[Still, the two leaders will confront a long list of tough issues when they meet. Since Trump began imposing tariffs on Chinese imports several months ago, the United States has broadened its complaints about Chinese behavior to include its military buildup and the treatment of religious minorities in Xinjing.]
By
David J. Lynch and Gerry Shih
 |
|
President
Trump chats with Chinese President Xi Jinping during a welcome ceremony
at the Great
Hall of the People in Beijing on Nov. 9, 2017. (Andy Wong/AP)
|
Stocks briefly rose on a report that
President Trump has directed aides to draw up terms for a deal to resolve the
escalating trade conflict with China, as he prepares to meet with Chinese
President Xi Jinping at the G20 summit later this month in Buenos Aires.
The Dow Jones Industrial Average jumped
nearly 200 points in early trading before surrendering those gains as analysts
highlighted the obstacles to any deal between the two economic giants. In
midday trading, the benchmark index was down more than 100 points.
Investors were cheered earlier by a Bloomberg
News report that Trump has directed his aides to flesh out a possible bargain
for the two leaders to consider when they meet. That report came hours after
Trump said in a morning tweet that he had a “long and very good conversation”
with Xi that included “a heavy emphasis on trade.”
The president added: “Those discussions are
moving along nicely with meetings being scheduled at the G-20 in Argentina.”
Still, the two leaders will confront a long
list of tough issues when they meet. Since Trump began imposing tariffs on
Chinese imports several months ago, the United States has broadened its
complaints about Chinese behavior to include its military buildup and the treatment
of religious minorities in Xinjing.
Fresh trade data on Friday, meanwhile, showed
that Trump has made no progress on his campaign to narrow the U.S. trade
deficit. Through September, the United States imported $445.2 billion more
goods and services than it sold abroad, up from a $404.4 billion deficit during
the same period in 2017.
As importers rushed to beat the scheduled
January 1 increase in U.S. tariffs on Chinese goods, the monthly goods deficit
in September with China rose to $37.4 billion, up $3 billion from the previous
month. Through the first nine months of the year, the United States has
incurred a $301.4 billion deficit with China — up 10 percent from the same
period last year.
On Thursday, the Justice Department unsealed
the latest in a series of spying charges against Chinese companies and
individuals.
The unusual slew of indictments are meant to
be a stern warning to Beijing about pilfering U.S. tech secrets that, beyond
the trade imbalance, illustrate Washington’s grievances about Chinese
commercial behavior.
In a lengthy readout published by Chinese
state media, Xi said he was “very happy” to talk to Trump and attached “great
importance to the good relations with the president.”
But the Chinese assessment also betrayed
frustration with the on-again, off-again nature of negotiations between
Washington and Beijing. “China sees the US administration under Trump as
inconsistent and untrustworthy,” wrote analysts at Trivium, an economic
consultancy in Beijing.
The optimism that flared in the wake of
Trump’s Thursday tweet and the subsequent Bloomberg report faded quickly.
Many analysts were skeptical that anything
fundamental had changed in the U.S.-China standoff. There has been no
indication, for instance, that Xi is willing to abandon the “Made-in-China
2025” program of state subsidies aimed at securing Chinese dominance of
advanced technology industries.
“I think the chances of a near-term deal are
low but not negligible. Given that the President reportedly has tasked some in
the administration with developing the outlines of an arrangement and that he
may want to bag a victory on China, anything is possible,” said Scott Kennedy,
a China expert at the Center for Strategic and International Studies. “Hawks in
the administration will argue against a deal for deal’s sake and the Chinese
likely will stay true to form and not come through with the necessary
concessions.”
The proximity of Trump’s sudden warming
toward China and Tuesday’s congressional elections also drew comment. In recent
days, as Republicans confront the possibility of losing their majority in the
House of Representatives, Trump has unveiled a flurry of high-profile
initiatives — including a promised middle-class tax cut and a military
deployment to the southern border — designed to woo his voters.
“There is good reason to be skeptical of this
kumbaya moment,” analyst Chris Krueger of the Cowen Washington Research Group
wrote in a research note Friday.
China will host an import fair in Shanghai
next week that Xi said will demonstrate Beijing’s commitment to “increase
imports and expand openness,” according to the Chinese readout.
Xi is expected to make a major speech at the
convention’s opening on Monday, where he could potentially discuss his vision
for further market access reforms or the government’s role in steering
industries — other areas in which Washington and U.S. businesses are demanding
more Chinese concessions.
After months of fitful negotiations through
intermediaries and lower-level officials, U.S. and Chinese officials hope that
a meeting of the two presidents on the sidelines of the Buenos Aires summit
will yield a breakthrough.
The months-long spat has weighed on worldwide
markets at politically crucial junctures for both presidents: Trump is facing a
key midterm test on Tuesday, while Xi has been navigating economic head winds
and growing middle-class anxieties.
Larry Kudlow, Trump’s top economic adviser,
said at a Washington Post Live event earlier Thursday that he wasn’t sure that
trade would be discussed when the two presidents meet in Argentina but
confirmed that the two men will sit down.
“The agenda is being discussed and worked on
in both camps,” Kudlow said. “I think it will include trade, but I’m not 100
percent sure.”
It’s unclear how the progress in high-level
talks will affect a new U.S. push to confront China on other thorny aspects of
the trade relationship. Federal prosecutors have accused Chinese companies and
individuals of spying in three cases in the past two months and pledged more to
come on this week.
Hours after Trump’s tweet, Attorney General
Jeff Sessions said the indictments are part of a new initiative to beef up the
Justice Department’s “strategic priority of countering Chinese national
security threats.”
The department unveiled an indictment on
Thursday accusing Fujian Jinhua Integrated Circuit, a Chinese state-owned
semiconductor company, of conspiring to steal secrets from the Idaho-based
chipmaker Micron.
And earlier this week, prosecutors unveiled
charges against Chinese intelligence officers who they said conspired to hack
into aviation firms to obtain engine designs on behalf of China’s jetliner
industry.
Shih reported from Hong Kong and Lynch
reported from Washington
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