Negotiators from the world's top two economies are meeting in Shanghai to discuss ways to ease their trade tensions, which have irked businesses and governments worldwide. Expectations for a breakthrough are running low.
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The latest round of trade talks between the United States and China are taking place on Tuesday and Wednesday in the Chinese financial hub of Shanghai. The two-day negotiations are the first face-to-face discussions since talks between the two sides collapsed in May, when US President Donald Trump accused Beijing of reneging on its commitments.
This is the first time Shanghai has hosted US-China talks since the trade row began and the 12th round of negotiations overall. The US delegation is being led by Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, while Vice Premier Liu He and Commerce Minister Zhong Shan lead the Chinese side.
But hours after the US officials landed in China, Trump took to Twitter to slam Beijing. "My team is negotiating with them now, but they always change the deal in the end to their benefit," Trump tweeted. The US president complained that China was supposed to start buying American agricultural products, but there have shown "no signs that they are doing so."
"That is the problem with China, they just don't come through," he said.
The latest talks are an attempt to build on the truce agreed by Trump and Chinese President Xi Jinping on the sidelines of the G20 summit in Osaka at the end of June.
Washington then said it would not slap new tariffs on Chinese exports "for at least the time being," while Beijing agreed to buy more US agricultural goods. Prior to their meeting, Trump had threatened to slap levies on all remaining imports from China — more than $300 billion worth.
Low expectations
The deepening rift in US-China trade and investment relations has triggered jitters among businesses and investors over economic growth prospects worldwide. The escalating row has also jeopardized the rule-based multilateral trading system.
Separately, Trump has angered Beijing by blacklisting Chinese tech giant Huawei.
Although investors hope Beijing and Washington will avoid another escalation in tariffs, they expect the Shanghai talks to produce little of substance.
Both the US and China also worked to lower expectations in the run-up to the meeting. Mnuchin told CNBC last week there were still "a lot of issues" while Chinese state-run daily The Global Times wrote that it is "widely believed that trade talks will take a long time."
"Realistically, this round of talks is about clarifying where the two sides stand after a significant lull in engagement," Jake Parker, senior vice president at the US-China Business Council, told the AFP news agency. "There also needs to be a focus on rebuilding trust that was present in April but has since dissipated."
In a commentary on Tuesday, China's state news agency Xinhua admitted relations were "strained" and called for the US to "treat China with due respect if it wants a trade deal."
China's slowdown — how it's being felt across the country
The world's second-largest economy was already slowing before the US-China trade conflict erupted. DW explores how different sectors of the Chinese economy are affected, and how tariffs could exacerbate the slump.
Image: picture alliance/dpa/S.Fan
China's auto slump persists
The world's largest automotive market last year saw its first annual sales drop in more than two decades. A 5.8% fall was recorded by the China Passenger Car Association (CPCA). The rout has continued into 2019, with sales dropping 21% in the first four months compared to last year. Beijing is due to introduce stimulus measures, including incentives for first-time and rural car buyers.
Image: Getty Images/AFP
Trade war hits Chinese exports
China's exports to the world sank 2.7% year-on-year in April. Exports to the US, meanwhile, dropped 13.2% amid a worsening trade conflict with Washington. Over the first four months of year, China's exports rose just 0.2% over the year. Manufacturing is expected to take a further hit as Hong Kong and Taiwan firms pull some of their production out of China to avoid US tariffs.
Image: picture-alliance/ZUMA Wire/Y. Fangping
P2P loan industry dries up
A major upheaval is underway in China's peer-to-peer (P2P) finance sector after numerous cases of fraud and negligence. Thousands of platforms have gone bust or just disappeared, leaving investors nursing heavy losses. A government crackdown on lenders means millions of Chinese consumers now have no alternative credit line.
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Consumers feel the pinch
Chinese consumers are cutting back on everyday spending. Clothing sales fell for the first time since 2009, while overall retail sales in April rose at their slowest pace in 15 years. With a huge stock market rout eating up retail investors' profits, the easy money that many middle- to low-income consumers have used to spend on designer and branded goods dried up.
There are conflicting reports about China's long-booming property market. Last year, investors of apartments started protesting outside developers' offices after the values of their flats plummeted between purchase and construction. Although some reports suggest prices are rising again, particularly in the four largest cities, authorities are keen to avoid the property market overheating.
A massive stimulus program in 2009 saw cheap loans offered to thousands of state-run industrial enterprises, including steel, aluminum, cement and coal producers. The investments created huge overcapacity in several sectors, and many firms relied on subsidies to stay afloat. Chinese authorities have since set a 2020 deadline to shut these "zombie firms," leaving behind an even bigger rust belt.
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China's hidden joblessness
Officially, unemployment remains low in China. However, most of the 280 million migrant workers from rural areas aren't counted in official statistics. Gavekal Dragonomics recently showed large state-funded industrial firms cut about 2.8 million jobs in 2018. Although the private sector has seen strong employment growth in recent years, surveys by job agencies suggest hiring is falling.
Image: picture-alliance/ZUMAPRESS.com/TPG
Lies, damn lies and Chinese statistics
The accuracy of official Chinese goverment statistics has been questioned for years. According to the Brookings Institute, China's gross domestic product (GDP) is some 12% smaller than officially claimed. Researchers believe growth between 2008 and 2016 was on average 1.7% lower. If extrapolated to 2018, China's official 6.6% GDP figure would be more like than 5.8%.
