Shanghai an Auspicious Pick for Resumption of Trade Talks

On-off negotiations to end the United States-China trade war have proved so unproductive that every detail of arrangements for the next round invites scrutiny for a positive sign. Analysts suggest China’s decision to host the talks resuming tomorrow in Shanghai, a global financial hub, rather than Beijing is an attempt to shift the emphasis to trade and away from political aspects that are more difficult to resolve. If that is so, it raises hopes for a pragmatic initial approach focusing on sensitive issues such as the relaxation of US sanctions on Huawei Technologies and the purchase of American farm products.

China’s choice of Shanghai for US trade talks emphasises commercial focus

Grounds for optimism are to be found in reports of US President Donald Trump holding talks with suppliers to Huawei amid expectations of an easing of restrictions where there are no security concerns; and of Chinese import companies making trade inquiries with US agricultural exporters and seeking exemptions from Chinese tariffs on American agricultural goods. This follows last month’s summit between Trump and President Xi Jinping at which the two sides agreed on a truce in their tit-for-tat tariff war. That said, sources say Xi made no specific commitment on agricultural purchases, which Trump has tied to a halt to further tariff increases. And US Treasury Secretary Steven Mnuchin says there remain a lot of issues and more meetings before any deal is done.

The Shanghai meeting, between Vice-Premier Liu He, Mnuchin and US Trade Representative Robert Lighthizer, will be the first between the two countries’ trade negotiators since talks collapsed in May. China blamed the failure to reach a deal on the US for being too demanding, and the Americans claimed China had reneged on earlier promises.

Mnuchin sees good symbolism in the venue of the next meeting, as the Shanghai Communique of 1972 is considered a key document in the normalisation of relations between Beijing and Washington. Since the negotiations were prompted by the Xi-Trump summit, we expect them to be pragmatic and practical – for the sake of world trade and global growth. Reports that Chinese companies have been establishing American export prices bode well for the outcome.