China announced they are done playing trade games with the United States and now wish to resolve trade differences. After weeks of back-and-forth trade negotiations, which included tariffs and other antics, China is conceding and is hoping for equal footing.
Reuters reports the announcement came shortly after a meeting between Secretary of State Mike Pompeo and the Chinese government’s top diplomat, Chinese State Councillor Wang Yi, concluded on Friday.
Pompeo’s meeting was aptly timed as President Trump recently instructed his trade officials to look into increasing the tariffs on Chinese goods from 10 percent on $200 billion imports to 25 percent.
Speaking to reporters after meeting Pompeo on the sidelines of a regional summit in Singapore, Chinese State Councillor Wang Yi said Pompeo told him he was “was willing to maintain constructive contact”.
“As two members of the U.N. Security Council and the world’s largest two economies, we should of course maintain talks at all times,” Wang said.
“Cooperation is the only correct choice for the United States and China. It’s the universal expectation of the international community. Opposition can only bring dual loss and will hurt the peaceful and stable development of the world,” he added.
“We are willing to resolve the concerns of both sides via talks on the basis of an equal footing and mutual respect. He (Pompeo) was accommodating on this as a direction, and said that he does not want current frictions to continue,” Wang said.
While China is looking to move past the trade war, it is unclear what concessions the two sides will have to make to find an agreeable, fair trade.
The Chinese official was asked what his country is looking for in a trade agreement with the U.S. but refused to share details.
“We did not speak in such details. But actually, as journalists have noted, how can talks take place under this pressure?” Wang said, as Reuters reports.
[The U.S.] wants China to stop stealing U.S. corporate secrets, abandon plans to boost its high-tech industries at America’s expense and stop subsidizing Chinese companies with cheap loans that enable them to compete unfairly.
China says the United States is trying to stop the rise of a competitor and it has imposed its own tariffs on U.S. goods. The rising tensions have weighed on stock and currency markets, with the Chinese yuan falling against the dollar.
As Forbes reports, China was beginning to see that they were falling behind in the trade reciprocations as China imports more things from the U.S. than the U.S. imports from China:
The worst-case scenario is that China is tariffed on everything it exports to the United States or around $500 billion worth of goods.
To date, China has tariffed on at least $50 billion. Beijing has retaliated in kind, with another $50 billion of U.S. imports hit with 25% tariffs at the ports there.
The thing is, China does not import anywhere near $500 billion worth of goods, so it is reaching a point where it has to retaliate by other methods. Some have argued that China can retaliate by blocking access for American companies. Others said that they can block access to American brands, though this is highly unlikely as it would hurt China’s growing consumer economy.
If Trump surprises and says, “Ladies and gentlemen, we have a deal,” China stocks will rally hard in the morning.
While China is posturing towards an end to the trade war, they are still keeping their tariffs with the U.S. in place until a final agreement is in place. The Chinese government also emphasized that should President Trump and the U.S. materialize the recent threat to bump up their 10 percent tax on Chinese imports to 25 percent, they would retaliate.
From ABC News:
China’s government has announced a $60 billion list of U.S. goods including coffee, honey and industrial chemicals for retaliation if Washington goes ahead with its latest tariff threat.
The revelation to concede in the trade war could have also been affected by the drop in China’s stock market from the world’s second-biggest to third, Yahoo Finance reports. They were recently overtaken as the world’s second-biggest by Japan.