China to of­fer U.S. trade-deficit pack­age

The Globe and Mail (Prairie Edition) - - REPORT ON BUSINESS - DAVID LAWDER STEVE HOLLAND WASH­ING­TON

The $200-bil­lion reduction deal in­cludes pur­chases of goods and other mea­sures

China has of­fered U.S. Pres­i­dent Don­ald Trump a pack­age of proposed pur­chases of U.S. goods and other mea­sures aimed at re­duc­ing the U.S. trade deficit with China by some US$200-bil­lion a year, U.S. of­fi­cials fa­mil­iar with the of­fer said.

The of­fer was made dur­ing U.S.China trade talks in Wash­ing­ton aimed at re­solv­ing tar­iff threats and other trade ir­ri­tants be­tween the world’s two largest economies, but it was not im­me­di­ately clear how the to­tal value was de­ter­mined.

One of the sources said that U.S. air­craft maker Boe­ing Co. would be a ma­jor ben­e­fi­ciary of the Chinese of­fer. Boe­ing is the largest U.S. ex­porter and al­ready sells about a quar­ter of its com­mer­cial air­craft to Chinese cus­tomers.

Ear­lier in the day, Mr. Trump said China had be­come “very spoiled” on trade with the United States and cast doubt on the suc­cess of his efforts to re­bal­ance the re­la­tion­ship with Bei­jing.

Mr. Trump, speak­ing to re­porters at the White House, said China had “ripped off” the United States for too long and that he told Chinese Pres­i­dent Xi Jin­ping that “we just can’t do that any­more.”

But he praised the efforts of U.S. and Chinese of­fi­cials to try to re­bal­ance the re­la­tion­ship through trade talks.

“Will that be suc­cess­ful? I tend to doubt it. The rea­son I doubt it is be­cause China has be­come very spoiled” with get­ting its way on trade with the United States, he said.

A sec­ond round of talks be­tween se­nior Trump ad­min­is­tra­tion of­fi­cials and their Chinese coun­ter­parts started at the U.S. Trea­sury on Thurs­day morn­ing, fo­cused on cut­ting China’s U.S. trade sur­plus and im­prov­ing in­tel­lec­tual prop­erty pro­tec­tions.

Mr. Trump has threat­ened to im­pose up to US$150-bil­lion in puni­tive tar­iffs to com­bat what he says is Bei­jing’s mis­ap­pro­pri­a­tion of U.S. tech­nol­ogy through joint ven­ture re­quire­ments and other poli­cies. Bei­jing has threat­ened equal re­tal­i­a­tion, in­clud­ing tar­iffs on some of its largest U.S. im­ports, in­clud­ing air­craft, soy­beans and au­tos.

At trade talks in Bei­jing two weeks ago, both sides pre­sented lengthy lists of de­mands, agree­ing only to keep talk­ing.

The Trump ad­min­is­tra­tion sought a US$200-bil­lion reduction in China’s US$375-bil­lion U.S. goods trade sur­plus, an end to joint ven­ture re­quire­ments that it says co­erce tech­nol­ogy trans­fers from Amer­i­can com­pa­nies and an end to sub­si­dies for ad­vanced tech­nol­ogy in­dus­tries un­der the “Made in China” 2025 pro­gram.

China de­manded that Mr. Trump re­lax crush­ing re­stric­tions im­posed on Chinese telecom­mu­ni­ca­tions equip­ment maker ZTE Corp., and end re­stric­tions on Chinese in­vest­ments in the United States and sales of high-tech­nol­ogy goods to China.

Mr. Trump on Sun­day wrote on Twit­ter he would help put ZTE back in busi­ness af­ter a Com­merce Depart­ment ban cut off its sup­ply of U.S. com­po­nents, forc­ing it to sus­pend op­er­a­tions. Mr. Trump told re­porters on Thurs­day that Mr. Xi had asked him to look into the ZTE sit­u­a­tion and he agreed to do so, adding that ZTE buys a lot of parts from U.S. com­pa­nies. “That’s a lot of busi­ness.

“Any­thing we do with ZTE, it’s just a small com­po­nent of the over­all deal. I can only tell you this: We’re go­ing to come out fine with China. Hope­fully, China will be happy, I think we’ll be happy,” Mr. Trump said.

Ear­lier, top White House eco­nomic ad­viser Larry Kud­low told Fox Busi­ness Net­work that the dis­cus­sion over ZTE was about re­ex­am­in­ing the U.S. penal­ties, not waiv­ing the en­force­ment ac­tion al­to­gether.

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