Don't expect a 'grand bargain' from new US-China trade talks, expert says

  • The U.S. and China are meeting later this week in Washington to discuss their ongoing trade war.
  • But don't expect a "grand bargain" from the talks, international trade scholar Alex Capri said.

The U.S. and China are meeting later this week in Washington to try to find some common ground in their escalating trade war, but don't expect a "grand bargain," according to an international trade scholar.

Markets are closely watching the bilateral trade talks aimed at resolving an escalating tariff war that threatens to engulf all trade between the world's two largest economies. But, according to Alex Capri, a visiting senior fellow at the National University of Singapore's business school, China and the U.S. face substantial differences of opinion — especially on issues that define China's "economic nationalism."

"There are just fundamental issues that are part and parcel to the Chinese economy: the subsidies, the technology transfers, the protection of the local markets. That's not going to go away, so there's no grand bargain," Capri said.

What may come out of this week's mid-levels talks is discussion about further market liberalization in China, according to Capri, who has over two decades of experience in various trade roles including leading the Asia trade and customs practice at accounting giant KPMG.

Such liberalizations could include "opening the door a bit more" for technology companies, such as Google, which recently expressed interest in potentially expanding the company's services in China, where its search engine is blocked.

Beijing and Washington have been locked in escalating rounds of tit-for-tat tariffs, with $34 billion in goods targeted by each country and another $16 billion slated to go into effect on Aug. 23. U.S. President Donald Trump has threatened to impose duties on virtually all of the more than $500 billion of Chinese goods exported to the U.S.

Already, there's some indication that China's trade war with the U.S. has hit the world's second-largest economy.

—CNBC's John W. Shoen contributed to this report.