Global gathering, the China-US economic and trade negotiations will kick off in Geneva this weekend!

According to a report by The Wall Street Journal, China has sent Minister of Public Security Wang Xiaohong to Switzerland to participate in the China-US trade talks to be held this weekend. Reuters analysis pointed out that this arrangement highlights the significant position of the "fentanyl issue" in this round of talks. For a long time, the fentanyl issue has been an issue that has stood between China-US relations. Even before the full-scale trade war erupted, former US President Trump had once imposed a 20% tariff on Chinese goods, accusing China of failing to act in curbing the precursor chemicals of fentanyl, linking the fentanyl crisis with the tariff on China. Now, at the critical moment of the trade talks, this issue has surfaced again, becoming an unavoidable topic on the negotiation table, adding more uncertainty to this round of talks.

In the lead-up to the talks, a series of statements from high-level officials on both sides have made this trade negotiation full of drama and tension. Trump first claimed on the social platform "Truth Social" that imposing an 80% tariff on Chinese goods "seems reasonable," which is his first specific alternative proposal to the current 145% tariff ahead of the key talks. Although the 80% tax rate is still about half of the current tariff, the number remains surprisingly high, even exceeding the 60% tax rate he promised during last year's campaign. However, the White House quickly "cooled down." Press Secretary Lettice of the White House stated that it was just a random number mentioned by the president, and the U.S. would not unilaterally lower tariffs without concessions from China. On one hand, there is Trump's seemingly tough stance on tariffs; on the other hand, the cautious remarks from the White House, the internal differences within the U.S. over the tariff issue make it difficult for outsiders to understand the real intentions of the U.S. in the negotiations.

Meanwhile, China's attitude has also drawn much attention. Amidst the impact of the trade war, China's economy has shown strong resilience. Just before the talks, China's April export data released was unexpected, with exports increasing by 8.1%, four times higher than expected. Although China's exports to the U.S. in April decreased by 17.6%, exports to ASEAN grew as high as 21%. Some analysts believe that this is due to Chinese enterprises rushing exports before the implementation of tariffs, as well as exporting a large amount to Southeast Asia for re-exporting and tariff adjustment. However, with the ongoing trade war, many Chinese enterprises have completely stopped shipping to the U.S. since the end of April. If there are no obvious results from the Geneva tariff negotiations, the negative effects will gradually become apparent. Additionally, People's Bank of China Governor Pan Gongsheng announced a reduction in the reserve requirement ratio and a decrease in mortgage loan interest rates, demonstrating China's determination and ability to stabilize the economy.

From the perspective of the U.S. economic situation, the first quarter of this year saw a 0.3% contraction in GDP, with inflation and unemployment continuing to rise, casting a shadow of economic recession over the U.S. market. China's first-quarter GDP growth reached 5.4%, slightly higher than expected, but several international banks have revised their full-year growth forecasts downward to around 4%, below Beijing's set target of "around 5%." Against such an economic backdrop, both sides have an intrinsic need to ease trade tensions through negotiations.

This round of talks is led by U.S. Treasury Secretary Bestant and chief trade negotiator Griller, engaging directly with China's State Council Vice Premier He Lifeng. Sources familiar with the matter revealed that China has downgraded this round of talks to an ordinary meeting, believing that given the conflicting messages repeatedly sent by the U.S., this negotiation mainly aims to understand Washington's demands and red lines.

Friday, May 9, 2025, Geneva, Switzerland, Swiss Federal Economic Minister Guy-Palmerin shakes hands with China's State Council Vice Premier He Lifeng.

Analysts generally believe that the most likely outcome of this negotiation is a partial rollback of tariffs. Morgan Stanley's Chief China Economist, Xing Ziqiang, estimates that the actual tariff on Chinese goods imposed by the U.S. could drop from the current 107% to 45% by the end of the year; economist Xu Tianchen from the Economist Intelligence Unit also believes that both sides may reduce the average weighted tariff rate to below 50% in the short term. However, besides the tariff issue, there remain significant gaps between the two sides on core issues such as market access, intellectual property protection, and agricultural purchases, all of which require arduous negotiation in the talks.

The China-US trade talks held in Geneva are seen as a litmus test for whether the two major economies can break free from the tariff deadlock. Despite being viewed by the outside world as a "thawing" signal in the Sino-US tariff war, the negotiation process is bound to be fraught with thorns. Whether the two sides can find a balance of interests in this game, release signals of easing tensions, and pave the way for subsequent negotiations, the whole world is watching with bated breath.

Original article: https://www.toutiao.com/article/7502598800238920244/

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