China-US trade talks:"We are just in a very challenged period"

CGTN Europe interviewed Cameron Johnson, Senior Partner at Tidalwave Solutions.

Transcript

00:00Cameron Johnson is a senior partner at the Shanghai-based consultancy Tidal Wave Solutions.

00:05Juliet Mann asked him what he thought of Donald Trump's description of negotiating with China as not easy.

00:13I interpret it as his way to say China's a really tough negotiator, and we're really trying to hard to negotiate with them.

00:21It's also his way of showing respect to the Chinese and the way they're doing things.

00:24It also is signaling to the U.S. side that it's okay to give some in the negotiation.

00:31Previously, before the Geneva Agreement, it was felt that the U.S. shouldn't give too much,

00:36but it looks like that now part of that comment is signaling, at least to the U.S. side, that it's okay to give some.

00:42The U.S. Commerce Secretary, Howard Lutnick, said the talks were going well.

00:47What is the least and the best we can expect?

00:50So the best we can expect is that they come to some form of agreement on the rare-earth approval process,

00:57making it very clear, for example, are there white lists for certain industries that can basically get a stamp approval,

01:04such as think of automotive, medical devices.

01:06The lowest is that we don't have much of an agreement,

01:09and we're going to spend the next couple of months going back and forth with a tit-for-tat response between each party.

01:15Of course, we're in this truce period, the 90 days, partway through it.

01:21Do you feel that time has been lost, that they're using this time productively enough?

01:27I think at the moment it's a mixed bag.

01:28On the one hand, you could say that, you know, both sides, there is a reprieve in the tariffs,

01:32so Christmas is saved, at least for the U.S.

01:36I think the other thing you can see is that China has realized that rare-earths are kind of its silver bullet.

01:41There are no alternatives to Chinese rare-earths, and so it has some leverage in these negotiations to move forward.

01:47So, on the one hand, it is positive.

01:50We have less tariffs, so Christmas is saved.

01:52On the other, both sides are feeling each other out to understand exactly what can we extract from the other party.

01:58The markets are already taking in the mood that is coming out of these talks so far.

02:04But, you know, if a deal is done on rare-earths, which seems to be the really crucial part of the conversation here,

02:10how long might it take to get back to business as usual?

02:15It'll take some time.

02:16The approval process out of China, at least Moffcom, is about 45 days, so that's roughly six weeks.

02:22If there are clean lists, for example, for automotive medical devices, that will be sped up.

02:27So, industries will be able to turn to normal a little bit faster, but ultimately it will probably take at least two to three months

02:35to fully get back to normal, where industries around the globe can return to business as usual.

02:40Of course, the U.S. and China continue to spar over other issues.

02:45What indications are there that the tense relationship between the two superpowers will reset?

02:52At the moment, we're just in a very challenged period.

02:55There really is no sign that there's a grand bargain on the horizon or that either side is really willing to give something to the other

03:02to really move the relationship in a different direction.

03:05So, at the moment, we're just going to have to be in this cycle where there will be some tit-for-tat.

03:11There will be some minor progress in certain areas, but there really is no positive roadmap for where we go from here.