controversy over a tweet from a US National Basketball Association official. His backing of Hong Kong democracy protests was rebuked by the NBA, sparking a backlash.

Trump and his top economic adviser Larry Kudlow spoke in generally upbeat terms about this week’s discussions with China, the first such high-level talks in more than two months, but Trump insisted he would not be satisfied with a partial deal.

“We think there’s a chance we could do something very substantial,” Trump said, referring to minister-level talks scheduled for the end of the week. “I would much prefer a big deal and I think that’s what we’re shooting for.”

Pressed to elaborate on the chances of progress this week, Trump sounded more skeptical. “Can something happen? I guess, maybe. Who knows. But I think it’s probably unlikely,” he said.

He also said he hoped China found a humane and peaceful resolution to the ongoing political protests in Hong Kong, and warned the situation had the potential to hurt trade talks.