WASHINGTON (AP) — President Donald Trump sounded upbeat ahead of a meeting he plans to hold later Friday with China's top trade negotiator, offering renewed hope that the world's two biggest economies will deescalate a conflict that has weighed on the world economy.
As the first of two days of trade talks were ending Thursday, Trump said the negotiations were "going very well."
Financial markets, highly sensitive to the ups and downs of the U.S.-China economic relationship, surged on Friday. The Dow Jones Industrial Average was up, more than 420 points, or 1.6%, in late morning trading.
Vice Premier Liu He is leading the Chinese delegation in the 13th round of negotiations with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin and was scheduled to meet with Trump on Friday afternoon.
Expectations for a major breakthrough in the 15-month standoff are still low. The two sides are deadlocked primarily over the Trump administration's assertions that China steals technology and pressures foreign companies to hand over trade secrets as part of a sharp-elbowed drive to become the global leader in robotics, self-driving cars and other advanced technology.
Beijing has been reluctant to make the kind of substantive policy reforms that would satisfy the administration. Doing so would likely require scaling back China's aspirations for technological supremacy, which it sees as crucial to its prosperity.
"There are deep underlying issues to be resolved," said Alexis Crow, who leads the geopolitical investing practice at the consulting firm PwC. Increasingly, she said, the administration sees China "as an enemy, not a partner. I don't see that approach disappearing."
But hopes are growing that the two countries can at least reach a cease-fire through a so-called mini-deal that would lower U.S.-China tensions and suspend Trump's plans to raise existing tariffs on Chinese goods and impose new ones. The talks had stalled in May after the administration accused Beijing of reneging on earlier commitments.
"China came to Washington prepared to put some things on the table," said Robert Holleyman, a former deputy U.S. trade representative who is now a partner at the Crowell & Moring law firm. "They want to do something that gets these negotiations back on track."
Beijing could agree to buy more farm products from the United States or act to address concerns that it manipulates the Chinese currency to gain an unfair edge in export markets, analysts say.
Progress in the talks might prompt the administration to delay plans to raise tariffs on $250 billion in Chinese imports on Tuesday and to impose new import taxes on an additional $160 billion of goods on Dec. 15 — a move that would extend sanctions to just about everything China ships the United States. (China is taxing about $120 billion in American products.)
Liu met Thursday with leaders of the U.S. Chamber of Commerce and the U.S.-China Business Council. Liu told them that the Chinese negotiators "come with great sincerity" and were ready to discuss the trade balance, market access and investor protection, the official Xinhua News Agency reported.
The report made no mention of any willingness to discuss Chinese industrial and technology policy.
Always thorny, the U.S.-China relationship has been complicated by growing concern that Chinese firms like the telecommunications giant Huawei pose a national security threat, not just an economic one. The Trump administration has imposed sanctions on Huawei, warning that its equipment can be used for cyberespionage.
Trump has suggested that easing the sanctions on Huawei could be a bargaining chip in the trade negotiations — a move that would likely encounter resistance in Congress.
"A China mini deal?" Senate Minority Leader Chuck Schumer, D-N.Y., tweeted Friday. "It must not include concessions on Huawei. That's what China wants most, and it would show tremendous weakness."
But Trump tweeted that a U.S.-China agreement does "not have to go through the very long and politically complex Congressional Approval Process. When the deal is fully negotiated, I sign it myself on behalf of our Country. Fast and Clean!"
The U.S.-China tariff war is taking an economic toll, especially on American manufacturers, which face higher costs and uncertainty over when and how the hostilities will end. A private survey found last week that U.S. factory output dropped in September to the lowest level since the recession year 2009.
AP writers Darlene Superville and Joe McDonald in Beijing contributed to this report.