US-China trade talks resume in Shanghai with tempered expectations

U.S. and Chinese trade representatives are about to begin their first official in-person meeting since the G-20 truce, but neither side is showing any sense of urgency for a deal.

The two-day meeting, set to begin Tuesday in Shanghai, follows a truce reached last month by President Donald Trump and Chinese leader Xi Jinping in their trade war. Expectations for a long-term resolution remain low: Beijing is awaiting Washington’s stance on Huawei and Trump believes China may hold out until the 2020 election.

“I don’t think personally China would sign a deal if I had a 2% chance of losing the election,” Trump said Friday. “I think China would probably say: ‘Let’s wait. Let’s wait. Maybe Trump will lose and we can deal with another dope, or another stiff.”‘

White House economic adviser Larry Kudlow told CNBC on Friday he “wouldn’t expect any grand deal” at the meeting in Shanghai.

“Talking to our negotiators, I think they’re going to reset the stage and hopefully go back to where the talks left off last May,” Kudlow said.

China believes it has extended the olive branch by following through on the promise of repurchasing American agricultural products. Millions of tons of U.S. soybean have been shipped to China since July 19, Chinese state media Xinhua reported Sunday. It said many Chinese companies have made inquiries to U.S. suppliers in the past week for purchasing new such products as soybeans, cotton, pork and sorghum.

The People’s Daily, the official newspaper of the Chinese Communist Party, called it a pragmatic move that “once again shows China’s sincerity.”

China wants the U.S. to reciprocate. It is pushing to get the U.S. to lift restrictions on Chinese telecom giant Huawei, which the Trump administration blacklisted in May at the height of the trade war, effectively halting its ability to buy U.S.-made chips.

Xinhua reported Friday that Chinese authorities suspect FedEx violated the law by blocking more than 100 shipments from Huawei.

Trump last week met with several tech companies including Google and Broadcom and agreed to give “timely licensing decisions” to allow them to sell to Huawei, which the U.S. accuses of having ties to the Chinese military. However, many lawmakers still strongly oppose any relief for Huawei, seeing it as a major threat to national security.

“The U.S. should take concrete measures to implement the relevant U.S. commitments and create favorable conditions for bilateral economic and trade cooperation,” Xinhua said.