China trade talks conclude on optimistic note in Beijing

Muriel Colon
January 10, 2019

Among their many requests, US negotiators are asking the Chinese to increase purchases of American farm and energy commodities; allow greater access into China's markets; improve and enforce property theft protections; and an end of China's policy of forcing foreign companies to hand over technology secrets.

Trade talks between China and the United States this week were extensive and helped establish a foundation for the resolution of each others' concerns, China's commerce ministry said on Thursday, but gave no details on the issues at stake.

The dollar tumbled to its lowest level since October after the Fed expressed caution about future rate hikes, and as investors reduced safe-haven bets due to optimism about U.S.

Word of progress briefly drove USA stocks higher in early morning trading but major indices soon pared much of those gains. US President Donald Trump tweeted without elaborating, as talks wound down late on Tuesday evening in Beijing.

These include expanded Chinese purchases of American products, greater protections for United States intellectual property, constraints on Chinese industrial policy, and enforcement and verification of follow-through by China. USA negotiators are also taking steps to ensure the Chinese government actually follows through on its promises.

"We're hopeful that we can make a deal with China", White House press secretary Sarah Sanders told Fox Business Network on Wednesday.

Chinese exports to the USA have held up despite tariff increases, partly due to exporters rushing to fill orders before more increases hit.

The USTR statement didn't say whether progress had been achieved on its main concerns.

The U.S. stock market was supported by advances by technology and other trade-sensitive sectors. USA and North Korean officials are believed to have met in Vietnam to discuss a location.

"Both sides have agreed to continue to keep close contact". Some disagreements remain on structural issues and they need to be addressed when more senior negotiators meet later on, according to Chinese officials involved in the discussions who asked not to be identified. Liu led a previous round of talks in Washington a year ago that ended in failure, and he's expected to meet chief USA negotiator Robert Lighthizer later this month.

Despite rising hopes of progress toward a deal, the outcome wasn't immediately clear.

The talks are taking longer than expected as the Chinese commerce ministry had said last week that the meetings would take place on Monday and Tuesday. If a "REAL" deal with China is possible, the US will "get it done", Trump tweeted shortly after his dinner with Jinping last month.

In the meantime, companies in both countries are feeling pain from the effects of USA tariffs and retaliation from China, which are starting to mount. On Tuesday, Hong Kong's Hang Seng index rose more than 2% and Japan's Nikkei more than 1%.

The OPEC-led cuts are aimed at reining in an emerging supply overhang, in part because U.S. crude oil output surged by around two million barrels per day in 2018, to a record 11.7 million bpd.

The talks that started Monday were the first face-to-face meeting since Trump and his Chinese counterpart, Xi Jinping, agreed December 1 to suspend further punitive action against each other's imports for 90 days while they negotiate over the fight sparked by American complaints Beijing steals or pressures companies to hand over technology.

With cooling economic growth raising the urgency for a settlement, this week's talks went ahead despite tension over the arrest of a Chinese tech executive in Canada on US charges related to possible violations of trade sanctions against Iran.

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