Steven Mnuchin. Picture: EPA/ALBIN LOHR-JONES
Steven Mnuchin. Picture: EPA/ALBIN LOHR-JONES

Two days of US-China trade discussions ended in Beijing on Friday with an agreement to keep on talking, and little else.

China’s official Xinhua News Agency reported Friday afternoon that both sides reached a consensus on some trade issues, without providing details. They also acknowledged major disagreements on some matters and that they would continue communicating.

The US delegation, led by treasury secretary Steven Mnuchin, asked China to decrease the trade deficit by at least $200bn by the end of 2020 compared with 2018, according to a document seen by Bloomberg News. By early afternoon on Friday neither side had flagged plans to give a briefing on the discussions, and the US team was scheduled to depart on Friday evening.

Earlier, Mnuchin said that the US and China had been having a "very good conversation", without elaborating. While China hasn’t indicated any detail on what it may be prepared to agree to, a senior official sounded a defiant tone ahead of the meeting, and the state news agency warned against "unreasonable demands". Foreign ministry spokeswoman Hua Chunying said at a Friday afternoon briefing there was no specific information on the talks.

The closed-door discussions between President Donald Trump’s economic team and officials in Beijing began on Thursday, amid a ban on China’s largest media outlets reporting any material beyond official media releases related to the talks, according to people familiar with the matter.

The US tempered expectations of a major breakthrough from the discussions, which were expected to focus on concerns over China’s state-driven economy, forced technology transfers and the US’s widening trade deficit with China. Underscoring the friction, a US report released on Thursday showed the trade gap with China surged 16% to more than $91bn in the first quarter of 2018.

A senior Chinese government official, who asked not to be named, said before the talks that the government would not accept US preconditions for negotiations such as abandoning its long-term advanced manufacturing ambitions or narrowing the trade gap by $100bn.

During the second day of discussions, across town at Beijing’s Great Hall of the People, President Xi Jinping indicated that China would continue to embrace globalism, saying it wanted to actively take part in world governance. Those who rejected the world would be rejected by the world, he said in a speech commemorating the 200th anniversary of Karl Marx’s birth.

Analysts weren’t optimistic about potential outcomes beyond the two countries possibly delaying on the threat of tit-for-tat tariffs.

"Our expectations are low. The US negotiating position is unclear — indeed it’s not even clear if the US representatives have a unified view on what they want to achieve," Tom Orlik, chief economist at Bloomberg Economics in Beijing, wrote in a report. "The Chinese side has already made concessions and won’t rush to make more. The past few weeks have shown that markets can be roiled by tariff chatter, so that’s certainly a possibility in the next couple of days."

The meetings are an opportunity for the two sides to exchange their views after the official channel for US-China high-level economic talks were suspended last year.

Trump has threatened to impose tariffs on as much as $150bn of Chinese goods to punish China over its IP practices if the talks fail to yield progress, a move that China said would spark retaliation in equal measure on American exports.

The US is also looking at ways to crack down on Chinese investment in the US in an effort to balance the scales and protect sensitive technology. China has announced tariffs on $3bn of US goods such as pork and wine in retaliation for new global steel and aluminium tariffs imposed by Trump. The US levies were aimed at tackling China’s overcapacity.

Trump sounded a more positive note as his economic team entered the talks in Beijing. "Our great financial team is in China trying to negotiate a level playing field on trade!," Trump tweeted as they arrived in Beijing. "I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!"

Xinhua said in a commentary on Wednesday that the US should show sincerity in trade talks instead of making unreasonable demands. It said China would take retaliatory steps of equal intensity if the US put tariffs on its goods after the talks.

The discussions should involve equal-footed consultation and mutual respect, and work toward mutual benefits, a Chinese foreign ministry spokeswoman told reporters in a regular briefing on Thursday. Chinese vice-premier Liu He, Xi’s top economic adviser, is leading his nation’s delegation.

With Saleha Mohsin, Andrew Mayeda, Peter Martin, Xiaoqing Pi, Dandan Li, Yinan Zhao and David Ramli