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US and China to reach truce at G20, says HK prof with Beijing connections

2018-12-5

THE presidents of the United States and China are likely to agree to a truce in their trade war at the G20 summit in Argentina, however, it could take some time to work out the finer details of a deal between the two economic powerhouses, according to a Hong Kong scholar with close ties to Beijing.

"The truce will probably come in the manner of a framework agreement on basic principles with the details to be worked out in the future," economics professor at the Chinese University of Hong Kong (CUHK) Lawrence Lau told the South China Morning Post.


"I don't think there will be enough time to work out the details and I really don't think Trump is a detail person," said Mr Lau, whose book, China-US Trade War and Their Future Economic Relations, is expected to be published before the end of the year.


The SCMP reported last week that US President Donald Trump and Chinese President Xi Jinping were set to discuss ways to end their trade hostilities over dinner in Buenos Aires on Saturday after the G20 forum.


The US president said last week he was ready for the talks. "I have been preparing for it all my life. I know every ingredient, every stat. I know it better than everybody knows it. My gut is always right," he said.


"China wants to make a deal. If we can make a deal, we will."


"It will really hurt American consumers. It doesn't really hurt the Chinese exporters because Chinese exporters have already collected the money," Mr Lau said.


"It may be a huge problem for Zhengzhou [where the biggest Foxconn factory is located] but for the country as a whole, I think it's completely manageable," Mr Lau said.


In his book, Mr Lau argues that the trade war will knock one percentage point off China's headline growth rate. Its gross domestic product in the third quarter of 2018 rose 6.5 per cent year on year.


"The best way to close the trade gap is for the US to export more to China," and particularly goods that create new production chains.


Mr Lau said also that Washington's complaints about forced technology transfers and the "Made in China 2025" industrial upgrading plan were ill-founded, echoing Beijing's position.

 
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