After a first day dominated by public shows of bonhomie, all eyes at the G-20 turned Saturday to a pivotal trade showdown between economic rivals China and the United States.
Even before Donald Trump sat down with his Chinese counterpart, the U.S. president grabbed the headlines with a surprise tweet saying he was open to meeting Kim Jong Un at the demilitarized zone between North and South Korea.
Trump and China’s Xi Jinping will meet in a bid to thrash out a truce in a long-running trade war that has seen hundreds of billions of dollars in tit-for-tat tariffs.
‘Discussing a lot of things’
Trump has said he expects a “productive” meeting but warned before the summit he was prepared to slap tariffs on all Chinese imports if no deal could be struck on the sidelines of the G-20.
“We’ll be discussing a lot of things,” Trump said Saturday morning, hours before the talks with Xi.
“I was with him last night. A lot was accomplished actually last night. The relationship is very good with China. As to whether or not we can make a deal, time will tell,” he said.
Trump confirmed that the leaders would discuss Chinese telecoms firm Huawei, which Washington has banned over security concerns. Beijing reportedly wants the restrictions lifted as part of any trade truce.
A truce and a pledge
Experts believe the most that will be agreed to is a truce and a pledge to keep talking, although markets are not ruling out a complete collapse or a surprise breakthrough given the U.S. president’s mercurial nature.
The first tete-a-tete between the leaders of the world’s top two economies since the last G-20 in December has cast a long shadow over this year’s gathering in Osaka, where differences over climate change have also been laid bare.
China’s state-run Xinhua news agency said the Xi-Trump head-to-head was a “unique opportunity for the two sides to find new common ground in easing trade tensions and bring the troubled ties back onto the right track.”
However, the commentary also warned the U.S. “needs to place itself on an equal footing with China” and “accommodate China’s legitimate concerns.”
Trade war, trade deal
Economists say that a lengthy trade war could be crippling for the global economy at a time when headwinds including increased geopolitical tensions and Brexit are blowing hard.
On Friday, the European Union and the South American trade bloc Mercosur sealed a blockbuster trade deal after 20 years of talks that repeatedly stalled over EU farmer concerns about the beef market.
“In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade,” European Commission President Jean-Claude Juncker said, hailing the deal.