“Ultimately, I think the biggest decisions and some even smaller decisions will be made by President Xi and myself,” the president told reporters. “And we expect to have a meeting some point in the not-too-distant future. . . . And I think President Xi and I will work out the final points. Perhaps and perhaps not.”
Trump said negotiators this week reached a “final agreement” to stabilize currency values, the first tangible accord with Beijing since he began imposing tariffs on Chinese imports last year.
Administration officials released no additional details but have been seeking China’s agreement to avoid manipulating the value of the yuan to gain a trade advantage.
The Chinese government intervenes in foreign exchange markets to prevent the yuan from rising or falling in value too rapidly. Between April and October 2018, the yuan dropped about 9 percent, offsetting a sizable portion of Trump’s tariffs.
Some analysts said the currency deal represents no real concession.
Chinese authorities are “very reluctant” to let the dollar value of one yuan rise above 7 because it encourages Chinese citizens to move their money outside the country, said Robin Brooks, chief economist for the Institute of International Finance.
“So this agreement isn’t a big ‘win’ for the U.S., since China doesn’t want a destabilizing yuan devaluation anyway,” Brooks said on Twitter.
The fate of two Chinese telecommunications companies that U.S. officials say pose national security concerns — Huawei and ZTE — also may be included in the trade discussions, Trump said, adding that he will consult with Attorney General William P. Barr before deciding.
The remark suggested a willingness to negotiate over the criminal charges facing Huawei, which the Justice Department has accused of stealing trade secrets, and its chief financial officer, Meng Wanzhou, whom the United States is seeking to extradite from Canada.
The president and his chief trade negotiator, Robert E. Lighthizer, had a bizarre exchange in front of the press over what to call a China trade deal. The White House had announced Feb. 15 that the two sides were negotiating several “memoranda of understanding.”
But after Lighthizer gave a lengthy explanation of the term “MOU,” saying it was equivalent to a contract, Trump contradicted his trade chief in front of Chinese officials and reporters, saying flatly: “I disagree.”
After a back-and-forth over what the two sides were negotiating — with the president saying that MOUs “don’t mean very much” — Lighthizer conceded: “We’ll never use MOU again.”
The veteran trade negotiator also said that “major hurdles” remain before a deal can be struck.
That’s just as well, say some analysts who fear the president is preparing to settle for minor concessions and Chinese promises to buy more American products, Beijing’s perennial strategy for defusing trade complaints.
“If we walk away with just some purchase commitments, that means this whole process would have been essentially for nothing. We need to get a lot more or this wasn’t worth it,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.
On Wall Street, the Dow Jones industrial average rose more than 180 points as investors anticipated U.S. and Chinese negotiators would head off a planned March 2 tariff increase on $200 billion worth of Chinese goods. The Dow is up nearly 6 percent over the past month, a period that coincides with the president’s increasingly positive statements about the likelihood of a deal.
“We are encouraged at this point that they’re getting closer to getting an agreement,” said Myron Brilliant, executive vice president and head of international affairs for the U.S. Chamber of Commerce, who said he has spoken this week with officials from both governments.
But Brilliant said the remaining gaps over issues at the center of the year-long trade dispute mean that talks are likely to continue for some time. Trump has publicly suggested that he may extend his original deadline, saying earlier this week there was nothing “magical” about the March date.
Chinese Vice Premier Liu He, who leads Beijing’s team, met this week with Lighthizer and his 11-man U.S. delegation in two days of talks at the Eisenhower Executive Office Building.
The two sides are trying to hammer out six MOUs that will address U.S. complaints about China’s trade practices, including intellectual property protections, joint venture technology transfer requirements and non-tariff barriers, along with specifying a substantial increase in Chinese purchases of American products.
Chinese officials have reportedly offered to buy an additional $30 billion worth of U.S. agricultural exports each year, more than doubling the current $24 billion figure, and to buy more American semiconductors.
The president has said that any deal must include profound structural changes in China’s state-led economic system. “We’re covering everything, all of the points that people have been talking about for years and said couldn’t be done,” he said last week.
That’s a tall order.
Brilliant, who visited Beijing earlier this week, said Chinese officials have been slow to recognize the need to offer more than just an increase in their purchases from the United States. Notable gaps remain over Trump’s demand for far-reaching changes in China’s compulsory technology transfer requirements for foreign companies and its subsidies for state-owned enterprises.
“Structural reform means something different for both governments,” Trump said.
Chinese officials have tried to parry U.S. demands by repackaging policy changes they had planned to make and by launching a “frontal attack” on Lighthizer’s claims of Chinese misdeeds, said Michael Pillsbury, a China expert at the Hudson Institute.
Chinese officials also have drafted a “contingency plan” to offer additional trade concessions if the threatened tariff increase to 25 percent from 10 percent is implemented, he added.
The two sides also are far apart on provisions for enforcing any agreement, an issue that Lighthizer has called essential to remaking the U.S.-China relationship. U.S. officials have considered leaving some tariffs in place or reimposing them if China fails to fulfill its promises.
Chinese officials, meanwhile, want enforcement handled through “further dialogue,” Brilliant said. “That’s not what we’re looking for. We want it very clear and very concrete in the text of the agreement.”