MNI: Full China-US Talks Uncertain Despite Swiss Meet-Advisors

The upcoming China-U.S. high-level engagement in Geneva this weekend is likely to be more of an icebreaker than a sign of coming substantive progress, but the two sides could agree on topics for later discussion including how to avoid disruption to bond markets, tariff exemptions for some isolated products and potentially even exchange rate policy, Chinese former officials and advisors told MNI.

While the meeting scheduled between U.S. Treasury Secretary Scott Bessent and China's Vice Premier He Lifeng will be the first formal official contact between the two sides during President Donald Trump's second term and signals China's openness to dialogue, it should not be interpreted as “any softening of China's position or compromise on core negotiating objectives,” said Zhou Xiaoming, former deputy permanent representative of China’s Mission to the UN Office in Geneva. 

China considers the removal of punitive duties as a matter of principle, and, given that Trump has insisted that he will need something “substantial” from Beijing in return, this means a trade deal between China and the U.S is nowhere in sight, with further formal talks depending on the result of this Geneva meeting, Zhou said.

BOND MARKETS

But meetings such as this weekend's might open the way to future talks on bond markets given China’s systemically-important holdings of U.S. Treasuries, said Zhou, adding that China takes a prudent approach to managing its holdings, intended to avoid any financial turbulence. (See MNI INTERVIEW2: China To Adjust UST Holdings In Trade Tensions)

Even exchange rate policy could eventually come into discussion, he said, though any strategic recalibration must account comprehensively for China's global trade dynamics rather than being narrowly focused on bilateral impacts with the U.S.

Other advisors, including Shi Yinhong, director of the Center for American Studies at Renmin University, agreed that the meeting scheduled between Bessent and Premier He signals at most a de-escalation, with Beijing unlikely to make any major concessions on tariffs. 

“It depends on the U.S. and there will be no substantive results should it fail to remove all the additional tariffs imposed this year,” said He Weiwen, a former economic and commercial counsellor at the Chinese Consulate General in San Francisco and New York. “Tariffs are illegal and cannot be used as a basis for negotiation.” 

While reducing U.S. treasury holdings sits in the Chinese toolbox, the currency issue is not linked with tariff negotiations at the moment, He said, adding that the U.S. trade deficit is a result of that country’s industrial structure and cross-border supply chains which cannot easily be addressed by pushing for a yuan appreciation.

Zhou Mi, researcher of Chinese Academy of International Trade and Economic Cooperation at Ministry of Commerce, said even if the U.S. persists with its additional tariffs, it might still be possible to negotiate exemptions for some products, noting that these would be in the interest of both sides, though they may not be discussed during this meeting before basic guiding principles for the next step can be determined. (See MNI: China Urged to Aid U.S.-Trade-Exposed Regions)