Trump's China visit could result in new trade deal

File photo shows the national flags of China and US. [Photo/IC]

US President Donald Trump's forthcoming visit to China might lead to breakthroughs in trade and economic relations between the two countries and there is "a good chance" that the US will drop the 301 investigation against China, a former US trade negotiator said.

Deborah Lehr, who was a lead negotiator for China's WTO accession at the Office of the US Trade Representative and former director of Asian Affairs at the US National Security Council, said whether the US would drop the investigation will depend on the progress made by the two sides over the next six months.

Hopes are that political issues such as the situation on the Korean Peninsula will not spill over into the economic sphere, said Lehr, who is now the chief executive of Basilinna, a strategic business consulting firm focused on China and the Middle East.

"Fortunately, the Trump administration and the Chinese government are in very active discussion about ways of rebalancing the economic relationship, particularly in the context of the comprehensive economic dialogue," she said.

Trump has accepted Xi's invitation to visit China this year. Chinese officials have said that Beijing is ready to work with Washington to ensure that Trump's visit yields positive outcomes.

The trade relations between the world's two largest economies experienced a bump after the Trump administration formally launched the "Section 301" investigation last month under a rarely used 1974 trade law against China over intellectual property issues.

Lehr said the trade challenges are a reflection of the growing bilateral economic relationship between the two countries, which she believed can withstand certain level of disagreement.

Beijing and Washington have sought to resolve economic issues and settle disagreement through the Comprehensive Economic Dialogue, which was established by Xi and Trump in April, representing the highest-level bilateral economic forum.

"Unfortunately, the CED in Washington didn't result in developments. We are hopeful that the next one might take place during Trump's visit to China and could potentially lead to some more breakthroughs," she said.

While China has been demanding greater US high-tech exports, Lehr said the US is hoping that China could cut investment restrictions and lift the equity cap for US companies in sectors including the financial service and automobile industries.

Chinese trade experts have expressed similar views, hoping that the Trump's visit to China this year could be an opportunity for Beijing and Washington to iron out differences in bilateral trade investment issues.

"Both sides need to take positive steps to ensure the visit (is) an effective and a fruitful one," said Wei Jianguo, vice-president of the China Center for International Economic Exchanges and a former vice-minister of commerce.

"China has become a major market for US exports including high-tech goods, machineries, agricultural products and consumer goods. A trade war will definitely not be in the interest of the US," he said.