TALKING AGAIN
Possibility of world’s two biggest economies ending impasse as Trump offers concessions, easing ban on Huawei
THE US and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei to reduce tensions with Beijing.
China agreed to make unspecified new purchases of US farm products and return to the negotiating table.
No deadline was set for progress on a deal, and the world’s two largest economies remain at odds over significant parts of an agreement.
The last major round of talks collapsed in May.
Financial markets, which have been rattled by the nearly year-long trade war, are likely to cheer the truce. Washington and Beijing have slapped tariffs on billions of dollars of each other’s imports, stoking fears of a wider global trade war.
The tariffs remain in place while negotiations resume.
“We’re right back on track,” Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping at a summit of leaders of the Group of 20 (G20) economies in Osaka, Japan.
“We’re holding back on tariffs and they’re going to buy farm products,” Trump said, without giving details on purchases.
The American president had threatened to slap new levies on about $300 billion (R4.2 trillion) of additional Chinese goods if the meeting in Japan proved unsuccessful.
Such a move would have extended existing tariffs to almost all Chinese imports into the US.
In a lengthy statement on the twoway talks, China’s foreign ministry quoted Xi as telling Trump he hoped the US could treat Chinese companies fairly.
“China is sincere about continuing negotiations with the US but negotiations should be equal and show mutual respect,” the foreign ministry quoted Xi as saying.
Trump offered an olive branch to Xi on Huawei, the world’s biggest telecoms network gear-maker.
The Trump administration has said that the Chinese firm is too close to China’s government and poses a national security risk, and has lobbied US allies to keep Huawei out of next-generation 5G telecoms infrastructure.
Trump’s Commerce Department has put Huawei on its “entity list”, effectively banning the company from buying parts and components from US companies without government approval.
However, Trump said on Saturday that he did not think that was fair to US suppliers, who were upset by the move.
“We’re allowing that, because that wasn’t national security,” the president said.
Trump added that the US Commerce Department would study in the next few days whether to take Huawei off the list of firms banned.
“If the US does what it says, then of course, we welcome it,” said Wang Xiaolong, the Chinese foreign ministry’s envoy for G20 affairs.
US microchip makers also applauded the move.
“We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president’s remarks on Huawei,” John Neuffer, president of the US Semiconductor Association, said.
Republican Senator Marco Rubio, however, tweeted that any deal to reverse the recent US action against Huawei would be a “catastrophic mistake” and that legislation would be needed to put the restrictions back in place if that turned out to be the case.
Last month, Rubio and Democratic Senator Mark Warner urged Trump to not use Huawei as a bargaining chip for trade negotiations.
Huawei has come under mounting scrutiny for over a year, led by US allegations that “back doors” in its routers, switches and other gear could allow China to spy on US communications.
The company has denied its products pose a security threat.
However, it declined to comment on the developments on Saturday.
The problems at Huawei have filtered across to the broader chip industry, with Broadcom warning of a broad slowdown in demand and cutting its revenue forecast.
Trump said that he and Xi did not discuss the extradition proceedings against Meng Wanzhou, Huawei’s chief financial officer, who was arrested in Canada in December last year on charges alleging that she misled global banks about Huawei’s relationship with a company in Iran.
Investors, businesses and financial leaders have for months been warning that an intractable tit-for-tat tariff war between the US and China could damage global supply chains and push the world economy over a cliff.
International Monetary Fund managing director Christine Lagarde on Saturday urged G20 policymakers to reduce tariffs and other obstacles to trade, warning that the global economy had hit a “rough patch” due to the trade conflict.
Although analysts cheered a resumption of talks between Washington and Beijing, some questioned whether the two sides would be able to build enough momentum to bridge the divide and forge a lasting deal.
“Translating this truce into a durable easing of trade tensions is far from automatic especially as what’s in play now extends well beyond economics to include delicate national security issues of both immediate- and longerterm nature,” said Mohamed El-Erian, chief economic adviser at Allianz.
The US says China has been stealing American intellectual property for years, forces US firms to share trade secrets as a condition for doing business in China, and subsidises stateowned firms to dominate industries.
However, China has said the US is making unreasonable demands and must also make concessions.
The negotiations hit an impasse in May after Washington accused Beijing of reneging on reform pledges made during months of talks.
Trump raised tariffs to 25 percent from 10 percent on $200bn of Chinese goods, and China retaliated by raising levies on a list of American imports.
There are other irritants in the relationship.
Trump said Xi raised the treatment of Chinese students and the president, bucking many of his fellow Republicans, said he did not think there should be restrictions on them entering the US.
Some American lawmakers have urged new rules on the subject for national security reasons.
The US-China feud cast a pall over the two-day G20 gathering, with leaders pointing to the threat to global growth.
In their communique, the leaders warned of growing risks to the world economy, however, stopped short of denouncing protectionism, calling instead for a free, fair trade environment after talks some members described as difficult.
Trump is spending the next part of his Asian trip in South Korea.
And on Saturday, he proposed a weekend meeting with North Korea’s Kim Jong Un at the demilitarised zone between North and South Korea. |