Chinese and US trade officials make attempt at striking a trade deal to defuse an increasingly bruising trade war that has rattled global markets and presented mounting challenges to both economies. Photo: VCG

Graphics: GT

With thawing China-US trade relations after the signing of the phase-one trade deal, China is willing to promote a bilateral investment treaty (BIT) and may include some BIT terms into the phase two trade talks, sources close to the Chinese government said.

They predicted, however, that official BIT talks and the phase two trade negotiations may not start ahead of the 2020 US presidential election. 

"China is willing to push forward the progress of BIT talks together with the US," Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Sunday. "While neither the phase two talks nor the BIT talks might start any earlier than the US presidential election this year, working teams of the two countries have remained in close contact," Gao said.

A source close to the trade talks disclosed that there is also a possibility that China will "bring some terms in the China-US BIT terms to the negotiating table of the second phase trade talks."

The China-US BIT talks began in 2008, but little progress was made before 2013, when the two agreed to hold discussions on the basis of pre-establishment national treatment with a negative list, which outlines sectors that are closed to foreign investment. After more than 30 rounds of negotiations, the BIT talks were put on hold.

Another source told the Global Times on Sunday that any progress between China and the US will depend on the situation of the next phase of trade negotiations, noting that the China-US BIT talks remain "on hold".

"We are taking a really cautious attitude that the two could achieve a smooth phase two negotiation," the source said.

No matter when the talks begin, both the BIT and trade talks are intended to protect the interests of companies, and both sides have to make compromises to achieve consensus, thus bringing relations back to a normal track, Gao noted.

Negotiations for a BIT between China and EU are coming to a critical point, as the two aim to achieve a final deal by the end of 2020. 

Experts said that a phase one trade agreement between China and the US might provide more impetus for China and EU to reach a final agreement, though major obstacles remain.

"If the two could finalize an agreement by year-end, some terms in the China-EU BIT agreement could also serve as a template for a China-US BIT agreement," Gao said.

Experts also noted that there is no need for the EU to worry the phase one trade deal between China and the US would hurt the interests of EU companies.

"If some are worrying about China will buy less from the EU if China increases purchases from the US, I'm afraid they are underestimating China's purchasing power," Gao said, adding that China could import more from the US and at the same time, that won't affect purchases from other partners.

"Nevertheless, if some do see a drop in exports to China, they cannot attribute that to China, they have to increase the competitiveness of their products accordingly," Gao added.