Business / Economy

Trump says China talks back on as Beijing downplays breakthrough

Bloomberg

U.S. President Donald Trump said the prospects for a deal with China are better now than at any time since negotiations began last year, even as a top state-media editor in Beijing questioned his version of events.

Speaking at the Group of Seven meetings in Biarritz, France, Trump said last night China called “our trade people and said let’s get back to the table.” He also lauded President Xi Jinping as a “great leader” and said “anything’s possible” when asked if he would delay tariff increases on China.

“You can say we’re having very meaningful talks, much more meaningful than I would say at any time frankly,” Trump said while meeting with German Chancellor Angela Merkel on Monday. “Maybe I’m wrong but we’re in a stronger position now to do a deal, a fair deal for everyone,” he added.

Still, a spokesman for China’s foreign ministry wasn’t able to immediately confirm the details of the phone calls on Monday. Later, Hu Xijin, editor-in-chief of China’s Global Times newspaper, said in a tweet that top trade negotiators hadn’t spoken by phone in recent days and that Trump was exaggerating the significance of the trade contacts.

The Stoxx Europe 600 index rose after Trump commented on the chances for a China deal. Earlier U.S. equity-future indexes increased on optimism that talks would restart. In Asia, shares on all major indexes declined led by Hong Kong which fell 2.3 percent.

Trump’s comments mark the latest twist in months of negotiations that have seen moments of optimism give way to even greater escalation. While the two sides have at times appeared close to a deal, China has balked at U.S. demands for market-based reforms in areas like state-run enterprises that could jeopardize the Communist Party’s grip on power.

The developments came after a weekend of tit-for-tat tariffs had rocked financial markets and fueled fears that the standoff would drag the global economy into recession.

Beijing’s retaliation on Friday to an earlier U.S. tariff hike led to yet another increase from Trump, who said that existing 25 percent tariffs on some $250 billion in imports from China would rise to 30 percent come Oct. 1, the 70th anniversary of the founding of the People’s Republic of China. Morgan Stanley warned that the spiral of trade measures could result in a global downturn within nine months.

Trump on Monday said the two countries were now dealing on “proper terms.”

“That’s a great thing that happened, and they want to get something done,” Trump said. “Now maybe it won’t get done, but this is the first time I’ve seen them where they really do want to make a deal, and I think that’s a very positive step.”

China has consistently agreed to engage in talks even with tariff escalations taking place. A round of negotiations that had been planned for September had not formally been called off after Trump pivoted to further tariff increases even after an apparent detente between the two sides in Shanghai last month.

Earlier on Monday, China’s top trade negotiator, Vice Premier Liu He, used a public appearance in China to call for a de-escalation in tensions.

“We are willing to solve the problem through consultation and cooperation with a calm attitude,” Liu said at the opening ceremony of 2019 Smart China Expo in Chongqing, Caixin reported. “We firmly oppose the escalation of the trade war,” he said, adding that it “is not conducive to China, the U.S. and the interests of people all over the world.”

China’s stance now has been referred to as “talking while fighting,” and officials continue to pledge that they’ll meet Trump’s trade measures with their own response even as they stress readiness to negotiate.

China’s retaliatory measures from Friday aim at the heart of Trump’s political support — factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down. Soybeans and other agricultural goods were targets, as were autos from Daimler AG and BMW AG that are made in the U.S.

Trump tweeted over the weekend that the U.S. “would be far better off” without China, and claimed he could order U.S. businesses to withdraw from the country.

China will follow through with retaliatory measures announced Friday and fight the trade war to the end, after the U.S. failed to keep its promises, the Communist Party flagship newspaper People’s Daily wrote in a Saturday editorial. Later, the Editor-in-Chief of the nationalist Global Times, Hu Xijin, said on Twitter that the U.S. is “starting to lose China.”

Taoran Notes, a blog run by the state Economic Daily, said Monday that Liu’s remarks showed that China is not being “taken hostage by emotions.” At the same time, the blog said that this stance didn’t preclude fighting back.

“If someone continues to misread China’s rational and calm attitude, and holds the illusion that they can continue maximum pressure and China won’t fight back, then China has no other option but to retaliate as in the past.”

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