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Beijing 'pessimistic' Xi Jinping and Donald Trump can make any progress on trade - if they meet

Beijing is pessimistic that there will be any significant progress on easing trade tensions if possible talks between the Chinese and US presidents go ahead next month, according to observers.

They said that officials in Beijing still did not fully grasp exactly what Washington was demanding from them, and that even if the two leaders did meet, it would not reduce the confrontation over trade and security issues.

Officials from both sides are seeking to arrange for Chinese President Xi Jinping and his US counterpart Donald Trump to meet on the sidelines of the G20 summit in Buenos Aires, Argentina next month.

But there is uncertainty over whether the talks will actually happen. The Wall Street Journal, citing officials, on Friday reported that the US would not restart trade talks unless China offered a "concrete proposal" to address Washington's concerns on "forced technology transfer and other economic issues".

Lu Xiang, an expert on US-China relations with the Chinese Academy of Social Sciences, said the threat of more pressure from Washington indicated that Beijing had not yielded to Washington's demands as it had expected.

The US government should "show some credibility" and not make "a bottomless pit" of demands on China, he said. "But it is unclear what the US administration is asking for," Lu said.

"The chances of [Xi and Trump] reaching a significant outcome are pretty slim," he said. "The US should provide solid evidence of China's mandatory technology transfer or technology theft, if there is any. It should seek to solve the problem via legal means, and China is able to fix the problems within its current legal system."

In the previous trade talks that ended in deadlock, Washington gave Beijing a list of demands that included a sharp reduction in the trade surplus with the US, as well as an overhaul of its government subsidies and industrial policies, especially the hi-tech "Made in China 2025" strategy " all of which were unacceptable to Beijing.

China did agree to buy more US goods and committed to improving intellectual property protection during trade talks in Beijing and Washington earlier this year. It has also lowered the bar on foreign investment, but the pace of change is not fast enough for the Trump administration " or for the foreign business community, which has for years pressed for much bolder market access and liberalisation.

Shi Yinhong, a professor of international relations at Renmin University, said the problem was that the US wanted to see more than just partial change in China's economic policy, while Beijing was moving more slowly on opening market access for the US amid the trade war.

"Even if the two leaders meet, the likelihood of a long-term truce is small," Shi said. "Although the two countries have kept up contact, we don't know who represents the US government attitude or who is the influencing voice in the US.

"Looking ahead, the conflict will worsen over trade and also issues like the South China Sea, Taiwan, and the accusation of meddling in US politics," said Shi, who is also a government adviser.

According to Everbright Sun Hung Kai, the "negative tide" could change if the meeting takes place, "given the constantly changing nature of these trade tensions".

"Very little is likely to happen before the G20 discussions. Both sides remain stubbornly at an impasse, with fair access to markets a key objective in US discussions, but with China extremely reluctant to offer this," the Hong Kong financial firm said in a research note.

"However, China could show that it is striving against intellectual property theft by expanding IPR courts, and taking on more international cases."

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2018. South China Morning Post Publishers Ltd. All rights reserved.

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