World Economy

China appears to be the winner of the Trump-Xi meeting at G-20, experts say

Key Points
  • U.S. President Donald Trump has touted his "far better than expected" meeting with Chinese President Xi Jinping at the G-20 summit in Japan, but experts say that Beijing appears to have gained an upper hand in the trade war.
  • Trump said after his meeting with Xi that Huawei will be allowed to purchase U.S. products — suggesting a softening in Washington's blacklist of the Chinese tech firm.
  • But back in Washington and Beijing, both governments appear to be treading Trump's Huawei announcement with caution.
China appears to be the winner in the trade war, strategist says

U.S. President Donald Trump has touted his meeting with Chinese President Xi Jinping at the weekend as "far better than expected" — but several trade and investment experts said Beijing appears to have gained the upper hand in the trade war.

Trump and Xi agreed at the G-20 summit in Japan to withhold from slapping additional tariffs on each other's products as the two sides return to the negotiating table in a bid to finalize a trade agreement. In addition, Trump said he agreed to allow Huawei to purchase U.S. products and China will buy "large amounts" of American farm produce.

Washington had earlier announced a ban that restricts Huawei's ability to do business with U.S. firms due to national security concerns. Trump's apparently softer stance on the Chinese tech giant was seen by some observers as a major concession that the U.S. has granted China.

"It is looking like, so far, China is coming out as a winner from this G-20," Francesco Filia, chief executive and chief investment officer at asset management firm Fasanara Capital, told CNBC's "Squawk Box Europe" on Monday.

"It's not even clear what they gave up in order to get it," he said, noting there was a lack of details about what the two leaders agreed on at the meeting.

Trump on Twitter: I had a great meeting with President Xi of China yesterday, far better than expected. I agreed not to increase the already existing Tariffs that we charge China while we continue to negotiate. China has agreed that, during the negotiation, they will begin purchasing large....amounts of agricultural product from our great Farmers. At the request of our High Tech companies, and President Xi, I agreed to allow Chinese company Huawei to buy product from them which will not impact our National Security. Importantly, we have opened up negotiations...

Trump on Twitter: ....again with China as our relationship with them continues to be a very good one. The quality of the transaction is far more important to me than speed. I am in no hurry, but things look very good! There will be no reduction in the Tariffs currently being charged to China.

Filia is not the only one who has expressed skepticism over the U.S.-China trade developments.

Trump standing down on some of his threats to China was "one of the most concerning outcomes at the G-20," said Danielle DiMartino Booth, chief executive of research firm Quill Intelligence.

"It looks as if he obviously gave a lot of ground back to China," she told CNBC's "Squawk Box Asia" on Wednesday.

Huawei's status

Back home, both the U.S. and China governments appeared to tread Trump's Huawei announcement with caution. A statement by China's foreign minister on the meeting between Trump and Xi didn't mention Huawei at all, while White House economic advisor Larry Kudlow said the president didn't intend to grant "a general amnesty" to the Chinese tech firm.

Kudlow said Huawei remained on the so-called entity list, which largely blocks it from buying U.S. products. He added, however, that the Commerce Department will grant more licenses to allow American companies to do business with Huawei as long as the transactions don't threaten national security in the U.S.

Peter Navarro on new trade talks between the U.S. and China

The lack of clarity surrounding the president's comments on Huawei is one reason why reaction in markets following the Trump-Xi meeting "wasn't actually that strong," according to Eric Robertsen, head of global macro strategy and FX research at Standard Chartered Bank.

While negative risks surrounding trade have gone away for now, there wasn't much "meaningful or tangible" outcome from that meeting between the two leaders, Robertsen told CNBC's "Squawk Box Asia" on Wednesday.

But Suresh Tantia, senior investment strategist in Asia Pacific at Credit Suisse, said Trump's Huawei announcement shows that "everything can be negotiated" — which is a positive development for investors.

"Whenever we're looking at any conflict, the first step in the resolution is a truce and that's what we have at the moment," Tantia told CNBC's "Capital Connection" on Wednesday.