Trump-Xi meeting at G20 raises hope for trade truce

US President Donald Trump and Chinese leader Xi Jinping have agreed to meet at the G20 summit in Japan next week, raising hopes for a truce in the bruising trade war between the world’s top two economies.

The two leaders spoke on the phone on Tuesday, weeks after negotiations broke down when Trump accused Beijing of reneging on its commitments, hiked tariffs on $200 billion in Chinese goods and then blacklisted Chinese telecom giant Huawei.

The US president took a conciliatory approach this time.

“Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan,” Trump said on Twitter.

“Our respective teams will begin talks prior to our meeting,” he said ahead of the June 28-29 summit.

Xi noted that bilateral relations had encountered difficulties that were “not in the interest of either side” but he warned that dialogue must be conducted on “an equal footing.” “China and the US will both gain by cooperating and lose by fighting,” Xi told Trump, according to state media.

Global shares were buoyed by the announcement, with Wall Street rallying on Tuesday and Asian stock markets surging on Wednesday.

The White House readout of the call said the leaders “discussed the importance of leveling the playing field for US farmers, workers, and businesses through a fair and reciprocal economic relationship.” “I think we have a chance. China wants a deal. They don’t like the tariffs,” Trump told reporters at the White House. “I have a very good relationship with president Xi. We’ll see what happens.” - North Korean ‘bargaining chip’ - The White House repeated that the focus of the talks will be to address “structural barriers to trade with China and achieving meaningful reforms that are enforceable and verifiable.” The United States and China seemed close to an agreement when talks collapsed last month.

Beijing retaliated to Trump’s tariffs and moves against Huawei by increasing custom taxes on $60 billion in US goods, creating its own list of “unreliable” companies and individuals and threatening to ban exports of rare earths to the United States.

Xi told Trump that the two countries must “accommodate each other’s legitimate concerns” and that “China hopes the US side can treat Chinese firms in a fair manner,” according to the official Xinhua news agency.

Trump had requested the call between the two leaders, according to Xinhua. A week before the G20, Xi will visit North Korea on Thursday and Friday, his first trip there as president.

China is North Korea’s sole major ally, and analysts say Xi could use any leverage Beijing may have in the nuclear standoff between Washington and Pyongyang as a “bargaining chip” in his talks with Trump.

- ‘No guarantees’ - Trump economic adviser Larry Kudlow warned that there are “no guarantees” of any resolution in Osaka, Japan.

“Our position continues to be (that) we want structural changes,” Kudlow told reporters.

“They’ll have a good conversation. The fact that they’re meeting is a good thing.” In an editorial, the state-run China Daily said Communist Party decision-makers, like White House counter-parts, “want to evade a full-blown trade war.” “Since neither side appears ready to really slam the door shut on further negotiations, they should refrain from escalating tensions, and engage each other in a more constructive manner,” the daily said.

Global markets are concerned about Trump’s threat to impose more steep tariffs on an additional $300 billion in Chinese imports, which could hurt the already slowing Chinese economy and spread the gloom worldwide.

Trump last week threatened to “immediately” jack up tariffs should Xi fail to show up at the meeting. The United States already has 25 percent duties on more than $250 billion of imports from China.