The U.S.-China trade talks in Beijing this week concluded without any sort of agreement and they will reconvene next week in Washington, D.C. There was hope for a memorandum of understanding to result from this week's talks, but clearly there was not enough progress.
Background: The U.S. team, led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, met with Chinese President Xi Jinping after two days of talks with Vice Premier Liu He and his team.
Given that President Trump met Liu in D.C. two weeks ago it would have been a very bad sign if Xi did not reciprocate.
What we're hearing:
From the White House statement...
These detailed and intensive discussions led to progress between the two parties. Much work remains, however. Both sides will continue working on all outstanding issues in advance of the March 1, 2019, deadline for an increase in the 10 percent tariff on certain imported Chinese goods. United States and Chinese officials have agreed that any commitments will be stated in a Memoranda of Understanding between the two countries...
Next week, discussions will continue in Washington at the ministerial and vice-ministerial levels.
The Wall Street Journal reports more detail from people briefed on the talks...
In the latest round, senior officials from both sides made some progress in sketching out the agreement, which would be in the form of a memorandum of understanding...
They described it as a bare-bones pact that both sides said could serve as the framework for a deal that President Trump and Chinese leader Xi Jinping later finalize at a summit...
The memorandum in the works is expected to cover issues related to Beijing's offers to purchase more American goods and services, accelerating China's market-opening efforts in sectors such as financial services and manufacturing, as well as improving its protection of U.S. intellectual-property rights...
The latest: In his press conference today, Trump affirmed a willingness to extend the discussions past the March 1 deadline if there is progress.
My thought bubble: The idea that Beijing is unable to move on the U.S. requests, most made 9 months or even years ago, and that another 60 days will be enough time for them, seems to go against the idea of seeking truth from fact.
Go deeper:
The U.S.-China trade talks this week were constructive, though as expected there were no big breakthroughs, sources tell me.
What's next: Soon after the Lunar Year holiday, U.S. Trade Representative Robert Lighthizer will lead a delegation to China to continue the discussions. President Trump and Chinese President Xi Jinping are likely to meet later this month when Trump is expected to travel to Asia for the second summit with North Korean leader Kim Jong-un.
In a meeting in the Oval office, Vice Premier Liu He delivered an artful letter from Xi that Trump called "beautiful." Among the highlights of Xi's letter, per the White House transcript:
"As I often say, I feel we have known each other for a long time, ever since we first met. I cherish the good working relations and personal friendship with you. I enjoy our meetings and phone calls in which we could talk about anything. It falls to us to work together and accomplish things meaningful for the people of our two countries and the world at large."
My thought bubble: Of course the Chinese want another Trump-Xi meeting. They know they can not trust any agreement that is not made directly with the U.S. president, and they believe that if they can get a face-to-face meeting with Trump, they will probably end up with a more favorable deal for China.
The big question: When they meet, will Xi make a last-minute request to release Meng Wanzhou and settle the Huawei indictments with a fine? It worked for Xi in the ZTE debacle.
Go deeper:
The next important episode in U.S.-China talks will be Politburo member and Vice Premier Liu He's visit to D.C. next week.
The big picture: Liu may be bringing an offer of more significant structural concessions but do not expect major breakthroughs next week. The deadline for this round of talks is March 1 and it would be surprising if the Chinese side put its best offer on the table so far from that date.
Yes, but: China runs the risks of offering too little again, so the pressure is on Liu and his team to at least show the U.S. side they are sincere, because if Liu leaves D.C. and the word out of the talks is the two sides are still far apart, the markets may get nervous.
My thought bubble: Chill out ... this will continue to be a grind, but I still believe Xi is very motivated to make a deal. The trade war is one more risk he does not want right now.
