US & China to Hold Semi-Annual Economic Talks

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Statement From US Administration

Hopes for an end to the US/China trade war have increased in recent days.

Over the weekend, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer released a statement highlighting plans to hold semi-annual talks with China. The talks aim to deliver economic reform as well as resolve disputes.

The effort will be led in China by Vice Premier Liu He. It will also be formally announced as part of the phase one trade deal.

The deal is due for signature in Washington on January 15th.

Phase One Trade Deal Agreed Upon

The phase one trade deal includes commitments by China to increase purchases of a range of US goods. It also includes some economic reforms in exchange for the US reducing some tariffs and removing others altogether.

As part of the deal, the two sides have agreed to dispute-resolution consultations. These will aim to help deal with any conflicts which might occur as trade negotiations continue.

The statement released over the weekend said that these bi-annual meetings will be run by Lighthizer and Liu, with Mnuchin aiding Lighthizer.

Alongside these meetings, the statement said that Mnuchin will also talk with Liu “on a regular basis” regarding macroeconomic issues. We can expect these consultations to also include Yi Gang, the head of the Chinese central bank, and Jerome Powell, head of the US Federal Reserve.

Phase Two Trade Talks to Start Soon

Importantly, these talks will take place separately from the negotiations pertaining to delivering the second phase of the US/China trade deal.

Negotiations are due to start soon on phase two of the deal. The second phase will cover much broader content such as fundamental Chinese economic policies, corporate subsidies as well as the activity of state-owned firms in China.

According to Trump, the second round of negotiations will likely not finish until after the US elections. That means we will not see results until after November of this year.

Comprehensive Economic Dialogue

The US administration is considering calling the talks the “Comprehensive Economic Dialogue”.

This is the same name that the US government applied to talks in 2017, led by Wilbur Ross. Back then, the talks were aimed at securing a quick trade deal in 100 days.

However, the talks broke down, with Trump removing Wilbur Ross from running China policy.

Ross has confirmed, however, that parts of his prior negotiations will be included in the phase-one trade deal. Ross said in a statement:

“There are many trade initiatives being worked on by the Administration, and they will be announced when we are ready to announce them.”

With the announcement of these new consultations to run alongside the ongoing trade negotiations, the market is hopeful that the US and China will be able to put a proper end to the two-year trade war.

Technical Perspective


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