Breakthrough in US-China trade talks is 'a bit optimistic,' says former commerce secretary

• The tariff fight between the U.S. and China escalated again this month as both sides slapped additional tariffs on each other's goods.
• Hu Xijin, editor-in-chief of Chinese state media Global Times, said on Twitter that "there's more possibility of a breakthrough" after the two countries agreed to meet in early October.
• But Carlos Gutierrez, former commerce secretary under President George W. Bush, said it's "a bit optimistic" to expect a breakthrough because the U.S. and China are "too far apart."

President Donald Trump (L) shakes hand with Chinese President Xi Jinping at the end of a press conference at the Great Hall of the People in Beijing on November 9, 2017.

Fred Dufour | AFP | Getty Images

Suggestions that the next round of U.S.-China trade talks could result in some breakthrough is "a bit optimistic," former American Commerce Secretary Carlos Gutierrez said on Friday.

The tariff fight between the two countries escalated again this month as they slapped additional tariffs on each other's goods — which led many analysts and economists to lower their expectations that the U.S. and China could reach a trade deal in the coming months.

But after both sides agreed to meet in early October in Washington to discuss trade, Hu Xijin — editor-in-chief of Chinese state media Global Times — said Thursday on Twitter that "there's more possibility of a breakthrough." Hu's Twitter account is widely followed for his insights on the trade war.

Hu Xijin on Twitter: China and the US announced new round of trade talks and will work to make substantial progress. Personally I think the US, worn out by the trade war, may no longer hope for crushing China's will. There's more possibility of a breakthrough between the two sides.

Gutierrez, who served under former President George W. Bush, said it's difficult to see the U.S. and China coming to an agreement in the near term.

I think it's good that they're meeting, but I wouldn't bank on a deal in the short term.

Carlos Gutierrez

former U.S. Commerce Secretary

"I think it's a bit optimistic. The two sides are too far apart, this has been such a public dispute," he told CNBC's "Street Signs" from the China Development Forum in Beijing.

"That environment is not conducive for a deal. I think it's good that they're meeting, but I wouldn't bank on a deal in the short term," added the former U.S. commerce secretary, who's now chairman of strategic advisory firm Albright Stonebridge Group.

Gutierrez said the U.S. and China could come to an agreement before America's presidential election in 2020, but it has to be a "very, very good deal" that President Donald Trump can sell to voters.

He noted that Trump has been telling the American public about China ripping off the U.S. So, the president will have to explain to the people and Democrat lawmakers in Congress how any deal he reaches with China addresses his claim.

Companies choosing to stay in China

The trade war, which has been going on for more than a year, has accelerated the trend of companies moving production out of China to circumvent tariffs.

But there are many large international companies which have chosen to stay put in China, according to Gutierrez.

"There are some supply chains — perhaps the easiest to move — (that) have gone to Vietnam, have gone to other countries. But by and large, large companies with bricks-and-mortar manufacturing who have invested heavily in China are staying and they're sticking it out," he said.

"If we're thinking about the large multi-national corporations, I can't think of anyone that has actually decided to leave China. So they're sticking it out, but boy, sticking it out means a hit to earnings, a hit to cash flow, stock price and everything that goes with it," Gutierrez added.