WASHINGTON/BEIJING – The U.S. and China are finalizing a bevy of long-running corporate deals ahead of a high-profile ceremony next week to sign a trade deal, which the world’s two largest economies are seeking to cast as a major breakthrough and a marked warming in their relationship.
Along with a Chinese delegation led by top negotiator Vice Premier Liu He, executives from American and Chinese companies will also attend the White House event to sign the phase-one agreement on Wednesday, said people familiar with the planning who asked not to be named. People’s Bank of China Gov. Yi Gang and Minister of Commerce Zhong Shan will also participate, they said.
Just as plans for the signature of the initial stage are being finalized, U.S. President Donald Trump told reporters Thursday he wanted to start negotiations on phase two “right away” — but that he might not finish those until after the American presidential election in November.
While few details have emerged about exactly what’s in the phase-one document, corporate executives will be part of the ceremony to show support, the sources said. What is clearer is the effort to show that the talks are bearing fruit, particularly with regard to long-running projects in China that are finally gaining traction.
On Thursday, China highlighted a pledge to fully open up its oil and gas exploration sector. The day before, it announced American Express Co. had cleared a key hurdle to accessing its $27 trillion payments market — the latest in a series of steps it’s taken to address areas of contention.
China has been opening up its financial sector at an unprecedented pace as the trade war has raged on, luring global banks seeking to compete for an estimated $9 billion in annual profits. The policy has often been cast as addressing U.S. complaints that the Asian nation has been a one-sided beneficiary of trade, but domestic motivations are also behind the push.
It was in November 2018 that AmEx became the first foreign firm to win permission to start preparation for the business, after forming a joint venture with LianLian, a Chinese fintech-services firm. The central bank’s decision this week to accept its application to start a bank card clearing business was only the latest step toward final approval.
Still, the U.S. and China have a history of announcing headline-grabbing deals that don’t pan out as promised. During Trump’s 2017 visit to Beijing, the two countries announced $250 billion in deals — many of which turned out to be more show than substance.
“It’s common to make the announcement, get the headline, and then let things fizzle,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. “China is not opening its market because of the trade deal, but because it’s in its own interest, and is using the timing as a politically convenient tool in the trade negotiations.”
For the U.S., a centerpiece in the latest deal is a Chinese pledge to boost purchases of American goods and services by at least $200 billion more than its 2017 level in two years. In October Trump called the commitment “by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country.” He also said on Twitter that the pact included Chinese purchases of $16 billion to $20 billion worth of Boeing Co. airplanes.
The U.S. administration is eager to show that it has convinced China to do more than buy farm commodities and boost purchases in three other areas — energy, manufactured goods and services.
U.S. financial institutions such as JPMorgan Chase & Co. and Moody’s Corp. are also awaiting the regulatory go-ahead for shareholding changes that would allow them to have more control of their Chinese joint ventures.