China and the United States still might make a breakthrough when mid-level officials meet for trade talks next week in Beijing even if a presidential summit does not take place before a crucial March 1 deadline, according to Chinese government advisers.This kind of posturing in the financial press is not uncommon and happened during the run up to the USMCA. What is interesting is that it is the US that is pessimistic and China who is optimistic about the prospects of a deal, which seems to reveal who needs the trade war to end sooner rather than later.
US President Donald Trump and his Chinese counterpart Xi Jinping were expected to meet at the end of this month around the same time as Trump's summit with North Korean leader Kim Jong-un in Vietnam.
That had raised hopes that a deal could be struck between the two countries before US tariffs on Chinese imports rise from 10 per cent to 25 per cent on March 1.
But Trump said on Thursday that it was "unlikely" he would meet Xi before the March deadline for a deal.
Asked if he would meet Xi this month, Trump responded "no" and shook his head, adding "unlikely".
Earlier on Thursday, White House economic adviser Larry Kudlow told the Fox Business television channel that there was "pretty sizable distance" between the world's two biggest economies on reaching and agreement.
Observers said next week's trade talks involving US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would be key in any progress.
"Trump's remarks [of not meeting Xi] are a way to signal and to pressure on China," said Wu Xinbo, director of the Centre for American Studies at Fudan University in Shanghai.
"So next week's meeting in Beijing will be crucial in deciding whether a Xi-Trump meeting can be held."
Wei Jianguo, former vice-minister of commerce and now vice-chairman of the China Centre for International Economic Exchanges, also said there was still a chance that the two leaders might meet if next week's talks went well.
"It is still likely that the two sides can reach an agreement in principle next week [to further postpone the tariff increase] ... and the leaders' summit will be the occasion to announce the results," Wei said.
It will be interesting to see what the public statements are next week after Mnunchin's and Lighthizer's trip to China.