China welcomes US offer for fresh trade talks as new tariffs loom

Beijing

CHINA welcomed on Thursday a US offer to hold fresh trade talks, adding that the two are discussing the details, providing some hope the world's top two economies could step back from the brink of an all-out trade war.

The countries have been engaged in an escalating tit-for-tat trade fight for months but on Wednesday it emerged that US Treasury Secretary Steven Mnuchin had invited top Chinese officials to discuss the issue.

"The Chinese side believes that the escalation of the trade conflict is not in the interest of either party," commerce ministry spokesman Gao Feng told reporters at a regular news briefing.

Beijing "has indeed received an invitation from the US and holds a welcoming attitude to it", said Mr Gao, noting the "two sides are still communicating on the specific details".

News of the possible high-level talks comes as a new business survey released on Thursday showed that the majority of US firms in China are beginning to feel the pinch of the tit-for-tat trade battle.

The fight had looked like it would spiral further after US President Donald Trump last week threatened to impose tariffs on all US$500 billion worth of imports from China.

Hopes for the resumption of negotiations sent Asian markets rallying with Hong Kong surging 2.5 per cent - having fallen for six straight days and into a bear market - and Shanghai more than one per cent higher.

But analysts cautioned the two sides may still be far from coming to an agreement.

The Trump administration may not be fully aligned on the matter, with the US Trade Representative still seeming to want to apply pressure, while Beijing may not be ready to budge on its positions, economist Andrew Polk wrote in the Trivium China newsletter.

"We don't think China has much more to offer than they already have, and the US doesn't seem like it's inclined to accept what is currently on the table," Mr Polk said.

"We may be in for another round of disappointment," Mr Polk forecast of the "umpteenth round" of trade negotiations.

Mr Trump imposed the first phase of tariffs this summer on US$50 billion of Chinese exports, including high-end technology parts and manufactured goods, while Beijing fired back dollar-for-dollar at US soybeans, autos and other farm goods.

The next wave of 25 per cent tariffs on a further US$200 billion in imports will loom over any talks - after a public consultation period for affected businesses came to an end last Thursday.

Beijing has pledged to hit back with 5 to 25 per cent tariffs on US$60 billion in US imports in retaliation for any measures from the US.

Top White House economic adviser Larry Kudlow told Fox Business Network on Wednesday: "Secretary Mnuchin, who is the team leader with China, has apparently issued an invitation." He added: "Talking is better than not talking, so I regard this as a plus."

Sixty per cent of American companies in China say they are hurting from the escalating trade spat, reporting increased costs, lower profits and stepped-up scrutiny, according to an American Chamber of Commerce in China survey of hundreds of US firms.

About half of American firms are making less money, and a similar number are reporting higher production costs, according to the survey.

Roughly a third of firms are shifting supply chains out of China or the US, and an equal proportion are delaying or cancelling investment decisions, the survey showed. AFP