US Commerce Secretary meets Chinese Premier Li as progress seen on trade

[BANGKOK] US Commerce Secretary Wilbur Ross met Chinese Premier Li Keqiang on Monday afternoon at a regional summit in Bangkok, a person familiar with the discussion said.

The meeting came hours after Mr Ross told a morning business forum that the US was "very far along" with "Phase One" of a trade deal with China. US President Donald Trump on Sunday told reporters at the White House that a trade agreement, if one is completed, would be signed somewhere in the US.

In an interview with Bloomberg on Sunday, Mr Ross expressed optimism the US would conclude an initial agreement with China this month before working on additional phases. He also said licenses would be coming "very shortly" for US firms to sell components to China's Huawei Technologies Co.

China's offshore strengthened as much as 0.27 per cent to 7.0228 per dollar on Monday, at one point breaking through its 100-day moving average for the first time since May.

Mr Ross called the Phase One agreement "particularly complicated" and said the US was "making sure that each side has a very correct and clear, detailed understanding of what each side has agreed to". Iowa, Alaska, Hawaii and locations in China were all possible places for Mr Trump and China President Xi Jinping to sign the deal after the cancellation of this month's Asia-Pacific Economic Cooperation summit in Chile.

"We're in good shape, we're making good progress, and there's no natural reason why it couldn't be," Mr Ross said. "But whether it will slip a little bit, who knows. It's always possible."

Downgraded delegation

Mr Ross and National Security Adviser Robert O'Brien are leading a downgraded American delegation to meetings hosted by the 10-member Association of Southeast Asian Nations in Thailand. Mr Ross said on Monday that the Trump administration remained "fully committed" to the Indo-Pacific region, amid questions over US strategy fuelled by the president's absence.

Asian leaders were separately expected to announce a breakthrough on another trade pact, the China-backed Regional Comprehensive Economic Partnership (RCEP), at the end of the meetings. It remained uncertain whether the pact would include India, which jeopardised it with last-minute requests.

Mr Ross in the interview downplayed the significance of RCEP, which would lower tariffs in an area that represents roughly a third of the global economy, and defended US engagement in Asia after Mr Trump skipped the Asean meetings for a second straight year.

No Trump or Pence in Bangkok has Asia questioning US strategy

Contentious issues remain and the terms aren't yet known, but RCEP would at least partly fill a trade gap left by Mr Trump's 2017 withdrawal from the Trans-Pacific Partnership. South-east Asia collectively has the world's fifth largest economy and has struggled to wade through the economic fallout of US-China trade tensions.

Top American and Chinese negotiators both spoke on the phone on Friday and described the talks as "constructive" as they look to lower tensions in a trade war that has roiled global growth. On Saturday after the call, Chinese state media reiterated the nation's core demands, including the removal of all punitive tariffs.

The deal would see China increase purchases of US agriculture products, keep its currency stable and open financial services markets to American firms. In return, Beijing wants the US to do away with new import taxes due to take effect on Dec 15 on goods including smart-phones.

Mr Ross remained non-committal on whether the Trump administration would suspend the December tariff hike. He also said further phases of the deal would depend on things involving legislation on the part of China and an enforcement mechanism.

Chinese officials have cast doubts about reaching a comprehensive long-term trade deal even as the two sides close in on the phase one agreement, Bloomberg reported last week. China has stated for months that a final deal must include the removal of all punitive tariffs, and has balked at reforms in areas such as state-run enterprises that could jeopardise the Communist Party's grip on power.

Mr Trump has placed dozens of Chinese firms on the Commerce Department's "entity list", hampering their ability to purchase American software and components. It first targeted Huawei in May for national security reasons, and last month added 28 more companies including artificial intelligence giants SenseTime Group Ltd, Megvii Technology Ltd and Hangzhou Hikvision Digital Technology Co.

Awaiting licences

Entities on the list are prohibited from doing business with American companies without being granted a US government licence, although some have maintained relationships with banned companies through international subsidiaries. China's government has signalled it will hit back over the blacklist, and the companies have denied wrongdoing.

The blacklist is also hurting American companies that do business with China, and particularly Huawei. Mr Trump said in June after meeting with Mr Xi in Japan that he'd "easily" agreed to allow American firms to continue certain exports to Huawei, and weeks later Mr Trump said he'd accelerate the approval process for licences.

Still, none have been granted so far. The president as recently as this month green-lit the approval of licences in a meeting with advisers, according to people familiar with the matter, but an announcement has yet to be made.

Mr Ross on Sunday said the licences "will be forthcoming very shortly", noting that the government received 260 requests.

BLOOMBERG