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story.lead_photo.caption Ted McKinney, U.S. undersecretary for trade and foreign agricultural affairs and part of the U.S. negotiating team, enters his hotel Tuesday in Beijing after a second day of meetings with Chinese officials.

U.S.-China trade talks in Beijing are progressing and will extend into today, an American negotiator said.

The discussions during the past two days "went well," according to Steven Winberg, an Energy Department official who spoke to reporters in Beijing. "I can confirm we're continuing tomorrow," he said Tuesday.

The reason for the extension of meetings originally scheduled for two days wasn't immediately clear. President Donald Trump earlier expressed optimism in a tweet, exclaiming "Talks with China are going very well!"

Chinese authorities plan to release a statement after the latest round of negotiations. Earlier on Tuesday, Chinese Foreign Ministry spokesman Lu Kang told reporters at a regular briefing in Beijing that "we will release a detailed readout after they are concluded."

U.S. stocks and European equities jumped as investors awaited developments on trade talks between the world's largest economies.

U.S. Commerce Secretary Wilbur Ross expressed optimism Monday, telling CNBC that "there's a very good chance that we'll get a reasonable settlement." Vice Premier Liu He made an appearance at the talks on Monday in a sign the Chinese were also pushing for a positive outcome.

Deputy U.S. Trade Representative Jeffrey Gerrish is leading the American delegation in Beijing.

Liu, the chief economic adviser to Chinese President Xi Jinping, made brief remarks at the negotiations, a person familiar with the meeting said. Asked Tuesday about the vice premier's presence, Lu from the Foreign Ministry said it wasn't surprising for Liu to be there. Liu led a previous round of talks in Washington last year that ended in failure, and he's expected to meet chief U.S. negotiator Robert Lighthizer later this month.

Since the two presidents met on Dec. 1, China has made a number of concessions to U.S. demands, including temporarily cutting punitive tariffs on U.S.-made cars, resuming soybean purchases, promising to open up its markets for more foreign investment, and drafting a law to prevent forced technology transfers.

How China will enforce those measures will be key to any deal. U.S. officials have repeatedly accused China of not fulfilling agreements, with Ross saying Monday that "the real issue is what are the enforcement mechanisms, what are the punishments if people don't do what they were supposed to do?"

The U.S. negotiators in Beijing are pushing the Chinese side to come up with a mechanism to ensure that Beijing keeps the promises it makes, The Wall Street Journal reported. That includes giving specific dates for making purchases and making assurances that Beijing won't hinder U.S. companies from gaining access to China's market.

Six months after Trump first imposed tariffs on Chinese goods, signs are growing that the trade war is exacting an economic and financial cost, increasing the incentive for both sides to end the conflict. Apple Inc. cut its revenue outlook last week as sales of the iPhone were slower than expected in China, while data on factory activity and retail sales in the Asian nation were also weak.

Liu's appearance at the talks is a "symbol of Xi's personal buy-in" in the effort to reach a deal, said Leland Miller, chief executive officer of China Beige Book, a data-analytics firm that surveys companies across the Chinese economy. "Beijing wants to show this is supported at the very highest level."

But much work remains before the two economic powers climb down. Trump has given Lighthizer until March 1 to negotiate an accord with the Chinese on "structural changes" to Beijing's state-driven economic model. The two sides have shown signs of common ground in the past year, only for progress to stall.

If negotiators do not come to a deal in the coming weeks, the administration is poised to raise U.S. tariffs on $200 billion a year in Chinese-made goods on March 2, amping up the trade war at a time when China faces rapidly softening growth and the U.S. economy is facing head winds.

The discussions are the first face-to-face interactions between the U.S. and China since both presidents met in Argentina and agreed to a temporary truce in their tariff war. More senior-level discussions could take place this month, with the South China Morning Post reporting that Trump and Chinese Vice President Wang Qishan may meet at the World Economic Forum in Davos, Switzerland.

China's Foreign Ministry on Monday confirmed that Wang would deliver a keynote speech at Davos, though it didn't confirm any plans for him to meet Trump.

Preliminary discussions were "a little more optimistic than usual," White House economic adviser Larry Kudlow told Bloomberg TV on Friday.

The White House has said China is an unfair trading partner. Its tariffs are too high, it says. It forces U.S. companies to give up important technology to Chinese partners as a price for doing business there. It also offers subsidies and cheap loans to Chinese companies that hope to compete with U.S. companies in strategic areas like jetliners, semiconductors and electric cars.

Chinese officials dispute those claims. They say higher Chinese tariffs and strict investment limits are justified because China is still a developing country and well behind the United States in many economic respects. China's manufacturing capabilities, they say, need upgrading for the country's continued growth. They have consistently denied that the government allows forced technology transfers, saying some companies willingly share and make big profits in China doing so.

The biggest sticking point in China's package of concessions to the White House may be Made in China 2025, a government plan for developing high-tech industries. The Trump administration has repeatedly criticized the plan, saying it is evidence that China unfairly supports its own companies over foreign competitors in the Chinese market.

China has played down the catchy Made in China 2025 name. But there is no evidence that Chinese companies have halted or reversed their plans or that officials are any less interested in plowing money into its state-owned enterprises. China's Ministry of Industry and Information Technology, which played a major role in the program, said last month that it would continue to support development of new manufacturing processes, without mentioning the policy by name.

Still, China has begun to budge. Last month, it dropped retaliatory measures on U.S.-made cars and resumed purchases of U.S. soybeans. It has also reduced tariffs on more than 700 categories of goods from around the world.

Chinese lawmakers last month released a draft of legislation that would stop local officials from forcing foreign companies to transfer their technology as a cost of doing business. The Trump administration says that Chinese industries like cars and aviation have benefited from U.S. technology.

The law may not change things meaningfully, said Donald Clarke, a specialist in Chinese law at George Washington University. The draft is vaguely worded, he said, and doesn't acknowledge that the pressure U.S. companies face to share their know-how often comes from behind-the-scenes maneuvering rather than strict government requirements.

As with many laws in China, it could also be moot if local governments decide not to enforce it or if penalties are not stiff enough.

"These forced tech transfers that people complain about don't occur because some government department issues an order saying, 'Transfer this tech,'" Clarke said in an email.

"It's done through the government department getting involved behind the scenes in the negotiations, or not granting discretionary permission to do something unless some tech is transferred. It's very hard to stop through a specific rule."

Information for this article was contributed by Haze Fan, Peter Martin, Miao Han and April Ma of Bloomberg News and by Sui-Lee Wee and Keith Bradsher of The New York Times.

A Section on 01/09/2019

Print Headline: Trade talks in China extended a day, American says

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