The United States and China have resumed trade negotiations under a rather tense atmosphere, and the international capital markets are paying high attention to the outcome of the negotiations as well. On October 11, U.S. President Donald Trump expressed optimism about the U.S.-China trade talks by tweeting, "Good things are happening at China Trade Talk Meeting. Warmer feelings than in the recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!" Stimulated by Trump's optimism, the European and American stock markets saw significant rises in the same day, the price of gold fell below US$ 1,488 per ounce.

After 15 months of continuous negotiations, the significance and value of the trade talks between China and the United States are undergoing subtle changes, which are likely to affect the expectations set out in the negotiations and the desire to reach an agreement, as well as the policy choices of both sides.

Since the intensification of the U.S.-China trade frictions last year, the two countries have not made substantial progress after paying huge economic costs throughout the 12 rounds of talks. Trade frictions are still escalating, and the frictions have even extended from trade to enterprises and finance. The increasingly tense U.S.-China relations have caused other problems. The recent situation in Hong Kong and the NBA incident reflects that the confrontational nature and distrust between China and the United States have spread from governmental departments and politicians to the general public. This also means that the decoupling of China and the United States has reached a broader field. This is a trend that both sides are reluctant to publicly acknowledge, but what may actually be happening is that the expectations of the two sides to reach an agreement on trade negotiations are decreasing. The Financial Times reported that Chinese officials have expressed their willingness to buy more American agricultural products, increasing soybean purchases from 20 million tons to 30 million tons. However, China's "goodwill" has not changed the pessimism of the market. Bloomberg has previously analyzed that the two countries are unlikely to reach a comprehensive agreement that week, and the best result could well be to postpone the next round of tariffs.

The kind of trade agreement that is reached is an important issue. President Trump often stated that he does not want to reach a partial deal with China. What he wants is a comprehensive agreement beneficial to the United States, but China's expectations may be different. Before the start of the talks, China Daily pointed out in an editorial that partial agreements are a more feasible goal, in line with the mutual interests of both sides. There are also reports that Chinese negotiators are willing to negotiate for partial trade agreements with the United States. According to CNBC's reports, China and the United States can reach partial agreements on issues concerning currency and the purchase of agricultural products, while leaving more controversial issues such as preventing China's "thievery" of U.S. intellectual property rights and protection for future negotiations. More and more analysts believe that the possibility of a comprehensive agreement between China and the United States to be reached is getting smaller by the day.

The lack of trust is a real problem faced by the two countries. CNBC reported that Ian Bremmer, Eurasia Group president, said his Washington sources are not optimistic for a breakthrough and on the Chinese side, President Xi Jinping no longer trusts Trump. "He expended a fair amount of political capital trying to work this out with Trump, specifically at the bilateral talks at G-20". Bremmer also pointed out that Trump will not gain the trust of Xi. "I think the trust between the two sides has deteriorated dramatically here," said Ethan Harris, Bank of America Merrill Lynch head of global economics. Prior to the talks, Vice Premier Liu He said in a meeting with American businesspeople that they came here "with great sincerity", which also reflects the importance of the relationship between the two sides in repairing trust.

As the situation develops, the significance of whether China and the United States can reach a comprehensive trade agreement is undergoing subtle changes. In an internal discussion ANBOUND scholar, Chan Kung mentioned that the Chinese government may have determined that maintaining the status quo of the U.S.-China trade war is better than reaching an agreement but paying significant-high price in the process. Chen further explained that this is not to say that China's plan is to drag the trade talks to the next POTUS after Trump's term. In his view, China's high-level officials have certainly made it clear that under the premise that as the United States has strategically adjusted to the U.S.-China relations, the next POTUS' attitude toward China would be similar, and may even be more troublesome for China, without making any progress towards solving the issue.

Chen said the focus of the judgment was not about whether the two sides could reach a trade deal nor reach specific conditions for an agreement. Instead, what China should concern itself with is that it cannot be hindered by major concessions in the international trade environment. Once the trade talks are concluded as a result of a comprehensive agreement, the overall situation of China and the United States are fixed. It should be noted that in a comprehensive trade agreement, the conditions laid down by the United States include many requirements related to China's reforms, such as abandoning industrial subsidies, joining the tariff-enforcement mechanism, revising and reviewing a large number of legal issues, and possibly creating new non-economic issues. If China compromises on these terms in order to reach an agreement, it could bring about many new problems for China. As a result, trade talks between China and the United States may not have a clear comprehensive agreement. Instead, the two sides may compromise or reach a partial agreement after constantly changing the content and scope of the negotiations. Compares with reaching a comprehensive agreement that limits its interests in the international environment, China would prefer to pay a higher price.

If the above judgment comes true, China and the United States will actually fall into a state of "long-term war" in the economic and trade fields. Even if a partial trade agreement is reached, trade frictions between China and the United States will still remain for a long time. Of course, it would be good for China if the United States made major concessions in the face of such a "long-term war," and the losing side in the trade war, in this case, would be the United States. It should also be noted that U.S. President Trump, under pressure from his ongoing impeachment and domestic political struggles, needs an economic "good news" now more than ever. Under such pressures, China and the United States could reach a partial trade deal that would temporarily end the 15-month trade war. If that happens, it would also be seen as a major concession from the United States.

Final analysis conclusion:

The economic and trade relationship between China and the United States is becoming more complex, and the significance of the trade agreements between the two countries is changing subtly. China is likely to adjust its expectations and reassess its gains and losses from the new U.S.-China economic and trade frictions. If China compromises on U.S. terms in order to reach an agreement, it could create new problems for China. Thus, it might be better for China to maintain the status quo of the trade frictions or to reach partial agreements with the U.S.