China Unlikely To Offer More Concessions To US, Despite Trump's Threats Of New Tariffs

China is unlikely to offer additional concessions to the United States in trade talks, despite threats from US President Donald Trump to slap new tariffs on Chinese goods after complaining negotiations were moving "too slowly," experts told Sputnik

MOSCOW (UrduPoint News / Sputnik - 06th May, 2019) China is unlikely to offer additional concessions to the United States in trade talks, despite threats from US President Donald Trump to slap new tariffs on Chinese goods after complaining negotiations were moving "too slowly," experts told Sputnik.

Following Trump's meeting with Chinese President Xi Jinping at the G20 summit last year, trade negotiators from both countries worked around the clock through ten rounds of meetings in both Washington and Beijing to resolve key differences between both sides.

However, after earlier media reports suggested both countries could reach an agreement to pave the way for a meeting between Trump and Xi by the end of May, the US president sent out a series of posts on Twitter on Sunday threatening to charge new tariffs on Chinese goods.

"For 10 months, China has been paying Tariffs to the USA of 25% on 50 billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!" Trump said on Twitter.

In response to Trump's statements, Chinese Foreign Ministry Spokesperson Geng Shuang stressed the importance of reaching a mutually beneficial agreement for both countries.

"China-US trade talks have been through ten rounds and made positive progress. At this critical moment, we hope the US side can work together with the Chinese side and move forward, in the hope of reaching a mutually beneficial and win-win agreement based on mutual respect. This not only fits China's interest, but also fits the US side's interest. It's also what the international community expects," Geng said during a regular press briefing on Monday.

According to Geng, the Chinese delegation is still preparing for a trip to the United States to take part in planned trade talks. Chinese Vice Premier Liu He, Beijing's top trade negotiator, is scheduled to travel to Washington later this week for the 11th round of talks, despite speculation that Trump's comments put his trip into question.

Despite Trump's latest threats, China is unlikely to offer additional concessions in future trade talks because Beijing is close to reaching its bottom line in the negotiations, Chinese economists pointed out.

"I believe Chinese trade negotiators working on the front line would know very clearly what Trump's intentions are. It's possible that Trump is trying to demand more concessions. But personally, I believe China is unlikely to easily meet his new demands. I think the trade talks have moved rather smoothly so far largely because China has already made significant concessions. From China's perspective, we're getting close to our bottom line. That's why I think if Trump makes more demands, it would be difficult for China to change its bottom line," Zhang Jun, the director of the China Center for Economic Studies at Fudan University in Shanghai, told Sputnik.

Other Chinese experts explained that Trump's comments could be part of his strategy to gauge where China's bottom line was.

"China's position has always been consistent, which is to reach an agreement that's acceptable for both sides through negotiations. But if it [US demands] goes beyond China's bottom line, I don't think Beijing will accept something that's harmful for the Chinese side. For Trump, I think he's also trying to find out where China's bottom line is.

The tariff is only a tool for the United States to put more pressure on China," Zhao Xijun, a finance professor with Renmin University of China in Beijing, told Sputnik.

Trump seems to have adopted a similar negotiating strategy employed during his denuclearization talks with North Korea last year. Three weeks before he was scheduled to meet with North Korean leader Kim Jong Un in Singapore, Trump abruptly announced that he decided to cancel the highly anticipated summit. But Trump subsequently reversed his decision after Pyongyang softened its rhetoric and sent a senior official to deliver a personal letter from Kim to the White House.

Through rounds of high-level trade talks, Chinese and US trade negotiators have already worked out a general framework for the prospective trade deal, according to Professor Zhang from Fudan University.

"Based on information from different sources, it's said that the document [trade deal] has already been formed. I remember when I attended the China Development Forum in late March, I heard from many people close to the negotiations that the document has already been produced and both sides were only working to finalize the exact wording of the agreement. That's why everyone believed the trade talks were entering the final stages," he said.

Chinese leaders could be blindsided by Trump's latest Twitter comments and therefore likely to reassess their views about Trump, Zhang warned.

"After more than six months of negotiations, we [Chinese negotiators] may have changed their previous perception about Trump and believed that he's trustworthy as he seemed to be very serious about trade talks. But this time, it may have broken Chinese leaders' such [positive] views of Trump. It's possible that they would again view Trump as unpredictable and unreliable. The consequences could be very serious," he said.

Nevertheless, Zhang suggested that Trump could still have one more chance to restore his credibility, as this was only his second strike after voiding the previous bilateral trade agreement from last May by introducing steep tariffs on Chinese goods in July 2018.

"From the Chinese perspective, such things cannot be tolerated more than three times. This was not his third strike. It was only the second time. That's why China is unlikely to shut off the doors of negotiations completely. I think China's strategy is: we still hope to reach a deal with you, but we may need to set some additional requirements because you always go back on your words," he said.

On the first day of trading following Trump's confrontational comments, the benchmark Shanghai Composite Index fell 5.58 percent on Monday, marking the largest one-day drop since February 2016.

However, Zhang argued that the investors were simply responding to the uncertainty in bilateral trade talks between China and the United States.

"This problem [doubts from investors] only exists when there's uncertainty. But if the result is clear and both sides have decided not to engage in any trade deals, the investors can make their decisions after the uncertainty is gone. The biggest problem is that everyone doesn't know what will happen. If both sides can't reach a trade deal, the situation may not be as bad. If that happens, the investors just need to pick a side and decide whether they want to continue to invest in China or not," he said.

The expert added that Chinese companies usually performed better under dire conditions because of their strong survival instincts, which could help minimize the impact of the scenario when China and the United States fail to reach a trade deal.