China: Keeping June Alive (Barely)

Published on May 28, 2019

From what we understand, the US trade negotiating team contacted their counterparts in China last week to discuss a potential next round of negotiations – with the hope it may be held in early June in Beijing. 

*** The timing for those talks, should they materialize, would be particularly important in that they would, despite the last few weeks of intensifying and broadening tensions between the US and China, come before the much touted G20 summit on June 28-29 in Osaka, where Presidents Donald Trump and Xi Jinping will have an opportunity to meet in person even if there is no formal summit set between the two for that date. ***

*** While we would caution that the narrative from Beijing around this outreach may reflect a desire by officials to keep markets and the economic outlook from further deterioration, Chinese sources maintain they believe the two sides are in fact likely to at least hold another round of talks in Beijing before the G20 summit meeting. ***

With a Heavy Caveat

From what we understand, the Chinese response to the US negotiators was that China is always open to negotiations “when the US is ready,” will engage in a next round of talks with the US and, if the US is sincere, will welcome the US team to Beijing in early June.

But officials maintain their response also stipulated that if the US “lacked sincerity” and continued to insist on its original position, there would be no need to waste time on a next round of talks.

As has been repeatedly stressed since Vice Premier Liu He’s last and unsuccessful trip to Washington, the premise for a next round of talks, from Beijing’s perspective, would need to start with assurances the US will abide by China’s “three bottom lines” (see SGH 5/9/19, “China: Beijing’s Negotiating Position”) if they are to happen at all.

And with an extreme sense of caution, senior Chinese officials continue to maintain they still do not have high expectations for the Xi-Trump talks, nor for a US-China trade agreement anytime soon. 

Whether such a deal is to happen at all, they wryly predict, will still depend not on China’s concessions, but on the vicissitudes of Wall Street.

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