US-China trade talks could get off to a rocky start this week as the two sides remain far apart on key issues

china us tradeU.S. Trade Representative Robert Lighthizer, center, listens as Chinese Vice Premier Liu He, right, talks while they line up for a group photo at the Diaoyutai State Guesthouse in Beijing, Friday, Feb. 15, 2019. At left is U.S. Treasury Secretary Steven Mnuchin.AP Photo/Mark Schiefelbein, Pool

  • Senior negotiators from the US and China are expected to speak by phone this week.
  • That would come after the US reached a trade ceasefire with China late last month, delaying a major escalation in tariffs as the two sides agreed to work toward an agreement.
  • However, the two sides have struggled to see eye-to-eye on how to enforce structural changes in the second-largest economy, which could represent a major sticking point.
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As Washington and Beijing labor to forge a deal that would defuse the sprawling trade dispute that began more than a year ago, the two sides remain miles apart on key issues.

President Donald Trump reached a trade ceasefire with Chinese President Xi Jinping at the G20 summit in Japan late last month, delaying a major tariff escalation that had been planned. The US loosened a ban on telecommunications giant Huawei, while Trump said that China agreed to purchase more American agricultural products.

But there has been little evidence of progress on issues that stalled the last round of talks, and those are expected to loom large as senior negotiators from the largest economies speak by phone this week. Nearly a dozen rounds of negotiations had taken place leading up to May, when the US said China had suddenly reneged on commitments it had already agreed to.

"This marks an overture to de-escalate tensions emanating from the US, where the door is open for additional talks, but without tangible details or urgency to make a trade deal," said Jim Caron, the managing director of fixed income at Morgan Stanley Investment Management.

Among the sticking points, the two sides have struggled to see eye to eye on how to enforce structural changes in the second-largest economy. US officials want China to change its domestic laws, a move they view as necessary to address issues such as intellectual property theft and the forced transfer of foreign technology.

"We thought we had commitments and those commitments were removed," White House Economic Adviser Larry Kudlow told CNBC on Tuesday. "Our team has time and time again asked for a change in Chinese laws. And resistance has mounted on the other side."

But conceding to legislative changes could be a tall order for Xi as he seeks to retain a tough appearance at home. US officials have also suggested that tariffs could be used as an enforcement mechanism, which China has indicated would be a nonstarter. The two sides have together placed levies on roughly $360 billion worth of each other's products.

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