A formidable set of cards that includes granting access to its vast market and an ability to withstand economic pain will allow Beijing to play hardball in upcoming trade talks with the United States in Geneva, analysts say.Trade between the world’s two largest economies has nearly skidded to a halt since US President Donald Trump slapped China with various rounds of levies that began as retaliation for Beijing’s alleged role in a devastating fentanyl crisis.With additional measures justified by Trump as efforts to rebalance the trade relationship and prevent the United States from being “ripped off”, tariffs on many Chinese products now reach as high as 145 percent — with cumulative duties on some goods soaring to a staggering 245 percent.Beijing has responded with 125 percent tariffs on US imports, along with other measures targeting American firms.But after weeks of tit-for-tat escalation that sent global markets into a tailspin, the two powers will meet this weekend for a chance to break the ice.Washington has said it’s not expecting a “big trade deal” that could address Trump’s longstanding complaint about the major goods imbalance with the export powerhouse — but it is hoping the two sides can at least begin to de-escalate tensions.Beijing has vowed to stick to its guns and insisted its demand that all US tariffs be lifted remains “unchanged”.Analysts say, however, China is in no major rush to make a deal.”Beijing can impose some pain on the United States,” Chong Ja Ian, associate professor of political science at National University of Singapore, told AFP.China’s core strengths going into the talks are its huge domestic market, as well as “key technologies and control of a significant proportion of processed rare earth minerals”, Chong said.- ‘No wild bluster’ – Compared to its approach during Trump’s first term, Beijing’s response to his tariffs this time has been “more mature”, said Dylan Loh, an assistant professor at Singapore’s Nanyang Technological University.”There’s no wild bluster,” he explained.”I think they have learnt from their earlier responses and they know that they cannot be led by the nose,” he said.Analysts say China has been able to take more of a hardline posture to Trump’s tariffs this time, despite its struggling economy.”It still has meaningful retaliatory tools and — just as important — staying power,” said Lizzi Lee from the Asia Society Policy Institute’s Center for China Analysis.China’s autocratic system, she said, allowed it “to absorb economic pain in ways democracies often cannot”.Beijing has also concurrently launched a charm offensive aimed at tightening trade ties in Southeast Asia and Europe — positioning itself as a more stable and reliable partner in contrast to the mercurial Trump administration.That move allowed Beijing to “build buffers” against trade war vicissitudes, Lee said.”It won’t replace the US market overnight, but every incremental diversification reduces exposure and increases negotiating room,” she added.That’s not to say China isn’t hurting.Sales of Chinese goods to the US last year totalled more than $500 billion — 16.4 percent of the country’s exports, according to Beijing’s customs data.But as the effects of the trade war sunk in, China’s factory activity shrank in April, with Beijing blaming a “sharp shift” in the global economy.While not as colossal as China’s export levels, US shipments to the country last year were a considerable $143.5 billion, according to the US Trade Representative website.”Even in the case that one of the two countries would clearly have ‘the upper hand’, it is still worse off economically than before the trade war started,” said Teeuwe Mevissen, senior China economist at Rabobank.Beijing and Washington have “found out that it is not so easy to fully decouple”.- Talks about talks -Policymakers this week unveiled measures to boost domestic consumption — a sign that leaders are “not panicking but feeling some pressure”, said Shehzad Qazi, managing director of China Beige Book.Beijing will need to strap in for potentially long and drawn-out negotiations with Washington that could bring “much more volatility along the way”, said Qazi. Analysts broadly agree that upcoming talks are a first step towards a de-escalation of tensions that could, a long way down the line, lead to a lifting of tariffs.”A best-case scenario would be agreement around a process to enter future negotiations,” Ryan Hass, senior fellow at Brookings Institution, told AFP.Beijing could insist on receiving the same 90-day waiver on tariffs that other countries had received, he suggested.And China’s insistence that the Switzerland talks came at the request of Washington suggests it is the United States that is desperate for a deal, said Dan Wang, China Director at the Eurasia Group.”The fact that it is happening is showing some concessions already on the US side.”

US and Chinese officials meet this weekend in Geneva for their first formal talks aimed at resolving a gruelling tit-for-tat tariff war that threatens hundreds of billions in trade and roiled global markets and supply chains.AFP looks at how the trade row between the world’s two economic superpowers is playing out:- What steps have the two sides taken so far? -The United States has raised tariffs on Chinese imports to 145 percent, with cumulative duties on some goods reaching a staggering 245 percent.As well as the blanket levies, China has also been hit with sector-specific tariffs on steel, aluminium and car imports.Sales of Chinese goods to the United States last year totalled more than $500 billion — 16.4 percent of the country’s exports, according to Beijing’s customs data.Beijing has vowed to fight the measures “to the end” and has unveiled reciprocal tariffs of up to 125 percent on imports of American goods, which totalled $143.5 billion last year, according to Washington.China has filed complaints with the World Trade Organization (WTO), citing “bullying” tactics by the Trump administration.And it has gone after US companies, scrapping orders for Boeing planes, probing Google for “anti-monopoly” violations and adding fashion group PVH Corp. — which owns Tommy Hilfiger and Calvin Klein — and biotech giant Illumina to a list of “unreliable entities”.Beijing has also restricted exports of rare earth elements — critical for making a wide range of products including semiconductors, medical technology and consumer electronics.- What’s been the impact? – Beijing has long drawn Trump’s ire with a trade surplus with the United States that reached $295.4 billion last year, according to the US Commerce Department’s Bureau of Economic Analysis. Chinese leaders have been reluctant to disrupt that status quo.But an intensified trade war could mean China cannot peg its hopes for strong economic growth this year on exports, which hit a record high in 2024.US duties further threaten to harm China’s fragile post-Covid economic recovery as it struggles with a debt crisis in the property sector and persistently low consumption.The tariff war is already having an impact in the United States, with uncertainty triggering a manufacturing slump last month and officials blaming it for an unexpected economic contraction during the first three months of the year.”Both countries have surely found out that it is not so easy to fully decouple,” Teeuwe Mevissen, senior China economist at Rabobank, told AFP.”Both the US and China lose economically with the current trade war,” he said, adding that even in the case that one side gains the upper hand “it is still worse off economically than before the trade war started”.The head of the WTO warned in April that the US-China standoff could cut trade in goods between the two countries by 80 percent.Beijing announced a raft of interest rate cuts on Wednesday aimed at boosting consumption — a possible sign that it is starting to feel the pinch.Analysts expect the levies to take a significant chunk out of China’s gross domestic product, which Beijing’s leadership have targeted to grow five percent this year.Likely to be hit hardest are China’s top exports to the United States — this includes everything from electronics and machinery to textiles and clothing.And because of the crucial role Chinese goods play in supplying US firms, the tariffs may also hurt American manufacturers and consumers, analysts have warned.- Is a breakthrough possible? -Both sides insist that economic pressures have driven the other to seek negotiations.But while markets have welcomed the talks, a major breakthrough in Geneva seems unlikely.China has insisted its position that the United States must lift tariffs first remains “unchanged” and vowed to defend its interests.US Treasury Secretary Scott Bessent has said the meetings will focus on “de-escalation” — and not a “big trade deal”.But analysts do expect some form of tariff reduction to be announced following Saturday’s ice-breaking exercise.”One possible outcome of the Switzerland talks is an agreement to pause most, if not all, of the tariffs that have been imposed this year while negotiations take place,” Bonnie Glaser, managing director of the German Marshall Fund’s Indo-Pacific program, told AFP.Lizzi Lee from the Asia Society said she expected “a tentative, symbolic gesture — designed to lower temperatures, not resolve core disputes”.”Stabilisation and guardrails are the most likely outcomes.”

Surrounded by samples of silk and glittering tweed in one of China’s largest fabric markets, textiles exporter Cherry said she was anxiously awaiting the result of trade talks with the United States this weekend.Her company, which relies on US customers for around half its client base, is one of many caught in the crosshairs as the standoff between Washington and Beijing has escalated this year. Cherry has already had US orders cancelled, and is desperately hoping the negotiations starting Saturday in Geneva will result in the rolling back of the reciprocal tariffs that make doing business almost impossible.”The situation will be very bad if this continues,” she said, sceptical of claims her industry would be able to weather prolonged levies.”A few months ago I heard people say they’d had many containers (of goods) being cancelled… Some factories have already had to stop production.” Sales to the United States made up 18 percent of China’s total textiles and apparel exports in 2024, according to Moody’s Ratings. A significant proportion of that comes from the eastern manufacturing powerhouse province of Zhejiang, where the labyrinth-like Keqiao China Textile City is based in the city of Shaoxing. With a listed 26,000 shops selling everything from velvet to rayon to fake fur, it is touted as one of the world’s busiest fabric hubs. But customers were few and far between when AFP visited on a day of torrential rain this week, with vendors’ spirits largely dampened too.  “Of course I am afraid,” said one woman surnamed Li, who added that business was already affected by the global turmoil.  “This is my job — I rely on it to support my family… I hope for a good outcome (for the talks).”- ‘Lose-lose scenario’ -The Geneva talks are the first official public engagement between the two sides aimed at resolving the stand-off triggered by US President Donald Trump’s wide-ranging tariffs. The subsequent tit-for-tat means many Chinese goods entering the United States now face duties of 145 percent — with some specific sectors even higher — while Beijing has hit back with 125 percent levies on most US goods.   One seller in Keqiao market described the situation as a “lose-lose scenario”.  Some of her colleagues’ US customers have agreed to pay a 30 percent non-refundable deposit to initiate production, on the understanding that the whole order can be cancelled if the final tariff level after negotiations is still too high. If that happens, everyone will lose money. “We basically don’t dare to take US orders anymore,” said 66-year-old Zhou, standing in front of swaths of khaki in various hues. “The cost price can’t even be covered, especially with such high tariffs added on.”For companies like his daughter’s, which dealt mainly with US clients, “the impact is huge”, he said. “The best outcome would be for everyone to sit down and talk things through — it would be good for everyone, right?” Even the hint of de-escalation has brought some back to the table, with one exporter telling AFP a client who had suspended orders had recently given the go-ahead for production to begin.But at a ski suit workshop in a cross-border e-commerce centre a few kilometres away, 31-year-old Xiao Huilan said a lot of local companies had lost out completing production for orders that had subsequently been reduced or held off. “In the short term, we can manage, but in the long run, businesses can’t sustain it,” she said. “In a trade war, no one really wins. What we hope for is reconciliation, where everyone can coexist and prosper together.”

Most Asian equities rose Friday on growing optimism that the worst of Donald Trump’s trade war is past after he reached a deal with Britain and suggested he could lower tariffs on China as officials prepare for high-stakes talks this weekend.The mood among investors has improved substantially since the US president unveiled his “Liberation Day” blitz last month, sending markets spinning and fuelling global recession fears.Several countries have lined up to hold talks with Washington to avert the worst of the duties that range from 10 percent to as high as 145 percent on China — Trump’s main target.On Thursday Britain became the first to announce a deal that reduces tariffs on British cars and lifts them on steel and aluminium, while in return Britain will open up markets to US beef and other farm products.While there are several areas that still need discussing, Trump and Prime Minister Keir Starmer hailed the “historic” deal, with the US president saying it should be seen as a template for others.But analysts said traders were more excited about the Republican leader’s comments on the upcoming talks with China in which he hinted at an easing of the stiff measures aimed at the world’s number two economy. That could see Beijing dial back some of its own 125 percent tariffs on US goods.Trump told reporters that he thought the negotiations would be “substantive” and when asked if reducing the levies was a possibility, he said “it could be”.”We’re going to see. Right now you can’t get any higher. It’s at 145 percent so we know it’s coming down. I think we’re going to have a very good relationship.” Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet Chinese Vice Premier He Lifeng in Switzerland on Saturday and Sunday, the first talks between the superpowers since Trump unveiled his tariffs.The US president also flagged efforts at home to push through the tax cuts he promised during the election campaign, adding: “This country will hit a point that you better go out and buy stock.”Now, let me tell you this, this country will be like a rocket ship that goes straight up.”Stephen Innes, of SPI Asset Management, said: “As important as the UK deal was, Trump’s tone on China was the real signal for markets — and it handed the risk-on baton straight to Asia in a friendly, optimistic fashion. “The president all but greenlit the idea that the days of punitive standoff might give way to negotiated momentum.”Asian markets extended the week’s rally and tracked gains on Wall Street.Tokyo jumped more than one percent on hopes for Japan’s trade talks. However, Commerce Secretary Howard Lutnick warned agreements with Japan and South Korea could take longer to reach, while adding that there was “a lot of work” in striking a deal with India.Hong Kong, Sydney, Wellington, Taipei, Manila and Jakarta also advanced, though Seoul retreated. Shanghai also dropped ahead of key Chinese trade data that is expected to see a sharp drop off from March owing to the tariffs war.The return of some confidence to the market also helped bitcoin recover, pushing it back above $100,000 for the first time since February. The cryptocurrency struck $104,159 on Thursday, pushing it towards the record above $109,000 seen in January.- Key figures at around 0230 GMT -Tokyo – Nikkei 225: UP 1.5 percent at 37,478.58 (break)Hong Kong – Hang Seng Index: UP 0.4 percent at 22,860.47Shanghai – Composite: DOWN 0.3 percent at 3,343.29Euro/dollar: DOWN at $1.1201 from $1.1230 on ThursdayPound/dollar: DOWN at $1.3219 from $1.3249Dollar/yen: UP at 145.92 yen from 145.82 yenEuro/pound: UP at 84.76 pence from 84.73 penceWest Texas Intermediate: UP 0.3 percent at $60.10 per barrel Brent North Sea Crude: UP 0.3 percent at $63.05 per barrelNew York – Dow: UP 0.6 percent at 41,368.45 (close)London – FTSE 100: DOWN 0.3 percent at 8,531.61 (close)