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U.S. Negotiators to Head to China Monday for Face-to-Face Talks

Illustration: Leila Dougan | Sources: Chinese President Xi Jinping at the Great Hall of the People in Beijing, China, 14 May 2019. EPA-EFE/JASON LEE / POOL / US President Donald J. Trump at the White House in Washington, DC, USA, 20 May 2019. EPA-EFE/SHAWN THEW / Flags by Samuel Branch/Unsplash and Philip Jägenstedt/Flickr

U.S. Trade Representative Robert Lighthizer and senior U.S. officials are set to travel to China next Monday for the first high-level, face-to-face trade negotiations between the world’s two biggest economies since talks broke down in May.

U.S. Trade Representative Robert Lighthizer and a small team will be in Shanghai through Wednesday, according to people familiar with the plans who asked not to be identified. The meeting will involve a broad discussion of the issues outstanding and isn’t expected to yield major breakthroughs, a senior administration official said.

President Donald Trump and Chinese counterpart Xi Jinping met at the Group of 20 summit in Japan last month and declared a tentative truce in their year-long trade war. The leaders directed their negotiators to resume trade talks. Since then Treasury Secretary Steven Mnuchin, Lighthizer and their Chinese counterparts have spoken by phone.

According to a senior administration official, the Chinese requested that the meeting take place in Shanghai, rather than Beijing. The Chinese foreign affairs and commerce ministries didn’t immediately respond to a request for comment.

Stocks jumped on the news, and the S&P 500 closed up almost 0.7% in New York. Chinese stocks gained Wednesday in early trade with all major indexes jumping more than 1% on the news of renewed talks. Foreign investors resumed buying via the exchange links with Shanghai and Shenzhen, and Hong Kong listed Chinese equities also gained, with the Hang Seng China gauge rising 1%.

Structural Issues

U.S. officials have played down the likelihood of a quick deal with China.

“It is impossible to judge how long it will take when the president’s objective is to get a proper deal or go ahead with tariffs,” Secretary of Commerce Wilbur Ross told Bloomberg TV on Tuesday. “What is important is if we make a deal, it’s a proper deal, a really good deal. That’s his overriding objective. And that’s much more important than exact timing.”

The sides remain at odds over significant issues like Washington’s demands for structural reforms to China’s economy and Beijing’s call for the U.S. to remove existing punitive tariffs on imported Chinese goods.

The talks in recent weeks have focused on Huawei licenses and agriculture purchases, and lacked engagement on structural issues that the U.S. wants addressed in any trade deal.

People familiar with next week’s meeting say it’s a positive step for talks overall but caution that it’s likely to feature a wide-ranging discussion of where things stand, rather than a chance for substantive negotiations. It’s still unclear what the starting point will be for deeper discussions. Talks collapsed in May because the two countries disagreed on draft terms of a deal.

Trade Negotiators

Chinese Commerce Minister Zhong Shan will be part of the core group of negotiators, which on the Chinese side has been led by Vice Premier Liu He. Zhong was part of the Chinese team at previous rounds of negotiations, but recently he’s been specifically mentioned in the official readouts of phone calls between the two sides, spurring speculation that he may now have a more prominent role in the talks.

Zhong is seen as more of a hardliner than Liu and some China watchers say he was added to the talks to ensure that a more hawkish view is represented at the table. Zhong is a known quantity for many U.S. officials, including Lighthizer who has met him several times over the past two years at international meetings such as Asia-Pacific Economic Cooperation summits.

Read more: Trump Agrees to Timely Decisions on Huawei as China Talks Near

On Monday, Trump and senior White House officials, including Mnuchin and Lighthizer, met with chief executives of U.S. technology companies in a step toward easing a ban on sales to China’s Huawei Technologies Co., which has been another point of tension in the relationship.

National Economic Council Director Larry Kudlow told reporters Tuesday that the meeting was positive and cited it as one reason he’s optimistic that in-person talks with China were likely to resume soon.

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