patrick.net

President Donald Trump said China may wait until after the 2020 U.S. presidential election to sign a trade agreement because Beijing would prefer to reach a deal with a Democrat.

“I think that China will probably say, ‘let’s wait,’” Trump told reporters in the Oval Office on Friday. “When I win, like almost immediately, they’re all going to sign deals.”

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to China Monday for the first high-level, face-to-face trade negotiations between the world’s two biggest economies since talks broke down in May.

The White House confirmed Wednesday an earlier Bloomberg News report that senior officials will be in Shanghai next week to cover a range of issues including intellectual property, agriculture and the trade balance.

Trump and Chinese President Xi Jinping met at the Group of 20 summit in Japan last month and declared a tentative truce in their year-long trade war. The leaders directed their negotiators to resume trade talks. Since then Mnuchin, Lighthizer and their Chinese counterparts have spoken by phone.

More than a year after Trump first levied punitive tariffs on Beijing, the conflict between the world’s two-largest economies has only widened as both Trump and Xi face political pressure to resist key demands from the other side.

One school of thought that emerged from conversations earlier this month with about a dozen bureaucrats, government advisers and researchers in the Chinese capital is that Trump must deliver a deal on China heading into 2020 to please his base, and would therefore eventually relent to Beijing’s demands.

The other was that he would drag things out through the campaign, particularly if the economy and stock market held up, since he faced a field of Democrats who basically agree with on getting tough with China.

The biggest sticking point from China’s perspective is a U.S. demand to keep the punitive tariffs in place until Beijing actually implements reforms to state-owned enterprises and intellectual property. It’s politically unfeasible for Xi to accept any deal that doesn’t remove the tariffs: Nationalists in the Communist Party are pressuring him to avoid signing an “unequal treaty” reminiscent of those China signed with colonial powers.