China confident of US trade deal

FAILURE WILL ESCALATE BATTLE

China expressed confidence that it can reach a trade deal with the US, despite new warnings from President Donald Trump that he would revert to more tariffs if the two sides cannot resolve their differences.

The remarks by the Chinese commerce ministry follow a period of relative quiet from Beijing after Trump and Chinese leader Xi Jinping reached a temporary truce in their trade war on Saturday. It said China would try to work quickly to implement specific issues already agreed upon, as both sides “actively promote the work of negotiations within 90 days in accordance with a clear timetable and road map”, calling the latest bilateral talks “very successful”.

Trump, via Twitter, held out the possibility of an extension of the ceasefire. “The negotiations with China have already started. Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina,” Trump tweeted.

He said he would place “major tariffs” on Chinese goods imported into the US if his administration was unable to reach an effective trade deal with Beijing.

The threat of further escalation in the trade war between the world’s two largest economies has loomed large over financial markets and the global economy for much of the year, and investors initially greeted the ceasefire with relief. But the mood has quickly soured on scepticism that the two sides will be able to reach a substantive deal on a host of highly divisive issues within the short negotiating period agreed.

Failure would raise the spectre of a major escalation in the trade battle as early as March.

The White House says China had committed to start buying more American products and lifting tariff and non-tariff barriers immediately, while beginning talks on structural changes with respect to forced technology transfers and intellectual property protection.

Sources said Chinese oil trader Unipec plans to resume buying US crude by March after the XiTrump deal reduced the risk of tariffs on those imports. China had stopped crude oil imports from the US. Global financial markets tumbled on Tuesday as doubts over what could realistically be accomplished in the tight negotiating window.

“Despite a temporary de-escalation of hostilities, the relationship between the US and China will remain contentious,” Moody’s Investors Service said.