<![CDATA[Ignore the bravado, a US-China trade deal is still possible. But it'll take a Xi-Trump one-on-one]>

Doom and gloom are clouding the China-United States trade relationship once more. Until two weeks ago, both Beijing and Washington had been saying a trade deal was within reach after 10 rounds of intense negotiations since the temporary truce agreed by the Chinese President Xi Jinping and his counterpart Donald Trump in December.

But Washington and Beijing are now at it again, raising tariffs on each other after Trump accused China of reneging on its commitments. The US hiked import duties on US$200 billion of Chinese goods and Beijing responded with higher tariffs on US$60 billion of American products. Then, in retaliation against China's retaliation, the Trump administration said it was preparing to slap higher tariffs over the rest of Chinese imports, valued at more than US$300 billion.

While the global equity markets were rattled, both Beijing and Washington put on brave faces. Typical of Trump's wilful unpredictability, he first said he was in "absolutely no rush" to make a deal with China but a few days later said a deal would "happen, and much faster than people think!".

Pessimism is growing that the trade war could take a prolonged turn, inflicting serious damage not only the world's two biggest economies but also dragging down the rest of the world.

While this is possible, there are also reasons to believe the bravado on show by both sides is a psychological negotiating tactic. The two countries are expected to resume negotiations soon and that both say they are open to further negotiations is a positive sign.

The next window of opportunity is late June in Japan, where Xi and Trump are scheduled to meet at a G20 summit.

Judging by the voluminous media reports, miscalculations on both sides seem to have unravelled a deal, which many had expected to be made soon.

Over the past few months, Trump and his top negotiators have used Twitter and the American media to lead public opinion over the progress of the talks, while Chinese officials " true to their secretive nature " have largely stayed silent.

Firstly, Beijing wanted any tariffs Trump had imposed since the beginning of the trade war to be removed before the deal was made. Secondly, it wanted a realistic target for the US demand that China expand its imports of American goods.

Finally, it wanted to change the wording of the draft agreement so that it was more balanced and protected China's dignity.

From the Chinese perspective, the last one seems to have been the deal-breaker, as what Liu inferred was apparently related to the US demand that Beijing should not oppose or retaliate against the US decision to unilaterally impose additional tariffs on Chinese imports if Washington deems Beijing to be in breach of the trade deal.

The US said the main sticking point was Beijing backtracking on its commitment to enact laws to codify policy changes on issues such as intellectual property protection. Instead, Beijing wanted to undertake those changes through decrees from the State Council, which the US found objectionable.

Here comes the mystifying part: ever since the beginning of the negotiations, Washington has made it very clear that Beijing needs to agree to very strong enforcement provisions for an eventual deal, given its record of not living up to its commitments.

Liu He, China's vice-premier who is in charge of the trade negotiations. Photo: EPA

But Washington should also know that Beijing would never agree to the US demand that it could unilaterally punish Beijing for breaching the agreement, for historical and political reasons.

The past humiliations China suffered from accepting "unequal treaties" imposed by Western colonial powers in feudal times have long made the Chinese sensitive to any perceived imbalance in international agreements.

Politically, Xi has consolidated his power to become the country's most powerful leader since Mao Zedong and proclaimed China's intentions to become a world power. There is no way he would allow such language in the final agreement because accepting such wording would seriously sap his political standing and authority at home.

In that case, why did Beijing allow Washington to believe that it was agreeable to such demands in the first 10 rounds of talks before proposing the significant changes?

This could well be one of Beijing's negotiating tactics. It is known for driving a hard bargain at the last minute.

Indeed, Liu defended Beijing's tactics by saying that it was normal for there to be ups and downs and it was irresponsible to casually accuse one party of "backtracking" while the two sides were still negotiating. Liu said he was still cautiously optimistic.

Ever since the impasse, the Chinese official media have ramped up the propaganda and hardened the rhetoric, saying that Beijing would not cave in to external pressure and the Chinese economy was resilient enough to withstand the economic shocks from a prolonged trade war with the US.

Some commentators in the state-run Chinese media even suggested China should stop purchasing US agricultural products and energy, reduce orders for Boeing planes, and even dump US treasury securities, to hit the American economy where it hurts.

From China's perspective, fighting with Washington while avoiding escalating matters out of control is still the preferred strategy as Beijing intends Washington to meet it halfway.

For that to happen, a face-to-face meeting between Trump and Xi is inevitable, even though Chinese officials may have qualms about an unpredictable Trump pulling a stunt like he did in meetings with the North Korean leader Kim Jong-un in Vietnam.

During Liu's latest talks in Washington, he reportedly told the US negotiators there was nothing more he could do and that it would be up to Xi and Trump to work the deal out.

Ever since the trade war started, Trump has occasionally suggested only he and Xi could seal the deal.

Come to think of it, this rather fits the characters of both men. Trump likes to say that he is his own man as far as all the important decisions from the White House are concerned and, in Xi, he has certainly met his match.

Wang Xiangwei is the former editor-in-chief of the South China Morning Post. He is now based in Beijing as editorial adviser to the paper

This article originally appeared on the South China Morning Post (SCMP).

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