Chinese President Xi Jinping’s top economic envoy, Liu He, is due to arrive in Washington this week for meetings with U.S. officials in the wake of a tweet by U.S. President Donald Trump that appeared to resurrect the fortunes of ZTE Corp. The telecoms company, sanctioned by the U.S., suddenly found itself forgiven in a move that has brightened the outlook talks.
In another twist, Chinese regulators have restarted their review of Qualcomm Inc.’s bid to buy a Dutch-registered semiconductor company after suspending the process in response to rising trade tensions. Meanwhile, JPMorgan Chase & Co pressed ahead with its aim to benefit from China’s accelerated financial opening just a week after Chief Executive Officer Jamie Dimon said he hoped the trade spat wouldn’t affect his company.
Such encouraging signs from across industries at the start of the week could turn sour, however, if negotiations get bogged down. That’s the danger inherent in business deals becoming chips in a high-stakes negotiation run, partly, via Twitter.
“Lui He’s goal is to get Washington to compromise in response to China’s offer to compromise,” said Pauline Loong, managing director at research firm Asia-Analytica in Hong Kong. “Exactly which concession is on offer is less important than reaching a breakthrough in the confrontation.”
Liu, who is President Xi Jinping’s top aide for economic matters, will be accompanied on the visit to the U.S. from May 15 to May 19 by Commerce Minister Zhong Shan, along with deputy ministers from the commerce, finance and foreign affairs ministries, according to a person briefed on the matter. Their visit follows that of a delegation led by Treasury Secretary Steven Mnuchin to Beijing earlier this month that left with few public signs of agreement.
Trump said in a Sunday morning tweet that he and Xi were working together to give ZTE “a way to get back into business, fast.” His administration had cut off the massive Chinese company from its U.S. suppliers for violating the terms of a 2017 sanctions settlement related to trading with Iran and North Korea, then lying about it.
The development could create a more positive atmosphere as Trump prepares to meet North Korean leader Kim Jong Un on June 12 in Singapore. United Nations Secretary-General Antonio Guterres said last week that China could play a central role as a “guarantor” in securing an agreement over a denuclearized Korean peninsula.
The move amounted to a drastic shift in tone for Trump, who has sought to use any leverage possible in negotiations aimed at lowering the U.S. trade deficit with China. In a major reversal for a president who has accused China many times of stealing U.S. jobs, Trump said the “Commerce Department has been instructed to get it done!” because “too many jobs in China lost.”
It wasn’t immediately clear if Trump had received anything in return. People familiar with the matter said Monday that Chinese regulators have revived their review of Qualcomm’s application to acquire NXP Semiconductors NV after having shelved the work earlier. As the world’s largest chip market, China can affect the fate of companies not even registered there.
Trump has proposed imposing duties on as much as $150 billion in goods over China’s alleged theft of intellectual property and unfair trade practices. China has vowed to retaliate with tariffs on U.S. products, prompting fears of a trade war. The U.S. is holding a public hearing from Tuesday through Thursday in Washington over the tariffs, before the administration decides whether to go ahead with the levies after a comment period ends May 22.
Beijing wants to reduce its dependence on foreign technology and build its own world-class industry. The centerpiece of that strategy — the so-called Made in China 2025 plan — is directly in the sights of the U.S. government.
“Corporates will continue watching this closely, as the U.S. government has been clear that China’s industrial and technological upgrade will be the key focus of the trade dispute,” said Cui Li, head of macro research at CCB International Holdings Ltd. in Hong Kong. “The broader risk in my view is that companies could delay or cancel investment, if uncertainties regarding trade policy and supply chain outlook drag on.”