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WASHINGTON/BEIJING — U.S. President Donald Trump sounded an optimistic note on Friday as high-level trade talks with China entered a second day, while Beijing indicated it was open to a “partial” deal that would avoid a planned hike in tariffs on its goods this month.
The two sides have been locked in on-again, off-again talks to resolve a 15-month trade war that has roiled financial markets, uprooted global supply chains and stoked fears of a global recession.
Officials, including U.S. Secretary of State Steven Mnuchin and Chinese Vice President Liu He, resumed the negotiations in Washington early on Friday. Liu is scheduled to meet Trump at the White House at 2:45 p.m. EDT (1845 GMT), according to the White House public schedule.
“Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!” Trump wrote on Twitter.
Mnuchin, arriving for the negotiations in Washington, told reporters the talks were “going well.”
A Chinese state newspaper said on Friday that a “partial” trade deal would benefit China and the United States, and that Washington should take the offer, reflecting Beijing’s aim of cooling the row before more tariffs kick in.
Both sides have slapped duties on hundreds of billions of dollars of goods during the dispute, and Trump is threatening to raise tariffs to 30 per cent from 25 per cent on about US$250 billion in Chinese goods on Oct. 15 if there is no progress on a deal.
On Thursday, Liu said China is willing to reach agreement with the United States on matters that both sides care about so as to prevent friction from leading to further escalation of the trade war. He stressed that “the Chinese side came with great sincerity.”
Adding to that, the official China Daily newspaper said in an editorial in English on Friday: “A partial deal is a more feasible objective.”
“Not only would it be of tangible benefit by breaking the impasse, but it would also create badly needed breathing space for both sides to reflect on the bigger picture,” the paper said.
Trump, who said on Thursday that talks with the Chinese had not gone well, has previously insisted he would not be satisfied with a partial deal to resolve his two-year effort to change China’s trade, intellectual property and industrial policy practices, which he argues cost millions of U.S. jobs.
Investors and business groups, however, saw China’s dangling of a partial deal as a sign of progress.
Major U.S. stock indexes were trading sharply higher on Friday, with the S&P 500 index up about 1.5 per cent.
China’s securities regulator on Friday also unveiled a firm timetable for scrapping foreign ownership limits in futures, securities and mutual fund companies for the first time. Increasing foreign access to the sector is among the U.S. demands at the trade talks.
Beijing previously said it would further open up its financial sector on its own terms and at its own pace.
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Chinese officials also are offering to increase annual purchases of U.S. agricultural products, the Financial Times reported on Wednesday, citing unidentified sources.
The U.S. Department of Agriculture (USDA) on Thursday confirmed net sales of 142,172 tonnes of U.S. pork to China in the week ended Oct. 3, the largest weekly sale to the world’s top pork market on record.
A U.S.-China currency agreement is also being floated as a symbol of progress in talks between the world’s two largest economies, although that would largely repeat past pledges by China, currency experts say, and will not change the dollar-yuan relationship that has been a thorn in Trump’s side.
PESSIMISM ‘STILL JUSTIFIED’
Analysts have noted China sent a larger-than-normal delegation of senior Chinese officials to Washington, with its commerce minister, Zhong Shan, and deputy ministers for agriculture and technology also present.
The sudden optimism about a potential de-escalation is in stark contrast to much more gloomy predictions in business circles just days ago on the heels of a series of threatened crackdowns on China by the Trump administration.
On Tuesday, the U.S. government widened its trade blacklist to include Chinese public security bureaus and some of China’s top artificial intelligence startups, punishing Beijing for its treatment of Muslim minorities.
Surprised by the move, Chinese government officials told Reuters on the eve of talks that they had lowered expectations for significant progress.
Friday’s China Daily editorial also warned that “pessimism is still justified,” noting that the talks would finish just three days before Washington is due to implement higher tariffs.
The negotiations were the “only window” to end deteriorating relations, it added.
There have also been reports that the Trump administration is readying additional measures aimed at China, with unknown consequences for trade negotiations.
Such wildly shifting expectations have been a persistent feature of the trade war, and observers remained cautious over what might emerge from this week’s talks.
“China wants peace, but I don’t think China will give more,” one Chinese trade expert said on condition of anonymity.
© Thomson Reuters 2019