By Trevor Hunnicutt and Jihoon Lee
GYEONGJU, South Korea (Reuters) -U.S. President Donald Trump landed in South Korea on Wednesday for the final leg of his Asia trip, optimistic about striking a trade war truce with Chinese President Xi Jinping after summit talks with South Korea’s Lee Jae Myung.
Arriving from Tokyo hours after North Korea test-fired a nuclear-capable cruise missile, Trump is due to address a summit of CEOs and meet with Lee in Gyeongju, a sleepy South Korean town filled with historic tombs and palaces.
The main item on Wednesday’s agenda will be the unresolved trade agreement between the U.S. and South Korea, before an expected meeting with Xi on Thursday, the prospect of which has already buoyed global markets.
Speaking to reporters aboard Air Force One en route to Gyeongyu, Trump dismissed the North Korea missile test and said he was squarely focused on his meeting with the leader of the world’s second-largest economy.
“The relationship with China is very good. So I think we’re going to have a very good outcome for our country and for the world, actually,” Trump said.
He expects to reduce U.S. tariffs on Chinese goods in exchange for Beijing’s commitment to curb exports of fentanyl precursor chemicals, he added.
SOUTH KOREA TRADE TALKS STRUGGLE
Trump made no mention of trade talks with South Korea on Wednesday, with both sides playing down the prospect of a breakthrough in leader talks.
The two allies announced a deal in August under which South Korea would avoid the worst of the tariffs by agreeing to pump $350 billion of new investments into the United States. But talks over the structure of those investments have been deadlocked.
Trump has also pressed allies like South Korea to pay more for defence, and South Korea has sought reforms to U.S. immigration laws to allow for more workers to build factories after a raid on a Hyundai Motor battery plant in Georgia.
The leaders will discuss trade, investment and peace on the Korean peninsula at talks on Wednesday, Lee’s office said, a reference to engagement with North Korea.
Trump has made repeated calls for a meeting with leader Kim Jong Un, including during this trip, but there has been no public comment from Pyongyang. Kim has previously said he could be open to talking if Washington stops pressing him to give up nuclear weapons.
TAIWAN ON THE AGENDA?
Filled with thousands of police and soldiers for security, Gyeongju will host the APEC forum this week, but Trump will skip the leaders’ summit scheduled for Friday and Saturday.
“Trump dislikes large international gatherings and prefers to have one-on-one meetings with key leaders,” said Christopher Padilla, senior adviser at advisory firm Brunswick Group in Washington. “But while the U.S. steps back, most of the world has continued to work through such institutions, finding them a useful source of cooperation on international problems.”
Instead, Trump will address the APEC CEO summit, hold bilateral meetings with several countries’ leaders, including China’s Xi, and have dinner with Lee.
The Xi-Trump meeting, expected on Thursday, is overshadowing the rest of the week’s busy diplomatic schedule.
Negotiators from the world’s top two economies hashed out a framework on Sunday for a deal to pause steeper American tariffs and Chinese rare earths export controls, U.S. officials said. The news sent stocks soaring to record peaks.
Taiwan Foreign Minister Lin Chia-lung said on Tuesday that he was not worried that Trump would “abandon” the island in his meeting this week with Xi.
Since taking office in January, Trump has vacillated on his position towards China-claimed Taiwan as he seeks to strike a trade deal with Beijing. Trump says Xi has told him he will not invade Taiwan while the Republican president is in office, but Trump has yet to approve any new U.S. arms sales to Taipei.
Trump told reporters on Wednesday that he did not know whether he would even discuss Taiwan with Xi.
FINAL STOP IN ASIA TRIP
Trump is arriving in Gyeongju after a whirlwind swing through the region, among the hardest hit by his tariff policies and increased U.S.-China competition.
In Malaysia, he announced a slew of trade agreements on the sidelines of the 11-member Association of Southeast Asian Nations summit and oversaw the signing of an expanded truce between Thailand and Cambodia after a border conflict.
In Tokyo on Tuesday, Trump lavished praise on Japan’s first female Prime Minister Sanae Takaichi, welcoming her pledge to accelerate a military buildup and signing deals on trade and rare earths.
The U.S. and Japan also released a list of projects in which Japanese companies are eyeing U.S. investments, related to Tokyo’s pledge earlier this year of $550 billion in strategic U.S. investments, loans and guarantees in exchange for tariff reprieve.
Washington has pressed South Korea to make a similar arrangement, but Seoul says it cannot afford to pay the $350 billion it pledged upfront. Instead, South Korea has offered a mix of phased investments, loans and other measures.
On Tuesday, South Korean Foreign Minister Cho Hyun said a last-minute concession by the United States could lead to a deal.
(Reporting by Trevor Hunnicutt in Tokyo and Jihoon Lee in Gyeongju, South Korea; Writing by Josh Smith and John Geddie; Editing by Jamie Freed and Lincoln Feast.)
