Liu He knows what he can offer Washington to end the trade war. It is just a question of whether China’s Vice-Premier can pull it off when talks resume with the United States next month.

President Xi Jinping’s economic confidant outlined Beijing’s priorities during a conversation with Evan Greenberg, the president of the US-China Business Council, an influential lobby group, on Thursday.

The state-run official news agency Xinhua reported that the “trade balance, market entry and investor protection” would be part of a relatively narrow agenda. It is open to debate if that will placate Washington.

Reducing America’s soaring trade deficit with China has been a crucial goal of the White House. But so far, it has not led to a reduction in the imbalance. Last year, the US trade deficit with China was $419.52 billion.

Still, there are other issues “on the table.”

Last week, Larry Kudlow, the White House economic adviser, told a media briefing that the discussions would cover a vast range of problem areas and could take up to “18 months” to resolve.

‘Global importance’

“A deal of this size and scope and central global importance, I don’t think 18 months is a very long time.“The stakes are so high, we have to get it right, and if that takes a decade, so be it,” he said, drawing parallels to the Cold War with the old Soviet Union.

“Everything will be on the table,” Kudlow added. “You can rest assured, for example, the absolute key structural issues – the IP [intellectial property] theft, the forced transfer of technology, the cyberspace, the clouds, financial services, all of that will be on the table – agriculture purchases, industrial purchases, energy purchases, getting tariff and non-tariff barriers down.”

Since then, his boss President Donald Trump has appeared to row back from that position.

“I see a lot of analysts are saying an interim deal, meaning we’ll do pieces of it, the easy ones first,” he told a media briefing on Thursday. “But there’s no easy or hard. There’s a deal or not a deal [An interim agreement is] something we would consider, I guess.”

Trade war tensions between China and the US have eased during the past 72 hours after Trump decided to delay tariff hikes on Chinese imports worth $250 billion until October 15.

They were due to kick in on October 1, the 70th anniversary of the founding of the People’s Republic of China.

“We have agreed, as a gesture of goodwill, to move the increased Tariffs on 250 Billion Dollars worth of goods [25% to 30%], from October 1 to October 15,” Trump tweeted on Wednesday.

Farming produce

Hours later, Xi’s government moved quickly to announce plans to buy more farming produce, such as pork and soybeans, setting the scene for next month’s negotiations in Washington.

“The whole world is expecting to see progress in China-US negotiations,” Liu pointed out in the Xinhua report.

In the meantime, the world’s two largest economies are showing signs of stress as the trade conflict drags on into a second year.

As both sides dig in, the fallout is having a serious impact on global growth, the International Monetary Fund warned.

Weakening industrial data has sent tremors through the world economy, which is facing challenges not seen since the global financial crisis in 2008.

“Trade tensions …. are not only a threat but are actually beginning to weigh down the dynamism in the global economy,” Gerry Rice, the IMF spokesman, said on Thursday. “[US-China tariffs] could potentially reduce the level of global GDP [gross domestic product] by 0.8% in 2020, with additional losses in future years.”