Peter Lewis: Asia Business Correspondent on US and China trade officials holding talks this weekend

Trade officials from the worlds biggest economies are coming together for discussions this weekend. 

US-President Donald Trump says tariffs on goods from China may come down. 

Asia Business Correspondent says people shouldn't get their hopes up. 

"These aren't really negotiations about trade, they're talks about having talks," he said. 

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Episode Transcript

Speaker 1 (00:00):
Peter Lewis our Asia Business correspondents with US.

Speaker 2 (00:02):
Hey, Peter, Good evening, Heather.

Speaker 1 (00:04):
Now, Peter, obviously Trump's tariffs are going to come down
on China. But is it because he's said as much.
But will it happen after this weekend?

Speaker 2 (00:13):
It's hard to know. I think we've got to sort
of temper our expectations a bit about this weekend because
these aren't really negotiations about trade. Their talks about having
talks and whether or not the right circumstances can exist
whereby they can start having some substantive discussions about trade.

(00:33):
And the sticking point at the moment is that China
has been insisting all along that before there can be
those discussions, Trump needs to remove his tariffs on Chinese goods. Now,
it's hard to imagine that Donald Trump is going to
remove them in their entirety. Maybe he might partially reduce
them and say come down. Instead of imposing one hundred

(00:55):
and twenty five percent tariffs, maybe impost fifty percent or
something like that. So the question is is that going
to be enough to get China to the negotiating table.
And I think this is what we're going to hear
a lot of the discussion will be about over the
weekend to try and create those conditions where they can talk.

(01:17):
But even if they do get to the point, we
now have a template for what Donald Trump thinks a
trade deal ought to look like, and that's the US
trade deal that was announced yesterday. Now that is not,
in any way, shape or form a trade deal as
you would imagine it. What it is is a tariff

(01:39):
reduction agreement. In other words, I've put one hundred and
twenty five percent tarofts on you, or whatever they are
in the UK's case, and I'll reduce some of them
across certain sectors. But at the end of it, tarotts
are still much higher than when Donald Trump came to
office in January. Now, is that going to be workable
with China? I think not becase because, first of all,

(02:00):
those types of deals where you sort of swap tariff
arrangements on certain limited sectors only really work where you
have balanced trade or maybe a trade surplus. But the
US has a huge deficit with China, so that isn't
going to be the right templates in any way. It's
not going to be of any interest to China whatsoever
they want to have tariffs removed and they want to

(02:23):
have a much more encompassing broad trade agreement, which will
take many, many months to get to pieces.

Speaker 1 (02:30):
So at the same time and obviously amidst the trade worries,
China Central Bank is doing a whole bunch of things
to trying to stimulate the economy. Now are they doing
it to stimulate what they are already seeing happen, like
the impact they're already seeing, or are they doing this
to prepare for the impact of these tariffs actually staying
in place for a long time.

Speaker 2 (02:50):
I think both. I mean, at the moment, they are
suffering an impact of this. It's hitting the economy because
trade between the world's two largest economies has just completely
ground to a halt, and you look at you see
that in things like the shipping numbers. If you look
at the port of Los Angeles, for example, where most
Chinese ships go through to bring their products to the US,

(03:12):
trade is down about thirty percent compared to this time
last year. So it's hitting Chinese exports, which is a
big part of the Chinese economy. So it is absolutely
hurting the Chinese economy at the moment. So this is
partly to deal with what it's already seeing. But I
think it does fear that this can only get worse

(03:33):
because the longer this goes on where the two countries
are not doing any trade with each other, it's going
to hurt both economies. It's going to hurt the US consumer,
and it's going to hurt the Chinese exporter and particularly
small manufacturers who provide lots of the goods and components
that US firms need to put together products for their

(03:54):
consumer base. So China is assuming this is going to
get worse, but I think it's in for the long
term here. It's assuming the worst at the moment, and
in the meantime it's looking for other markets. And if
you look at Chinese trade, for example, with Southeast Asian nations,
it's holding up reasonably well. So they are looking for

(04:15):
other areas where they can try and find replacement markets
for what they're assuming is going to be a permanent
loss of the US market. The problem is these measures
that they've announced, which is a twenty five basis point
interest rate cut and also a cut in the reserve
requirement ratio, which is the amount of money banks have
to put aside to guarantee loans and things. It's not

(04:39):
going to be enough, so China is going to have
to do a lot more if it wants to, in
particular stimulate its domestic economy to try and make up
for the loss of exports good stuff.

Speaker 1 (04:49):
Peter, it was always good to talk to you. Thank
you so much. We'll chat to you again next week.
That's Peter Lewis Out Asia Business Correspondent. For more from
Hither Duplassy Alan Drive, listen live to news talks.

Speaker 2 (04:58):
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