China's secret trade weapon may be Japan

With the G20 in full swing, all eyes were on President Trump and Chinese President Xi Jinping, who reached a plan to resume trade talks during their Friday night meeting in Osaka, Japan.

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However, Japan has emerged as a very important chess piece for overall trade partnerships.

As the U.S. talks tough, the Chinese are focusing on garnering support from other G20 members against tariffs, especially Japan. The Chinese consistently called President Trump’s use of tariffs a “bullying tactic."

Xi indicated, following a bilateral on Friday with Japanese Prime Minister Shinzo Abe, that the two countries are very close to finishing a trade deal. Experts in Asian trade tell FOX Business if China secures a historic trade deal with Japan, it could bolster their economy allowing China to continue the hard line with the United States. Meanwhile, the trade deal between the U.S. and Japan has hit a snag. According to the lead Japanese negotiator, he agreed to speed up talks with the United States following a meeting with US Trade Representative Robert Ligthizer. Still, that deal is behind a finalizing deal between Japan and China.

In a speech to the G20, Xi says China is offering greater protection on intellectual property, lower tariffs, and to open China’s agriculture market.

A move meant to further unify countries against the United States.

As Trump makes the rounds at the G20 Summit in Osaka he is trying to get a Chinese trade deal back on track with at the very least restarting negotiations which broke down. Trade sources say the U.S. wants to lower expectations of this meeting because both the U.S. and China remain far apart.


Still, Trump remains optimistic that a trade deal can be worked out. “It’s a question of if we do something there’s a chance, we’ll see what happens. Ultimately something will happen and it will only be good.” He adds, “good things happen.”

Last week, the Trade Representative’s Office finished public hearings on what items could be included in the next round of $300 billion of Chinese imports under tariff. Trump indicated, in a FOX Business exclusive interview this week, that round might not be at 25 percent as he originally said. Instead, it could be a 10% tariff to start.

The United States, as reported by FOX Business, wants China to put back in the deal every concession the Treasury Secretary says they already agreed too but then deleted from the latest draft of the agreement. Chinese trade sources say they will not agree to any concessions unless all the tariffs on Chinese imports are rolled back.  Also, those sources said the Chinese want sanctions on Huawei removed, ideally within 90 days of when talks restart.