China Is Counting On Trump-Xi Meeting to Settle Trade Fight

The invite comes as Mr. Liu delivered a package of modest concessions for the trade talks that started Wednesday, the people said. It includes more Chinese purchases of U.S. farm and energy products and promises to invite more American capital into the manufacturing and financial-services sectors.

But the offer falls short of what Washington has been asking for, which includes deeper changes in what it calls Beijing’s protectionist industrial policies that hamstring U.S. competitors. The two sides are still far from a deal, and they aren’t expected to agree today to a written framework with blanks left for areas where there is disagreement—the kind of document that is standard in trade negotiations.

“We are in the fifth inning of a nine-inning game,” said Mr. Brilliant. “The president sees this as an historic opportunity, but the question is whether the administration can deliver on a comprehensive deal with the Chinese.” The U.S. Chamber, along with many business groups, have been pushing the White House not to settle too easily with the Chinese and to insist on significant changes in Chinese industrial and technology policies.

.. By agreeing to a meeting, some of Mr. Trump’s advisers believe the president is putting himself in a position where he will face enormous pressure not to escalate tariffs on Chinese goods from 10% now to 25% on March 2, as he has threatened. That’s because the build-up for the meeting—and the expectations of a deal—will be so high that a negative outcome would tank markets globally and batter both economies.

That is especially the case if the two leaders were to meet in China, as Chinese officials want. A decision then to raise tariffs would be a slap in the face for the Chinese leader, whom Mr. Trump regularly refers to as a friend. Instead, the pressure would be on the U.S. to reduce tariffs.

.. even keeping the current 10% tariffs in place “would be hard for Xi Jinping to accept.”

.. At the same time, Beijing is also unlikely to accept U.S. demands to remake its industrial policy and scale back the role of the state in the economy, said Cornell University China expert Eswar Prasad.

.. “The more likely scenario is a deal where Trump declares victory, which is relatively modest in scope, and the two sides de-escalate tension and continue discussions on complicated issues left unresolved,” said Mr. Prasad, who speaks regularly with Chinese officials.