Controversial White House trade policy adviser and prominent China hawk Peter Navarro will attend a crucial dinner meeting between US President Donald Trump and his Chinese counterpart Xi Jinping in Buenos Aires on Saturday, after he was initially left off the guest list.

The South China Morning Post reported last week that Navarro, whose presence may complicate attempts to resolve the trade war amicably, would not attend the dinner. But a source who has been briefed on the latest arrangements for the meeting said Navarro would now be part of the Trump team in Buenos Aires.

The inclusion of Navarro could add to the uncertainty surrounding the meeting, the first between Trump and Xi since the trade war broke out, diplomatic observers said.

Navarro, author of Death by China: Confronting the Dragon – A Global Call to Action, is viewed by Beijing as being an impediment to resolving the trade war to its satisfaction.

A staunch advocate for the president’s get-tough approach with China, he clashed publicly with Treasury Secretary Steven Mnuchin – who favours a compromise with Beijing over trade – when the two were in China for talks in May.

That same month, people familiar with the trade talks told the Post  that Navarro had been very harsh on China during previous negotiations in Beijing, and demanded that the government fundamentally change its industrial policy.

“Navarro is not good from China’s perspective. He is too tough and not sincere about solving problems. His intention is to contain China,” the source said.

The New York Times reported on Tuesday that the inclusion of Navarro into the Trump delegation took place after US Trade Representative Robert Lighthizer authorised Navarro’s travel.

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Navarro is likely to join Mnuchin, Lighthizer, US Secretary of State Mike Pompeo, National Security Adviser John Bolton and White House economic adviser Larry Kudlow to accompany Trump at the dinner, the results of which will affect the world’s economy for years to come.

Fu Mengzi, vice-president of the China Institutes of Contemporary International Relations, said Narravo was a typical China hawk.

“Adding him to the negotiation team means that Trump wants to keep a strong stance against China and gain the biggest concession possible from China,” he said.

Liang Yunxiang, an international relations professor at Peking University, said the formation of a hawkish negotiation team meant Trump wanted to gain more concessions.

“And if Beijing makes a concession this time, even a small concession, it will trigger more pressure from Washington in the future,” he said. “A small deal is possible at the G20, but – given China and the US have fundamental strategic differences that cannot be resolved through dialogue – ways to completely erase the conflict do not exist.”

Li Mingjiang, an associate professor at the S. Rajaratnam School of International Studies in Singapore, said Navarro still played a prominent role in formulating US trade policies.

Whether Beijing and Washington find common ground to suspend – or possibly even end – their escalating trade conflict largely hinges on the outcome of the dinner in Buenos Aires.

The Trump-Xi summit is still shrouded in secrecy. It remains unknown how long it will last, which advisers will join the leaders at the table and what specific items will be on the agenda.

Kudlow told reporters on Tuesday that the dinner with Xi was one of the last events on Trump’s itinerary before his return to Washington.

The Post first reported in early November that Trump had invited Xi for a dinner immediately after the G20 leaders’ summit so the two could have more time to catch up and sort out differences than would be possible with a chat on the sidelines.

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The Post also reported that negotiations between the two country’s trade teams were rescheduled at the last minute to take place in Buenos Aires, bypassing Washington, so the two leaders could have more first-hand guidance on the progress of the talks.

There is great anticipation, and much fear, over what may result from the meeting. The Post and Politico previously reported that, with or without any breakthrough, the two countries were unlikely to issue a joint statement or hold a joint press conference.

Market expectations around the Trump-Xi meeting have injected extra volatility in the financial markets in recent weeks. The Dow Jones Industrial Average fell more than 100 points, or 0.5 per cent, to 25,216.35, after news of Navarro’s participation in the talks broke.

Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management, wrote in a note this week that the odds of a Sino-US deal versus no deal on trade tariffs was “about 50:50 in the market’s view”.

The possibility of the summit ending in open conflict is smaller than 5 per cent, while the chances the meeting will end with “no significant agreement” – putting Washington on track to raise tariffs on Chinese products as planned on January 1 – has a 30 per cent chance, Mitra said.

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The odds of the meeting ending with “deliberate ambiguity on whether the January 1 tariff increase will happen” has a 40 per cent probability.

Mitra rated the prospect of a clear statement from the two leaders that the tariff increase would be put on hold at just 25 per cent.

Additional reporting by Kristin Huang, Sarah Zheng and Catherine Wong


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