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YU Miaojie: A Deal Between China and the US Could Feasibly Be Signed by the End of December


BEIJING (MNI) - Chinese President Xi Jinping and U.S. counterpart Donald Trump could sign a preliminary trade deal during the APEC meeting in Chile in mid-November, perhaps opening the way to a second-phase deal including guidelines on managing the yuan, government advisors told MNI.

"It is very likely that the two heads of state will meet next month, and sign the phase-one agreement," said Mei Guanqun, deputy researcher at the China Center for International Economic Exchange, a think tank managed by the National Development and Reform Commission. The U.S. and China have agreed to divide negotiations over their trade dispute into three phases, with the first phase containing the overall outline for talks, Mei said on Thursday.

Trump said last Saturday that the two countries have reached a "substantial phase one" agreement which would take several weeks to prepare and be signed by November.

A more detailed trade accord, building on phase one, would follow, Mei said, although he added that differences on how to ensure its implementation could delay this second-phase accord until the middle or second half of 2020.


China will never accept an enforcement mechanism imposed by another country, said Mei, adding that a new reference in accounts of talks to "dispute resolution", which replaced the earlier "enforcement mechanism", was a positive step, and that ideally the two sides would set up a joint committee for mutual supervision. Trump's electoral calculations may also prompt him to drag out the second phase, he added.

Yu Miaojie, a veteran trade expert advising several government departments, said on Thursday an extension of the phase-one deal, including specific guidelines on how China manages its currency, could feasibly be signed by the end of December. If this were to occur, the yuan, currently trading at about 7.08 to the dollar, could strengthen as far as 6.9 before 2020 is out, added Yu, also deputy dean of the National School of Development at Peking University.

Both advisors saw a possible significant stumbling block from the U.S. threat to impose an additional round of tariffs on Dec 15. While Trump, who delayed an earlier round of tariff increases due in October following the recent talks, could once again order a postponement, but he will not easily lay his tariff weapon aside, the advisors said.

China's Ministry of Commerce renewed calls for progress towards reversing U.S. tariffs on Chinese goods at a briefing on Thursday.

Without the removal of tariffs imposed during the dispute, China will not cede to U.S. demands for it to reduce industrial subsidies, Yu said, adding that subsidies provided in a transparent way are in line with WTO rules.

Trump could choose other levers with which to pressure China, according to Mei, suggesting that the U.S. might continue to threaten measures such as banning Chinese listings on U.S. exchanges, or imposing sanctions on tech firms.

(From MNI, by Wanxia Lin)