China and the US announced that face-to-face negotiations aimed at ending their tariff war will be held in Washington in the coming weeks, amid skepticism on both sides that any substantive progress can be made.
Chinese Vice Premier Liu He agreed to a visit “in early October” during a telephone call on Thursday morning Beijing time with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, according to a statement from China’s Ministry of Commerce. A cautious statement from the USTR’s office confirmed that ministerial-level discussions will take place in “the coming weeks,” without specifying when.
Any meeting in the immediate future would take place against the threat of increasing US tariffs on Chinese goods, as President Donald Trump’s administration is set to ratchet up levies on October 1 and in December. A rapid deterioration in relations last month has left global investors reeling amid increasing evidence that the conflict is harming the economy in both nations.
“Neither China nor the US want to be blamed by the rest of world for escalating the trade war and damaging the world economy,” said Zhou Xiaoming, a former commerce ministry official and diplomat. “But the talks don’t mean the two sides will inch closer or that their stances soften.”
The Chinese commerce ministry said lower-level officials will have “serious” discussions this month to prepare for the talks, which had originally been expected to take place in September. The USTR said in the statement that deputies will seek “to lay the ground-work for meaningful progress.”
Both sides raised tariffs on September 1 in the latest round of retaliation, the US plans to add more tariffs on October 1, and then both nations will increase them again on December 15 unless there is a breakthrough.
Asian stocks and US equity futures climbed after the news, while the yuan advanced and the dollar stabilised after dropping the most since June.
Commerce Minister Zhong Shan, People’s Bank of China Governor Yi Gang and Ning Jizhe, the deputy head of the economic planning commission, were also on the call, according to the commerce ministry statement.
Some within the Trump administration are skeptical that China is willing to make the sort of broad commitment to reforms sought by the U.S. that caused a breakdown in talks in May, according to people familiar with the officials’ thinking.
Others have become increasingly focused on trying to calm financial markets and forestall any further economic fallout in the U.S. where Trump’s tariffs and the uncertainty surrounding the trade war is being blamed for a slowdown in manufacturing. It is unclear if the two sides will go back to a May draft agreement as the U.S. has been seeking.
Officials have struggled to agree on when to hold talks and what to discuss since their last meeting in Shanghai in July. While Trump’s administration ratchets up the tariff pressure, China is having to add stimulus to support its slowing economy. On Wednesday, the State Council signalled that a reduction in the amount of funds banks have to hold in reserve is on the way.
“No one is holding their breath” with regard to the talks, said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte. in Singapore. “ Investors are slowly coming to terms that a trade deal is increasingly remote, with both sides talking tough and preparing for a long battle.”