Go inside the global economy with Stephanie Flanders in her new podcast, Stephanomics. Subscribe via Pocket Cast or iTunes.
The trade deal that the U.S. and China are crafting would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in the Asian nation, according to three people familiar with the talks.
Talks are continuing in Washington where Chinese Vice Premier Liu He began planned meetings with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday. The goal over the next few days is to strike an agreement on the core issues so President Donald Trump and Chinese leader Xi Jinping can hold a ceremony to sign a deal. Trump plans to meet Liu at the White House Thursday.
As the talks resumed on Wednesday morning, Trump’s top economic adviser touted progress but cautioned that a final deal to end the trade war remains elusive. Negotiators are “making good headway,” White House economic adviser Larry Kudlow told reporters at an event in Washington. “But we’re not there and we hope this week to get closer,” he said.
Under the proposed agreement, China would commit by 2025 to buy more U.S. commodities, including soybeans and energy products, and allow 100 percent foreign ownership for U.S. companies operating in China as a binding pledge that can trigger retaliation from the U.S. if left unfulfilled, the people said on condition of anonymity because the talks are private.
Stocks in Asia were mixed in early Thursday trading after American equities edged up to a six-month high, as investors look for signs of progress. The offshore yuan held at 6.7131 per dollar.
Other non-binding promises China has offered to implement by 2029 wouldn’t be tied to potential U.S. retaliation, they said, without elaborating.
The limited time frame raises questions about how much a deal would reshape the longer-term economic relationship, rather than simply serve as a political win for Trump that would last through his potential second term as the 2020 election campaign kicks off. While some progress is being made, resolving more contentious issues such as the forced transfer of technology is taking longer.
China’s Commerce Ministry didn’t immediately reply to faxed questions. The White House referred questions to USTR, which didn’t immediately reply to a request for comment.
The White House is particularly focused on purchases commitments through the second quarter of 2020, in an effort to narrow the trade balance ahead of Trump’s re-election bid. People familiar with the talks said for that reason, the U.S. is pushing for China to front-load a big chunk of the commodities purchases in the first two years the agreement is in place.
The merchandise-trade deficit with China hit a record $419.2 billion in 2018.