Expectations low for Trump-Xi talks, preparations limited

[webfact]

Expectations low for Trump-Xi talks, preparations limited

By David Lawder and Ben Blanchard

 

FILE PHOTO: U.S. President Donald Trump and China's President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj/File Photo

 

WASHINGTON/BEIJING (Reuters) - With under three weeks to go before proposed talks between the Chinese and U.S. leaders, expectations for progress toward ending the trade war are low and sources say there has been little preparation for a meeting even as the health of the world economy is at stake.

 

President Donald Trump says he wants to meet with President Xi Jinping at the June 28-29 G20 summit in Osaka, Japan and will decide on whether to extend tariffs to almost all Chinese imports after that.

 

Though neither side has confirmed that a meeting will take place, investors worldwide who have seen over a trillion dollars wiped from global markets in the past month by the trade fight will be closely watching any interaction between the two men.

 

Relations have deteriorated since May when negotiations to end the U.S.-Chinese trade disputes broke down, all but killing off the possibility of an agreement in Japan.

 

"The atmosphere is poisonous," one senior Beijing-based Western diplomat told Reuters, referring to China-U.S. ties.

 

Sources familiar with the matter, including officials and diplomats in Washington and Beijing, say there has been a lack of preparatory work for the meeting, due largely to the increasing acrimony. The trade negotiating teams have not met since talks ended in stalemate on May 10.

 

The White House declined to comment on plans for a Trump-Xi meeting.

 

"Preparations for the G20 summit in Japan are ongoing. We have nothing to announce at this time regarding specific bilateral meetings," White House National Security Council spokesman Garrett Marquis.

 

White House economic adviser Larry Kudlow told CNBC on Tuesday that Trump is hoping to "pick up where we left off" in the talks with Xi.

 

Trump said again on Monday that he expected the meeting to happen, and threatened more tariffs on Chinese imports if there is not enough progress or if Xi does not attend.

 

China is open to more trade talks but has nothing to announce about a possible meeting between the two leaders, Foreign Ministry spokesman Geng Shuang said on Monday. He said on Tuesday that China would "fight to the end" if Washington escalates trade fictions.

 

Sources said the two leaders are likely to have some kind of meeting but whatever happens in Osaka, it will be a downgrade from the possibility both sides feted just two months ago - when they hoped the talks would be the scene for the two presidents to sign a historic trade deal.

 

A senior Chinese official told U.S. business representatives last week that preparations had yet to begin for either a Trump-Xi meeting or to resume trade negotiations, a source with direct knowledge of the briefing said.

 

On the U.S. side in recent years, the lack of preparation for a big meeting is not that unusual. Trump often attends important talks with little advance work and makes policy on the fly.

 

Xi may not even want to go into such a high profile meeting with an unpredictable outcome and facing the threat of more U.S. tariffs on Chinese goods.

"For China it's all about protocol for Xi and making sure he is respected," said an Asian diplomat. "China will not want Xi go into a meeting where he may be embarrassed."

 

LOW EXPECTATIONS

Eswar Prasad, a trade professor at Cornell University and a former head of the China department at the International Monetary Fund, said expectations from any talks were low.

 

"The best-case outcome from a Trump-Xi meeting, which seems a dubious proposition at this stage, would be an agreement for the two sides to resume talks," said Prasad, who is in touch with Chinese officials. "The prospects for even a temporary and limited ceasefire have dissipated and a prolonged period of trade and broader economic tensions between the two countries seems on the cards."

 

If talks go badly, both sides could raise tariffs on each other, Trump could withdraw licenses for firms trading with Chinese telecommunications giant Huawei, and China might ban exports of rare earth supplies vital for high-tech products as well as take measures against U.S. companies in China.

 

Trade negotiations broke down in May and the two sides raised tariffs on hundreds of billions of dollars of each other's imports.

 

Trump accused Beijing of reneging on promises to meet U.S. demands to extend protection of intellectual property, end state-sponsored cyber theft, open more markets to U.S. firms, and reduce industrial subsidies.

 

China has said U.S. demands are so extensive that they violate its sovereignty.

 

A source with ties to China's leadership said there was deep anger in the government and party about Trump's accusations of China backsliding, especially as Beijing thought it was on the verge of a deal.

 

The source likened the U.S. response to the feeling of being jilted at the altar.

 

"You don't promise to marry someone and then back out at the last minute," the source, who meets regularly with senior officials, told Reuters.

Xi and Trump met last year in Buenos Aires and broke a prior impasse in trade talks.

 

U.S. Treasury Secretary Steven Mnuchin drew parallels between the planned Osaka meeting and that encounter, telling Reuters that the pace of preparations for both meetings were similar.

 

But, unlike the current uncertainty over plans for the meeting in Japan, the White House confirmed the Argentina talks were taking place as early as six weeks in advance.

 

The U.S.-China tension has gone beyond tariffs. The United States has sanctioned Huawei, sent its navy into the disputed South China Sea and Taiwan Strait, and made other public shows of support for self-ruled Taiwan.

 

The strains between Washington and Beijing are expected to make it difficult for diplomats to agree on the language of the G20 statement issued at the end of the summit.

 

Host country Japan and European Union countries are working with the United States on new World Trade Organization rules aimed at reining in "non market-oriented policies" including industrial subsidies, rules clearly aimed at China.

 

Beijing is expected to resist language in the statement that the United States may subsequently use against China in trade talks.

 

(Reporting by David Lawder in Washington and Ben Blanchard in Beijing, additional reporting by Alex Alper and Jeff Mason in Washington, Chris Prentice in New York and Michael Martina in Beijing.; Editing by Simon Webb and Alistair Bell)

 

-- © Copyright Reuters 2019-06-12

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[zydeco]

If Trump caves on this, he's finished. He's already caved on just about everything else. And, yes, I think he'll cave.

[Boon Mee]

1 hour ago, zydeco said:

If Trump caves on this, he's finished. He's already caved on just about everything else. And, yes, I think he'll cave.

Yeah, he sure caved on Mexico and Iran didn't he! 555 

[attrayant]

37 minutes ago, Boon Mee said:

Yeah, he sure caved on Mexico and Iran didn't he! 555 

 

Yeah, he actually did.  Why do you seem so happy about that?

[Srikcir]

After Trump's recent trade war with G20 member India, the summit meeting will give India, China and Australia an opportunity to combine their trade strategies to counter Trump's trade war.

https://economictimes.indiatimes.com/news/economy/foreign-trade/donald-trumps-trade-threat-to-india-demands-cool-heads/articleshow/69628016.cms

 

War With the World: Trump Puts Tariffs on India, Considers Australia

“I have determined that India has not assured the United States that India will provide equitable and reasonable access to its markets,” Mr. Trump said on Friday. Tariffs start June 5.

https://moneymaven.io/mishtalk/economics/war-with-the-world-trump-puts-tariffs-on-india-considers-australia-7Wn7iqEGf063DCqqTQG5YQ/

[Sujo]

Trump ill prepared. Whats new.

[ExpatOilWorker]

Xi is kind of in a tough spot on this one. The longer he waits the more of an anti-China feeling will build up in the US and that might be hard to reverse once it settle in.

A few companies, Chinese and US, are starting the relocate manufacturing outside China. If this trend pick up speed, it will be a permanent loss for China.

On the other hand, if Xi cave in, he will look like a weak leader domestically.

 

We hear so much noise from Washington, but all is quiet on the Eastern front.

[ExpatOilWorker]

6 minutes ago, Jerry787 said:

trumphish shall worry, if china pull the cord and recall the US bond, tomorrow there will be no food in the US supermarket.
 

You couldn't be more wrong even if you tried.

The $3 trillion China hold in foreign reserves is not a weapon, it is a lifevest for China. They need it to maintain their 10.92% inclusion in the IMF special drawing rights basket of currencies. 

Whenever you see China is reducing their foreign reserves, like they did in 2015 when it dropped from $4 to $3 trillion, it is because ordinary Chinese and companies are pulling money out of China, which the central government is doing everything in their power to stop.

 

https://www.imf.org/en/News/Articles/2016/09/30/AM16-PR16440-IMF-Launches-New-SDR-Basket-Including-Chinese-Renminbi

[Longcut]

29 minutes ago, Jerry787 said:

trumphish shall worry, if china pull the cord and recall the US bond, tomorrow there will be no food in the US supermarket.
 

China would not call in its debt all at once. If it did, the demand for the dollar would plummet. This dollar collapse would disrupt international markets even more than the 2008 financial crisis. China's economy would suffer along with everyone else's.

 

It's more likely that China would slowly begin selling off its Treasury holdings. Even when it just warns that it plans to do so, dollar demand starts to drop. That hurts China's competitiveness. As it raises its export prices, U.S. consumers would buy American products instead. China could only start this process if it further expands its exports to other Asian countries and increases domestic demand. 

[simple1]

1 hour ago, Srikcir said:

After Trump's recent trade war with G20 member India, the summit meeting will give India, China and Australia an opportunity to combine their trade strategies to counter Trump's trade war.

https://economictimes.indiatimes.com/news/economy/foreign-trade/donald-trumps-trade-threat-to-india-demands-cool-heads/articleshow/69628016.cms

 

War With the World: Trump Puts Tariffs on India, Considers Australia

“I have determined that India has not assured the United States that India will provide equitable and reasonable access to its markets,” Mr. Trump said on Friday. Tariffs start June 5.

https://moneymaven.io/mishtalk/economics/war-with-the-world-trump-puts-tariffs-on-india-considers-australia-7Wn7iqEGf063DCqqTQG5YQ/

You would think trump would want to keep India onside. Can't grasp why he seems to be so focused on 'I win, you lose'. I don't believe Oz would align against the US, will concentrate on keeping good relations with both China and the USA.

[bristolboy]

2 hours ago, ExpatOilWorker said:

You couldn't be more wrong even if you tried.

The $3 trillion China hold in foreign reserves is not a weapon, it is a lifevest for China. They need it to maintain their 10.92% inclusion in the IMF special drawing rights basket of currencies. 

Whenever you see China is reducing their foreign reserves, like they did in 2015 when it dropped from $4 to $3 trillion, it is because ordinary Chinese and companies are pulling money out of China, which the central government is doing everything in their power to stop.

 

https://www.imf.org/en/News/Articles/2016/09/30/AM16-PR16440-IMF-Launches-New-SDR-Basket-Including-Chinese-Renminbi

The SDR is not nearly as important as it used to be back when world currencies were, at least in theory, backed by gold. Hardly a lifevest for China. 

[bristolboy]

3 hours ago, ExpatOilWorker said:

Xi is kind of in a tough spot on this one. The longer he waits the more of an anti-China feeling will build up in the US and that might be hard to reverse once it settle in.

A few companies, Chinese and US, are starting the relocate manufacturing outside China. If this trend pick up speed, it will be a permanent loss for China.

On the other hand, if Xi cave in, he will look like a weak leader domestically.

 

We hear so much noise from Washington, but all is quiet on the Eastern front.

You don't think anti-US feeling is building up. China is not nearly so dependent on exports as it used to be. And the Chinese are quite jingoistic. Trump is facing an election in less than 2 years. Already economists estimate that the tariffs will cost the average American household over $1200 per year. And much more if Trump imposes tariffs on another 300 billion in Chinese goods. Lots of Trump support lies in poor rural areas. Lots of Walmart shoppers there.

[sfokevin]

5 hours ago, Boon Mee said:

Yeah, he sure caved on Mexico and Iran didn't he! 555 

Yeah he has Mexico all squared away...

#YouveBeenConned

 

[Tug]

6 hours ago, Boon Mee said:

Yeah, he sure caved on Mexico and Iran didn't he! 555 

Yup he sure did fake bs with Mexico and now thanks to donald Iran is busy creating weapons grade plutonium tired of winning yet?the bar is low very very low look at who you are dealing with the man of 10,000 lies nobody believes  what he says  he can’t be trusted

[spidermike007]

It has been proven by now, that anytime Trump is involved in a negotiation, expectations have to be kept very low. He is a terrible negotiator. NO is not a negotiating tool. He thinks the big stick is his stock in trade. It may have worked when he was buying small apartment houses from guys who really needed to sell. But, it does not work with China. Not with Xi, who outshines this guy by 70 IQ points. Now, we find out all of the concessions that Mexico offered, were worked out 6 months ago. It was a big show. They were probably warned in advance of the threat. That is just who this guy is. Not a sincere or well intentioned bone in his entire body.

 

Lock him up! Donald. Get ready for prison. It awaits you after you are charged with multiple felonies, in 19 months, after you lose the election. Bye Bye Don. 

[Credo]

8 hours ago, ExpatOilWorker said:

Xi is kind of in a tough spot on this one. The longer he waits the more of an anti-China feeling will build up in the US and that might be hard to reverse once it settle in.

A few companies, Chinese and US, are starting the relocate manufacturing outside China. If this trend pick up speed, it will be a permanent loss for China.

On the other hand, if Xi cave in, he will look like a weak leader domestically.

 

We hear so much noise from Washington, but all is quiet on the Eastern front.

The average American doesn't much care about where there products come from.   A lot would buy American if it were available and reasonably priced.   Quality counts and the US tended to have good quality products.   

Chinese markets need to be cultivated and it has taken a long time to gain access to those markets.   China is a vast market and losing it will be a major loss for the US.   They are also a competitive market.   There isn't a lot that the US makes that China doesn't make or can't get elsewhere.   

 

 

[sfokevin]

13 hours ago, Boon Mee said:

Yeah, he sure caved on Mexico and Iran didn't he! 555 

Would that be the same Mexico that will be paying for the wall?... 

[Tug]

He is starting to fold on China won’t set deadline for more sanctions of course maybe he will have a (gut) feeling and things will change just pathetic 

[Cryingdick]

1 hour ago, Tug said:

He is starting to fold on China won’t set deadline for more sanctions of course maybe he will have a (gut) feeling and things will change just pathetic 

 

It isn't like Xi has some pretty serious problems at home after all. The sanctions thus far have had very little affect on the American consumer as the Yuan has gone down and it has been China absorbing it for the most part. I live in the USA and shop here everyday and prices have not gone up or at least not to the point anybody could notice it.

 

Add to this the fact that gasoline is at a pretty steep decline in price and I don't think anybody could argue this is hurting the average American so far.

 

The protests in HK are now full blown riots. 

[attrayant]

3 hours ago, Cryingdick said:

I live in the USA and shop here everyday and prices have not gone up or at least not to the point anybody could notice it.

 

 

Have you really been shopping "everyday" for major appliances, furniture, bedding, floor coverings, auto parts and building materials? Because that's where the tariffs have been mostly targeted:
 

 

As we move into the late summer and fall, the impact of new tariffs is going to be felt on more of the average consumer goods like electronics and staples like peanuts, sugar, wheat, chicken & turkey.

[ExpatOilWorker]

1 hour ago, attrayant said:

 

Have you really been shopping "everyday" for major appliances, furniture, bedding, floor coverings, auto parts and building materials? Because that's where the tariffs have been mostly targeted:
 

 

As we move into the late summer and fall, the impact of new tariffs is going to be felt on more of the average consumer goods like electronics and staples like peanuts, sugar, wheat, chicken & turkey.

Clearly visible?

They cherry picked 9 tariff impacted categories and made a cute little graph showing prices are marginally higher than 2015.

Despite he sad name,  cryingD is of course right.

Every single central banker around the world have been on their knees praying for 2% inflation since 2008, now we are finally getting just a little bit of inflation.

 

 

[bristolboy]

34 minutes ago, ExpatOilWorker said:

Clearly visible?

They cherry picked 9 tariff impacted categories and made a cute little graph showing prices are marginally higher than 2015.

Despite he sad name,  cryingD is of course right.

Every single central banker around the world have been on their knees praying for 2% inflation since 2008, now we are finally getting just a little bit of inflation.

 

 

Central bankers were and are praying for that level of inflation as a natural consequence of economic activity. Not as a consequence of tariffs which are economically equivalent to taxes.

[bristolboy]

5 hours ago, Cryingdick said:

 

It isn't like Xi has some pretty serious problems at home after all. The sanctions thus far have had very little affect on the American consumer as the Yuan has gone down and it has been China absorbing it for the most part. I live in the USA and shop here everyday and prices have not gone up or at least not to the point anybody could notice it.

 

Add to this the fact that gasoline is at a pretty steep decline in price and I don't think anybody could argue this is hurting the average American so far.

 

The protests in HK are now full blown riots. 

Economists have estimated that if you total up the effect of the first and second round of tariffs that Trump has imposed, it would average out to $1244 per household. Oddly enough, this analysis is somewhat at odds with Trump's claim that it's China paying for the tariffs.

[ExpatOilWorker]

17 hours ago, sfokevin said:

Yeah he has Mexico all squared away...

#YouveBeenConned

 

Wouldn't it be nice if China had a similar satirical program, then we could all laugh of Winnie the Pooh, but I guess he is too afraid to speak up.

[mtls2005]

15 hours ago, Credo said:

Quality counts and the US tended to have good quality products.   

 

Somebody didn't buy many durable goods, manufactured in the U.S., in the 70's and 80's: total crap.

 

Jobs that are gone are not coming back. Get over it, move on. Or maybe re-open that buggy whip factory?

 

 

3 hours ago, bristolboy said:

Economists have estimated that if you total up the effect of the first and second round of tariffs that Trump has imposed, it would average out to $1244 per household.

Yes, whatever tax cut benefit trickled down to the lower depths have all been more than offset by trump's tariff policies.

 

And on the other side, American firms/farms exporting to China are also caught in the trump tariff vise. Lose/lose.