World Economy

The US-China trade discussion is just getting started, so experts don't expect much yet

Key Points
  • U.S.-China trade talks this week are just the start of a long, protracted process, experts said.
  • Even though China is seen to have helped the U.S. deal with North Korea, it doesn't mean President Donald Trump will cut Beijing any slack regarding the trade gap, said Deborah Elms, executive director at the Asian Trade Centre.
'Very little' expected to result from US-China trade talks: Asian Trade Talks

A U.S. delegation to China negotiating the yawning trade gap between the world's two largest economies is just beginning a long and protracted process with any concrete outcomes unlikely from this first round, experts said on Friday.

"This 48-hours negotiation is unlikely to result in any concrete outcomes, and certainly not resolve anything," said Deborah Elms, executive director at the Singapore-based Asian Trade Centre.

The talks, led by Treasury Secretary Steve Mnuchin and Chinese Vice Premier Liu He, began on Thursday. The U.S. team contains key members of President Donald Trump's administration including the National Economic Council's Larry Kudlow and U.S. Trade Representative Robert Lighthizer.

Trump's team was set to depart Friday.

So far, few details from the meeting have emerged, but Mnuchin told reporters on Friday morning that the delegation has been "having very good conversations," Reuters reported.

The current "getting-to-know-you phase" will give Chinese officials the opportunity to assess the delegation, Elms said. It also comes with risks from looming tariffs between the two giants, she added.

"We're in the process of negotiations, which suggests that things are moving along quite well. But, because it's all taking place with the possibility of tariffs that could be triggered at any moment, that's a lot of pressure and things could go quickly awry without a lot of additional pressure," said Elms.

One major issue under scrutiny is if the U.S. will be able to talk China into rolling back Xi Jinping's Made in China 2025 drive — a core government program to upgrade the country's manufacturing base by way of more advanced products.

US-China trade talks likely to be more 'exploratory' for now: Strategic Access

The meetings this week are seen to be more exploratory than anything, said David Dodwell, CEO of consultancy Strategic Access.

"We have to measure its importance simply in terms of the size of the team. The fact that just about everybody with the responsibility for economic and trade management in the U.S. is there means they obviously want all the troops there to see the status quo," Dodwell told CNBC.

The United States imported about $479 billion from China in 2016, but exported just $170 billion, according to the Office of the U.S. Trade Representative. The U.S. goods and services trade deficit to China the same year was $385 billion. Trump said tariffs on steel and aluminum would correct what he deems an unfair trade system.

Even though China is seen to have helped the U.S. deal with North Korea — which Trump earlier in his term factored into his trade thinking — it doesn't mean Trump will cut Beijing any slack regarding the trade gap, said Elms.

"This 'China thing' is a longstanding problem for Trump. It's a longstanding objection of his. And so, if he would call off the Chinese tariff war, he would be undermining his own longstanding complaints about China," said Elms.

—CNBC's Kellie Ell contributed to this report.