US and China Unlikely to Make Significant Progress This Week

Alan Penny

7 October 2019

2 min read


  • High-level talks to resume in Washington DC
  • Lower-level talks have been underway since last month
  • Will focus on different key areas for each country

The United States and China will have high-level talks in Washington DC this week, as Thursday sees Treasury Secretary Stephen Mnuchin and Robert Lighthizer meeting with Liu He from China. The talks will focus on key areas such as intellectual property rights, the forced transfer of proprietary technologies, agricultural purchases, and enforcement of those areas. It was noted on Friday that US President Donald Trump suggested there’s “a very good chance” that the two countries could strike a deal.

In the meantime, Washington and Beijing are both due to continue raising tariffs on each other’s exports until the end of the year. This is something a lot of traders will be looking at, as these talks are a potential way to avoid tariffs, which continue to weigh upon the attitude of markets.

Divergence of desires

The Chinese have recently suggested they are not willing to discuss some of the main points the Americans wish to tackle, which suggests that the talks may already be doomed before they even start. President Trump has already stated that a potential “skinny deal” isn’t a possibility. The Chinese have suggested they would perhaps ramp up agricultural purchases, and that’s not something that would be very difficult to imagine in a scenario where they have their own issues with pork production and soybeans.

the talks may already be doomed before they even start

The Chinese need these imports, so they’re not necessarily giving in to anything. Intellectual property will be the sticking point, as the Chinese have copied and flat-out stolen quite a bit of technology over the last several decades, which costs the United States billions of dollars every year.

The one issue Democrats and Republicans agree on

The Chinese are more than likely going to be playing out the clock, waiting to see whether the impeachment talks gain any traction and perhaps see Trump quick to sign a deal. They may also wait until after the election to sign any significant deal. Some might say this is a miscalculation by the Chinese, as Democrats are on board with the idea of taking the Chinese on. It doesn’t matter who is running the country at this point. Now that the genie is out of the bottle, the United States is ready to fight China regardless of which party is in power.

This is a scenario where the fight is likely to continue and quite possibly take a few years, rather than just a few weeks. Perhaps the most shocking turn of events this week would be if some type of deal was agreed to. At this point, neither Trump nor the Democrats would be able to afford to cave in to China, as that would result in the voicing of public displeasure at the ballot box.

Written By
Alan Penny

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