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US-China trade talks resume in Shanghai with tempered expectations

Lisa Micheal 43 Jul 29
Chinese President Xi Jinping (R) and US President Donald Trump attend their bilateral meeting on the sidelines of the G20 Summit in Osaka on June 29, 2019.

Trade representatives from the U.S. and China will begin their first official in-person meeting since the G-20 truce, but neither side is showing any sense of urgency for a trade deal.

The two-day meeting is set to take place in Shanghai on Tuesday after President Donald Trump and Chinese leader Xi Jinping reached a ceasefire last month. However, expectations for a long-term resolution remain low as Beijing waits and sees Washington's stance on Huawei, while Trump believes China may hold out until the 2020 election.

"I don't think personally China would sign a deal if I had a 2% chance of losing the election," Trump said on Friday. "I think China would probably say: 'Let's wait. Let's wait. Maybe Trump will lose and we can deal with another dope, or another stiff."'

White House economic adviser Larry Kudlow told CNBC on Friday he "wouldn't expect any grand deal" at the meeting in Shanghai.

"Talking to our negotiators, I think they're going to reset the stage and hopefully go back to where the talks left off last May," Kudlow said.

Meanwhile, the Chinese side believes they have extended the olive branch to the U.S. by following through the promise of repurchasing American agricultural products.

There have been millions of tons of U.S. soybean shipments to China, and the U.S. has announced the exemption of tariffs on those farm goods, Chinese state media Xinhua reported on Sunday. It said many Chinese companies have made inquiries to U.S. suppliers in the past week for purchasing new soybeans, cotton, pork, sorghum and other agricultural products and a number of them have been sold.

The People's Daily, the official newspaper of the Chinese Communist Party, said it is a "pragmatic move by China to implement the important consensus" reached at the G-20 summit, "once again shows China's sincerity."

China is waiting for the U.S. to reciprocate the goodwill, however. Its push to relieve the telecom giant Huawei intensified as Chinese authorities suspect Fedex violated the law by blocking more than 100 shipments from Huawei, Xinhua reported on Friday.

China's allegation came after the Trump administration blacklisted Huawei in May at the height of the trade war, effectively halting its ability to buy U.S.-made chips.

Trump last week met with a slew of tech companies including Google and Broadcom and agreed to give "timely licensing decisions" to allow them to sell to Huawei. However, many lawmakers still strongly oppose any relief for Huawei, seeing it as a major threat to national security.

"The U.S. should take concrete measures to implement the relevant U.S. commitments and create favorable conditions for bilateral economic and trade cooperation," Xinhua said.