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Carson Block

Anjali Sundaram | CNBC

Investors shouldn’t get their hopes up for the U.S. and China to make any progress on the trade front at the G-20 summit next week, short-seller Carson Block said on Friday.

“I don’t think we’re going to have any rapprochement here. The Chinese media seems to be digging in and not softening its tone,” Block, founder of Muddy Waters Research, told CNBC’s “Squawk on the Street. ” “They’re preparing, I think, for a long geopolitical battle with the West.”

Block lived in China for six years and gained recognition by shorting several Chinese stocks, including Sino-Forest. More recently, Block compared Chinese after-school operator Tal Education to Enron.

China and the U.S. have been engaged in a trade war for more than a year. In that time, the two countries have slapped tariffs on billions of dollars worth of their goods, tightening trade conditions and dampening the U.S. economic outlook.

President Donald Trump and his Chinese counterpart, Xi Jinping, are scheduled to meet at next week’s G-20 summit in Japan. The two leaders are expected to discuss trade, with the possibility of reaching an accord.

Still, Block does not expect a deal to be reached. He also said China has figured out how to use the open markets and economies of the West against Western countries through its influence on Chinese companies.

“At the end of the day, there can be no business that is based in mainland China that can be assured of acting independently of the government and just for commercial reasons,” Block said. “Huawei and ZTE built themselves because they were strategic priorities of the Chinese government. When Ericsson and Nokia were laying employees, Huawei was hiring them in Sweden and Norway not because it was a good commercial decision, but because of the long-term vision” of the Chinese government.

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