U.S., China meet for trade talks as Trump talks tough

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SHANGHAI (Reuters) – Top U.S. and Chinese trade officials met in Shanghai on Wednesday for talks in a bid to end a year-long trade war, despite low expectations for progress and combative remarks from U.S. President Donald Trump.

As U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin landed in the Chinese commercial hub on Tuesday, Trump accused Beijing on Twitter of stalling, and warned of a worse outcome for China if it continued to do so.

This week’s meetings, the first in-person trade talks since a G20 truce last month, come as an official survey showed China’s factory activity shrank for the third month in a row in July, underlining the growing strains placed on the world’s second-biggest economy by the trade war.

Vice Premier Liu He met and shook hands with Lighthizer and Mnuchin at Shanghai’s Xijiao State Guest Hotel in front of media on Wednesday morning ahead of the day’s negotiations, but the officials did not make any public remarks.

The trade row has dragged on for more than a year, with the world’s two largest economies slapping billions of dollars of tariffs on each other’s imports, disrupting global supply chains and shaking financial markets.

The Shanghai talks were expected to centre on “goodwill” gestures, such as Chinese commitments to purchase U.S. agricultural commodities and steps by the United States to ease some sanctions on Chinese telecoms equipment giant Huawei Technologies Co Ltd, a person familiar with the discussions told Reuters earlier.

Trump had said on Twitter that China appeared to be backing off on a pledge to buy U.S. farm goods, and he warned that if China stalled in the hope that he wouldn’t win re-election in the November 2020 U.S. presidential contest, the outcome will be worse for China.

“The problem with them waiting … is that if & when I win, the deal that they get will be much tougher than what we are negotiating now … or no deal at all,” Trump said.

China’s state-owned Global Times tabloid said that U.S. negotiators should show sincerity and hold “reasonable expectations” after making “unrealistic demands that infringe upon China’s sovereignty and dignity”.

It said that if “Washington still holds the illusion that Beijing will somehow cave in and compromise on issues concerning sovereignty and other related core interests to reach a deal, then no deal is fine”.

The U.S. and Chinese delegations were scheduled to have had dinner at Shanghai’s historic riverfront Fairmont Peace Hotel on Tuesday night, but both teams avoided the media and did not make public comments.

The U.S. Commerce Department put Huawei on a national security blacklist in May, effectively banning U.S. firms from selling to Huawei, a move that enraged Chinese officials.

Trump had agreed last month to allow some sales to Huawei in a meeting with Chinese President Xi Jinping, but so far, U.S. semiconductor and software makers are still mostly in the dark about the administration’s plans.

In Sao Paulo on Tuesday, U.S. Commerce Secretary Wilbur Ross said decisions on license applications by U.S. firms to resume some sales to Huawei could come as early as next week.

Reporting by Brenda Goh and David Stanway in Shanghai; Writing by Michael Martina in Beijing; Editing by Simon Cameron-Moore

Our Standards:The Thomson Reuters Trust Principles.

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