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January 8, 2019 11:30 AM, EST

Trump Lauds Progress After Day Two of Beijing Trade Talks

Wilbur Ross US Commerce Secretary Wilbur Ross (Joshua Roberts/Bloomberg News)

President Donald Trump expressed optimism that U.S.-China trade talks in Beijing are progressing well, as Chinese authorities planned to give a statement after the latest round of negotiations.

“Talks with China are going very well!” Trump tweeted Jan. 8 as the second day of midlevel meetings concluded.

While the hosts indicated the talks would run Jan. 7-8, the editor-in-chief of the Chinese state-run Global Times newspaper said in a tweet the discussions could continue Jan. 9.

Before the talks ended earlier Jan. 8, Chinese foreign ministry spokesman Lu Kang told reporters at a regular briefing in Beijing, “I believe we will release a detailed readout after they are concluded.”

No timing was given, and it wasn’t immediately clear if the U.S. delegation would release a statement.

U.S. stocks and European equities jumped as investors awaited developments on trade talks between the world’s largest economies.

U.S. Commerce Secretary Wilbur Ross expressed optimism Jan. 7, telling CNBC, “There’s a very good chance that we’ll get a reasonable settlement.”

Liu He

China Vice Premier Liu He (Jason Alden/Bloomberg News)

Vice Premier Liu He made an appearance at the talks Jan. 7 in a sign the Chinese also were pushing for a positive outcome.

Liu, the chief economic adviser to Chinese President Xi Jinping, made brief remarks at the negotiations, a person familiar with the meeting said. Asked about his presence Jan. 8, Lu from the foreign ministry said it wasn’t surprising for Liu to be there. Liu led a round of talks in Washington last year that ended in failure, and he’s expected to meet chief U.S. negotiator Robert Lighthizer later this month.

Since the two presidents met Dec. 1, China has made a number of concessions to U.S. demands, including temporarily cutting punitive tariffs on U.S.-made cars, resuming soybean purchases, promising to open up its markets for more foreign investment and drafting a law to prevent forced technology transfers.

How China will enforce those measures will be key to any deal. U.S. officials repeatedly have accused China of not fulfilling agreements, with Ross saying Jan. 7, “The real issue is what are the enforcement mechanisms, what are the punishments if people don’t do what they were supposed to do?”

The U.S. negotiators in Beijing are pushing the Chinese side to come up with a mechanism to ensure that Beijing keeps the promises it makes, The Wall Street Journal reported. That includes giving specific dates for making purchases and making assurances that Beijing won’t hinder U.S. companies from gaining access to China’s market.

Economic Cost

Six months after Trump first slapped tariffs on Chinese goods, signs are growing that the trade war is exacting an economic and financial cost, increasing the incentive for both sides to end the conflict. Apple Inc. cut its revenue outlook last week as sales of the iPhone were slower than expected in China, while data on factory activity and retail sales in the Asian nation also were weak.

Wang

China Vice President Wang Qichan (Justin Chin/Bloomberg News)

Liu’s appearance at the talks is a “symbol of Xi’s personal buy-in” in the effort to reach a deal, said Leland Miller, CEO of China Beige Book, a data-analytics firm that surveys companies across the Chinese economy. “Beijing wants to show this is supported at the very highest level.”

But much work remains before the economic powers climb down. Trump has given U.S. Trade Representative Lighthizer until March 1 to negotiate an accord with the Chinese on “structural changes” to Beijing’s state-driven economic model. The sides have shown signs of common ground in the past year, only for progress to stall.

Robert Lighthizer

US Trade Representative Robert Lighthizer (Zach Gibson/Bloomberg News)

The discussions are the first face-to-face interactions between the United States and China since both presidents met in Argentina and agreed to a temporary truce in their tit-for-tat tariff war. More senior-level discussions could take place this month, with the South China Morning Post reporting that Trump and Chinese Vice President Wang Qishan may meet at the World Economic Forum in Davos, Switzerland.

China’s foreign ministry on Jan. 7 confirmed that Wang would deliver a keynote speech at Davos, though didn’t confirm plans for him to meet Trump.

Deputy U.S. Trade Representative Jeffrey Gerrish is leading the American delegation in Beijing. Preliminary discussions were “a little more optimistic than usual,” White House economic adviser Larry Kudlow told Bloomberg TV on Jan. 4.