WASHINGTON: US President Donald Trump wants to reach an agreement on trade with Chinese President Xi Jinping at the G20 summit in Argentina later this month and has asked US officials to begin drafting potential terms.
The proposal, confirmed by Beijing, sent stock markets soaring in Asia and Wall Street futures were trading sharply higher on Friday morning New York time.
The push for a possible deal with China was prompted by the president’s telephone call with Xi on Thursday, sources in Washington said. Trump described the conversation as “long and very good” and said in a tweet that their discussions on trade were “moving along nicely”
Foreign ministry officials in Beijing said Xi had and “extremely positive” phone conversation with Trump about trade and other issues.
The two leaders agreed to “strengthen economic exchanges”, said spokesman, Lu Kang. He gave no indication whether they made progress on settling their escalating tariff war.
“I agree, this phone conversation was an extremely positive phone conversation,” Lu said in response to Trump’s reported comments.
Trump has asked key cabinet secretaries to have their staff draw up a potential deal to signal a ceasefire in an escalating trade conflict, sources said, adding that multiple agencies are involved in drafting the plan. It was unclear if Trump was easing up on US demands that China has resisted.
US-China talks have made little progress since May, when Trump put a stop to a deal that would see China buy more energy and agricultural goods to narrow the trade deficit. In Beijing that was seen as an insult to Xi, who sent a personal emissary to Washington for the negotiations, and cemented a view that Trump’s real goal was to thwart China’s rise.
Analysts were mixed on the significance of Trump’s latest move, with some viewing it as a positive sign of a breakthrough and others seeing it as a ploy to boost market sentiment ahead of midterm elections next week.
“I don’t buy the story for a second,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. “This seems a perfect way to ensure equities rally into election day, put Xi into a box in terms of what is expected of him and then have someone to blame when the deal then falls through.”
Tuuli McCully, head of Asia-Pacific economics at Scotiabank in Singapore, called the news “encouraging”. It “likely reflects the fact that businesses in the US are starting to feel the impact of the trade conflict through higher prices and squeezed margins,” she said.
The telephone conversation on Thursday was Trump and Xi’s first publicly disclosed call in six months. Both sides reported that they had constructive discussions on North Korea and trade, with Chinese state media saying that Trump supported “frequent, direct communication” between the presidents and “joint efforts to prepare for” the planned meeting on the sidelines of the G20 summit, which is scheduled for Nov 30 and Dec 1.
“Those discussions are moving along nicely,” Trump wrote on Twitter Thursday. At a campaign rally in Columbia, Missouri, on Thursday night he said, “They want to make a deal.”
“He wants to do it,” Trump said of Xi. “They all want to do it.”
The Trump administration this year has already imposed tariffs on $250 billion in trade with China and is threatening to impose tariffs on all remaining imports from China, which last year were worth $505 billion.
In recent months China has repeatedly questioned the US’s sincerity in trade talks, wary of agreeing to something only to have Trump change his mind. While Beijing is open to striking a deal that narrows the trade deficit, officials have resisted Trump’s other demands -- including an end to subsidies for strategic industries, a stop to forced technology transfer and more competition for state-owned enterprises.
One person said a sticking point in any potential deal is intellectual property theft, where the Trump administration has sought to take a hard line.
White House economic adviser Larry Kudlow said that Trump and Xi might be able to break the logjam on issues during the summit. But Kudlow cautioned that Trump would “aggressively” pursue his agenda against China, if no deals were reached on intellectual property theft, cybersecurity and tariffs on commodities, among other issues.