BEIJING �� U.S. and Chinese officials are to begin trade negotiations Monday, hoping to make a deal during a 90-day truce between President Donald Trump and his counterpart Xi Jinping.
While the midlevel talks probably won't produce a major breakthrough, the stakes are high as both sides face a resumption of tariffs in March if they don't strike a deal. More senior-level discussions are expected later this month, with the South China Morning Post reporting that Trump may meet with Chinese Vice President Wang Qishan at the World Economic Forum in Davos, Switzerland.
Seven issues will be essential to making progress:
�� Intellectual property: The U.S. accusation that China forces American companies to share sensitive technology and steals intellectual property is one of the thorniest issues, and could make or break any potential deal. The 90-day negotiations will focus on "structural changes" in how China handles technology transfers, intellectual-property protection, cybertheft and other issues, the U.S. said after Trump and Xi met in Argentina.
China has announced punishments that could restrict companies' access to borrowing and state-funding support over intellectual-property theft, and is drafting a law to prevent forced technology transfer. But the devil will be in the details and execution.
�� Huawei and 5G: Huawei Technologies, China's biggest maker of telecom equipment, has long denied accusations by the U.S. and its allies of facilitating state-sponsored espionage. The company is racing to develop 5G technology and owns a tenth of essential patents worldwide. But its efforts have been frustrated by the U.S., which has banned its products for government procurement and encouraged other nations to do the same.
Beijing has also demanded that Canada release Huawei's chief financial officer, Meng Wanzhou, who was arrested in Canada on the behalf of the U.S. for alleged bank fraud. The FBI is also investigating possible Iranian sanctions violations by the company. Two Canadians who were seized after Meng's arrest remain detained in China.
�� Made in China 2025: Beijing's "Made in China 2025" plan aims to transform China into an advanced manufacturing leader by targeting 10 emerging sectors including robotics, clean-energy vehicles and biotechnology. The White House argues that China's state-led intervention violates World Trade Organization rules and could create an unfair playing field for foreign investors. Tariffs imposed by Trump took aim at many of the industries targeted in the plan.
China sees the plan as essential to achieving its long-term economic goals.
�� Energy: The trade deal disrupted what should be a sweet deal for the two countries: The U.S. is becoming a major oil and natural gas exporter while China has emerged as the world's biggest buyer of both. While lifting China's retaliatory tariff on U.S. liquefied natural gas may revive sales, the bigger, longer-term concern for the industry is restoring enough trust to persuade Chinese companies to invest billions of dollars in American LNG export projects. Meanwhile, any assurances from Beijing that it won't target U.S. oil would help dispel the concerns that choked off sales last year.
�� Agricultural imports: Investors will be watching to see if China removes retaliatory tariffs on U.S. farm products �� including soybeans, corn, cotton, sorghum and pork �� that severely hurt the U.S. heartland. Lifting the tariffs could encourage private buyers to immediately resume U.S. farm-product purchases. If talks fail, China may cancel some soybean orders that have been placed over the past weeks.
�� Auto tariffs: After imposing a 25 percent retaliatory tariff on vehicles imported from the U.S., China temporarily scrapped the duty starting Jan. 1. The additional tax has hurt all carmakers that sell U.S.-made cars in China. Auto sales in China fell fallen for six consecutive months through November, and December data is due this week.
�� Market access for banks: China has pledged to increase access for foreign-owned financial firms. In November, UBS Group became the first entity to win control of a local securities joint venture under rules that were eased in 2018. JPMorgan Chase and Nomura Holdings are still waiting for approval to take 51 percent stakes in onshore partnerships.
