U.S., China put off trade talks until September after no signs of progress in Shanghai

U.S. and Chinese negotiators wrapped up a round of trade talks on Wednesday without visible signs of progress and put off their next meeting until September, extending an uneasy truce between the world's two largest economies for at least a month.

With hopes for a quick trade agreement receding, both sides issued brief statements after the first face-to-face meetings since U.S. President Donald Trump and Chinese President Xi Jinping in June called a ceasefire in the escalating trade war.

China and the United States also remain at odds over protests in Hong Kong and the contested South China Sea even as Trump puts more focus on his 2020 re-election bid.

The White House and China's Commerce Ministry each described the meetings in Shanghai as constructive but offered differing views about Chinese purchases of U.S. agricultural goods.

Fresh fears over the trade war and concerns about a protracted fight with little near-term progress weighed on global markets on Wednesday.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin left Shanghai with little in hand save a pledge to keep talking, following a working dinner at Shanghai's historic Fairmont Peace Hotel on Tuesday and a half-day meeting on Wednesday.

'Candid' exchange

Lighthizer, Trump's top trade official, is slated to meet with Japanese Economy Minister Toshimitsu Motegi in Washington on Thursday and Friday, with sources pointing to progress on a possible narrow agreement that would swap lower U.S. tariffs on auto components for better access for U.S agricultural sales.

China's Commerce Ministry said "both sides ... had a candid, highly effective, constructive and deep exchange on major trade and economic issues of mutual interest." It said negotiators discussed more Chinese purchases of U.S. agricultural products, but did not say there was any agreement to buy more.

"We expect negotiations on an enforceable trade deal to continue in Washington ... in early September," White House spokesperson Stephanie Grisham said in a statement. "The Chinese side confirmed their commitment to increase purchases of United States agricultural exports."

Hu Xijin, editor-in-chief of China's Communist Party-controlled Global Times, wrote on Twitter the negotiators had discussed increasing purchases of U.S. farm products, and the "U.S. side agreed to create favourable conditions for it."

The U.S.-China trade war has disrupted global supply chains and shaken financial markets as each side has slapped tariffs on billions of dollars of each other's goods. The IMF has warned that the trade dispute will shave 0.2 per cent off global output.

'Pragmatic and realistic'

The U.S.-China Business Council, representing American firms operating in China, said it was pleased the two sides agreed to continue negotiations.

"We hope the negotiators will continue to take a pragmatic and realistic approach to compromise and reach a conclusion that leads to greater market access for foreign companies, improves the protection and enforcement of intellectual property, and ultimately levels the playing field for

foreign companies operating in the market," the council said.

The talks began amid low expectations. Trump on Tuesday warned China against waiting out his first term to finalize any trade deal, saying the outcome would be worse for China if he wins re-election in November 2020.

The Global Times said Trump's remarks were not "a good style" and urged Washington to follow through on its own promise to lift sanctions on Chinese telecoms equipment giant Huawei Technologies Co Ltd to shore up the fragile trust between the two countries.

Chinese Foreign Ministry spokesperson Hua Chunying told a news briefing it is the United States that continues to "flip flop" and added, "It's pointless to tell others to take medication when you're the one who is sick."

An official Chinese government survey released on Wednesday showed factory activity shrank for the third straight month in July, underlining the growing strains the dispute has placed on the world's No. 2 economy.

The White House said in its statement that Chinese state subsidies, forced technology transfers and intellectual property violations were also discussed. China's account of the discussions did not mention any of these non-agricultural issues.

Trump and Xi agreed in June at the G20 summit in Osaka, Japan, to restart trade talks that had stalled in May after Washington accused Beijing of reneging on major portions of a draft agreement. The collapse in talks prompted a steep U.S. tariff hike on $200 billion US of Chinese goods.

The U.S. Commerce Department put Huawei on a national security blacklist in May, effectively banning U.S. firms from selling to Huawei, a move that enraged Chinese officials.

Trump said after the Osaka meeting he would not impose new tariffs on a final $300 billion US of Chinese imports and would ease some U.S. restrictions on Huawei if China agreed to make purchases of U.S. agricultural products.

But few large purchases have been seen so far, and U.S. semiconductor and software makers remain mostly in the dark about the administration's plans on Huawei.