China and US poised for fresh trade talks

China's commerce ministry has welcomed the possibility of a visit by US treasury secretary Steven Mnuchin for trade talks in a sign that the two economies are entering a negotiation phase after threats of tariffs from both sides.

Mr Mnuchin said on the sidelines of International Monetary Fund meetings in Washington on Saturday that "a trip is under consideration", adding that he was "cautiously optimistic" about the chance of an agreement with Beijing, according to Reuters.

A Chinese commerce ministry spokesman on Sunday said China had "received information" about talks with the US over trade and economic issues, and that China "expressed welcome".

Mr Mnuchin also said he met Chinese central bank governor Yi Gang at the IMF meeting, and that the US "appreciated" market-opening measures for China's securities and insurance sectors that Mr Yi outlined this month. The treasury secretary said China had been "very helpful" by supporting sanctions on North Korea.

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The positive comments come a day after North Korea announced it would halt missile tests and close down a nuclear site, winning praise from China and the US.

Each of the world’s two largest economies has threatened the other with tariffs on $150 billion worth of imports, but many observers believe both sides are reluctant to follow through.

China has been careful to avoid the appearance of yielding to US demand. But the US hailed China’s pledge last week to further open its domestic automotive sector to US companies, a long-standing item on Washington’s wish list.

Imports

President Donald Trump also praised Xi Jinping's speech at "China's Davos" in Bo'ao this month in which the Chinese leader committed to raising imports and said the two countries would make "progress together".

However, successful negotiations on trade could be derailed by rising tensions over issues including last week’s ban on American companies doing business with Chinese telecoms group ZTE and pending new restrictions on Chinese investment in the US.

Despite recent signs of warming, most analysts believe trade tensions will be a long-term feature of the US-China relationship.

"The expansion of the US trade deficit is the inevitable result of the current pattern of international division of labour against the backdrop of a US economy in recovery," wrote Zhengsheng Zhong, chief economist at macroeconomic research group CEBM in Beijing. "This is not a solution with a short-term fix that will be quickly solved by Sino-US political negotiations." – Copyright The Financial Times Limited 2018