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Talks aim to defuse trade war disrupting global economy

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Low expectations for major breakthrough amid distrust

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Talks are taking place at Swiss diplomatic residence

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China determined to defend international fairness, Xinhua

says

(Adds talks continue in paragraph 2, details on duration and

venue in paragraphs 4-5, Xinhua in paragraph 9)

By John Revill and Emma Farge

GENEVA, May 10 (Reuters) - Chinese Vice Premier He

Lifeng held talks with U.S. Treasury Secretary Scott Bessent on

Saturday in a tentative first step towards defusing a trade war

that is disrupting the global economy.

Bessent and He were meeting in Geneva after weeks of growing

tensions in which duties on goods imports between the world's

two largest economies have soared far beyond 100%. The talks

were still under way late on Saturday afternoon and were widely

expected to continue on Sunday.

The trade dispute, combined with U.S. President Donald

Trump's decision last month to impose duties on dozens of other

countries, has disrupted supply chains, unsettled financial

markets and stoked fears of a sharp global downturn.

The location of the talks in the Swiss diplomatic hub was

not made public. However, witnesses saw both delegations

returning to the residence of Switzerland's ambassador to the

U.N. in the leafy suburb of Cologny after a lunch break where

they remained for several hours.

They had met for around two hours in the morning at the

gated villa which has its own private park overlooking Lake

Geneva. Earlier, U.S. officials including Bessent and U.S. Trade

Representative Jamieson Greer smiled as they left their hotel on

the way to the talks, wearing red ties and American flags on

their lapels. Bessent declined to speak to reporters.

At the same time, Mercedes vans with tinted windows were

seen leaving a hotel where the Chinese delegation was staying on

the lakeside as runners preparing for a weekend marathon warmed

up in the sunshine.

Washington is seeking to reduce its trade deficit with

Beijing and convince China to renounce what the United States

says is a mercantilist economic model and contribute more to

global consumption, a shift that would require politically

sensitive domestic reforms.

Beijing has pushed back against what it sees as external

interference. It wants Washington to lower tariffs, clarify what

it wants China to buy more of, and treat it as an equal on the

world stage.

"China's determination to protect its national development

interests is as solid as a rock, and its stance and goals in

defending international fairness and justice, as well as

maintaining the global economic and trade order, remain

unwavering," Chinese state news agency Xinhua said in a

commentary on Saturday.

LOW EXPECTATIONS

With distrust running high, both sides have been keen not to

appear weak, and economic analysts have low expectations of a

breakthrough.

U.S. President Donald Trump said on Friday that an 80%

tariff on Chinese goods "seems right", suggesting for the first

time a specific alternative to the 145% levies he has imposed on

Chinese imports.

He has suggested the discussions were initiated by China.

Beijing said the U.S. requested the discussions and that China's

policy of opposing U.S. tariffs had not changed.

China could be looking for the same 90-day waiver on tariffs

that Washington has given other countries as negotiations take

place, while any kind of tariff reduction and follow-up talks

would be seen as positive by investors.

Swiss Economy Minister Guy Parmelin met both parties in

Geneva on Friday and said the fact that the talks were taking

place was already a success.

"If a road map can emerge and they decide to continue

discussions, that will lower the tensions," he told reporters on

Friday, saying talks could continue into Sunday or even Monday.

Switzerland helped to broker the meeting during recent

visits by Swiss politicians to China and the United States.

China's He is also provisionally scheduled to meet the

director-general of the World Trade Organization, Ngozi

Okonjo-Iweala, during his stay, a spokesperson for the

Geneva-based watchdog said.

She has welcomed the talks "as a positive and constructive

step towards de-escalation", calling for sustained dialogue

between the two top economies.

Since taking office in January, Trump has increased tariffs

on Chinese imports to 145%, citing unfair trade practices and

accusing Beijing of failing to curb the export of chemicals used

to produce fentanyl, a lethal synthetic opioid.

China retaliated with 125% retaliatory tariffs, and said it

would not bow to "imperialists" and bullies.