24 March 2019
White House chief economic adviser Larry Kudlow said Trump believes "there is a good possibility that a deal can be made". Photo: Reuters
White House chief economic adviser Larry Kudlow said Trump believes "there is a good possibility that a deal can be made". Photo: Reuters

Trump open to deal with Xi at G20 dinner: Kudlow

US President Donald Trump is open to reaching a deal on US-China trade irritants over dinner on Saturday with Chinese leader Xi Jinping but is ready to hike tariffs on Chinese imports if there is no breakthrough, Reuters reports, citing White House economic adviser Larry Kudlow.

Days before the high-stakes dinner, it was unclear whether the two sides had agreed on a formal agenda for the leaders’ conversation after the G20 summit in Buenos Aires, the news agency said.

Kudlow said there were no scheduled talks on the ground for their advisers. Trump had told advisers that “in his view, there is a good possibility that a deal can be made, and that he is open to that”.

But Trump said “certain conditions have to be met”, listing intellectual property theft, forced technology transfer, ownership of American companies in China, high tariffs and non-tariff barriers on commodities, and commercial hacking as examples of issues that “must be solved”.

Kudlow declined to comment on whether China had made offers of concessions.

Meanwhile, China’s ambassador to Washington said his country is hoping for a deal to ease the trade war, while warning of dire consequences if US hardliners try to separate the world’s two largest economies.

Speaking to Reuters on Tuesday before heading to join President Xi’s delegation to the G20 summit, Cui Tiankai said China and the US have a shared responsibility to cooperate in the interests of the global economy.

Asked whether he thought hardliners in the White House were seeking to separate the closely linked US and Chinese economies, Cui said he did not think it was possible or helpful to do so, adding: “I don’t know if people really realize the possible consequences – the impact, the negative impact – if there is such a decoupling.”

He drew parallels to the tariff wars of the 1930s among industrial countries, which contributed to a collapse of global trade and heightened tensions in the years before World War Two.

“The lessons of history are still there. In the last century, we had two world wars, and in between them, the Great Depression. I don’t think anybody should really try to have a repetition of history. These things should never happen again, so people have to act in a responsible way.”

Asked whether he thought the current tensions could degenerate into all-out conflict, Cui called the outcome “unimaginable” and the two countries should do everything to prevent it.

US debt purchases

Cui also said he does not believe Beijing is seriously considering using its massive US Treasury debt holdings as a trade war weapon, citing concerns that such a move would destabilize financial markets.

“This is very dangerous, this is like playing with fire,” he said when asked if China would consider selling Treasuries or reducing purchases should trade tensions worsen.

Trade and economic analysts have often said China could slow its purchases of US Treasuries or sell off its holdings to pressure Washington into a deal.

China is the largest foreign holder of US Treasury debt, with US$1.15 trillion on Sept. 30, according to the latest Treasury data, compared with US$1.19 trillion a year earlier. As of Monday, there was about US$15.97 trillion of total public Treasury debt outstanding.

Kudlow said the dinner in Buenos Aires presents an opportunity to “turn the page” on the trade war with China. But he said the White House has been disappointed so far in the Chinese response to trade issues.

“Their responses have disappointed because … we can’t find much change in their approach,” he said, declining to comment on specifics.

“President Xi has an opportunity to change the tone and the substance of these talks,” Kudlow told reporters at the White House on Tuesday. “President Trump has indicated he is open – now we need to know if President Xi is open.”

If there is no progress, Trump is prepared to raise tariffs on US$200 billion of imports to 25 percent from current levels of 10 percent, and could add tariffs on another US$267 billion of imports, Kudlow said.

“As we’ve all learned, he means what he says,” Kudlow said.

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