On Wednesday, top Chinese and US trade officials return to the negotiating table in Washington – and investors will be tuned in longing for a positive outcome from the high level talks. The discussions are aimed at finding a solution to the vicious trade war between Beijing and Washington that has lasted for months.
Tensions between the two economies spiraled last year after President Donald Trump announced tariffs on $250bn worth of Chinese goods. The decision was sparked by complaints from American companies saying China steals or forces them to hand over technology. President Xi Jinping administration hit back with its own tariff hikes, putting stock markets around the globe on edge.
Both sides have shown an interest in ending their tariff battle over Beijing’s tech ambitions. However, neither has indicated its position has changed since Trump and Xi Jinping agreed to a 90-day truce when they met on the sidelines of the G20 in Argentina last year. The two leaders agreed to suspend further tariffs against each other’s goods for until March 2 while they negotiate.
Beijing played host to the first round of face-to-face trade negotiations earlier this month. The talks were originally scheduled for two days but were extended to a third day amid hopes that the countries could strike a deal to prevent a full-blown confrontation.
The clock is ticking for both sides to reach a trade agreement failure to which Trump will hike levies on $200bn of Chinese goods anytime from March 2. Steven Mnuchin, US Treasury Secretary said Tuesday he expects “significant progress,” noting that only a month left for the ceasefire to expire.
However, a final agreement seems impossible considering that the US Justice Department unveiled criminal indictments against Chinese telecommunications giant Huawei and its chief financial officer, Meng Wanzhou on Monday. The department accuses the firm of stealing trade secrets, fraud, and obstructing of justice.
Ms Wanzhou and Huawei are also charged with misleading the US government and banks about the telco’s business operations in Iran. The CFO faces up to 30 years in jail if found guilty and Huawei would be forced to pay heavy financial penalties.
But US authorities insists the indictments are not related with the trade discussions. US Commerce Secretary Wilbur Ross on Monday said, “Let me be clear. Those are separate issues.” The comments were echoed by Mnuchin, during an interview with Fox Business.