China and the US inch their way to a deal

Deal or No Deal was a popular game show more than a decade ago. Contestants could walk away with US$1 million or just a few cents.

At times, it was gripping television, a bit like the ongoing trade talks between the United States and China.

The only difference is that the TV version lasted around 40 minutes. The real-life episodes in Washington and Beijing have dragged on for nearly 18 months as the trade war rumbles on.

Even the heavily-diluted phase one deal appears to be moving at a snail-like pace since last month’s breakthrough. Sticking points still exist despite tentative moves to dismantle tariff barriers.

US President Donald Trump has publicly stated that the world’s second-largest economy could buy as much as US$50 billion in farm produce, more than double the annual amount before the conflict started.

President Xi Jinping’s administration has balked at that amid fears it could damage domestic farmers and send prices tumbling.

Read: China unveils high-tech spending spree

“We’ll work with other countries to reduce trade barriers, to establish stable and reliable partnerships and a free and convenient business environment,” Xie Jianmin, a Ministry of Agricultural and Rural Affairs official who oversees international cooperation, told the media last month.

But he also made it clear that Beijing would dictate the “opening up” process. Months could yet turn into years in a move to protect the nation’s agricultural sector.

Others were blunter in their assessment of the $50 billion-motherlode outlined by the White House.

“[This amount] entering China might be hard for the domestic market to digest,” one unnamed Chinese official told the CNBC network.

Adding to the problem is part of the $15 billion contracts signed between Paris and Beijing during French President Emmanuel Macron’s trip to Shanghai this week.

Included in the package are substantial French farming exports to China such as poultry, beef and pork. Brazil has also increased agricultural shipments to its BRICS partner to make up for the US shortfall.

Still, a massive increase in agri-food exports is not the only challenge in signing off a modest phase one Sino-American agreement. Xi’s government is also pressing Washington to quickly lift sky-high tariffs imposed on Chinese imports entering the States.

Last month, a planned hike was delayed on goods and products worth $250 billion. The US could also put on hold increased US tariffs on items such as smartphones, laptops and computers. They are due to kick in on December 15 and would hit Chinese imports worth $156 billion.

Hardliners in Beijing are now pushing for the White House to scrap earlier tariffs going back to September.

Read: Fact or fiction? Xi’s Shanghai claims

“China’s core concerns … are the elimination of the tariffs already imposed [and] even with a phased agreement, these core concerns should be reflected. Any misjudgment on this issue may lead to repeated negotiations,” Taoran Notes, a state-run social media account with close links to China’s Economic Daily, stressed.

These “concerns” have dogged negotiations and cast doubts on when an interim accord will be rubber-stamped. Unofficial sources have hinted it could be pushed back to December. At least on Thursday, there was movement when it came to relaxing tariffs.

“In the past two weeks, the two sides have held serious and constructive discussions on properly resolving their core concerns and agreed to roll back the additional tariffs in stages, as progress is made towards a [final] agreement,” Gao Feng, a spokesman for China’s Ministry of Commerce, said, without outlining a detailed timetable. This will probably be linked to phase two discussions and work on a quid pro quo formula.

In the meantime, both economies have shown signs of stress while the fallout has stifled global growth, according to a report released by the United Nations.

“Compared with the trade deficits between China and the United States, ‘trust deficits’ are even bigger. The key to increasing mutual confidence is rational dialogue and active communication,” Zhang Monan, of the China International Economic Exchanges Center, a Beijing-based think tank, said.

“Only by establishing institutionalized channels for dialogue can the two countries avoid strategic misjudgment,” she wrote on the China-US Focus website.

Deal or no deal? That will be up to Trump and Xi to decide. Probably, on TV.