US won’t resume trade talks without firm proposal from a wary China

THE US is refusing to resume trade negotiations with China until Beijing comes up with a concrete proposal to address Washington’s complaints about forced technology transfers and other economic issues, officials on both sides of the Pacific said.

The impasse threatens to undermine a meeting between President Trump and President Xi Jinping of China that is scheduled for the end of November at the Group of 20 leaders summit in Buenos Aires. Both sides had hoped the gathering would ease the trade tensions.

US businesses have been counting on sufficient progress at the meeting for the Trump administration to suspend its plan to increase tariffs on US$200bil of Chinese imports to 25% on Jan 1, from the current 10%. Such a move would be a blow to US importers and consumers.

Negotiations have been on hold since mid-September, when the Chinese cancelled a trip to Washington after the US announced levies on the US$200bil of Chinese imports. Since then, Beijing has sought to re-engage, including asking US Treasury Undersecretary David Malpass to resume talks. He declined – with the backing of the White House trade team – until the Chinese present a formal offer, US officials said.

“If China wants (the G-20 session) to be a meaningful meeting, we need to do the groundwork,” a senior White House official said. “And if they don’t give us any information, it’s just hard to see how that becomes fruitful.”

The impasse comes as tensions between the world’s two largest economies are spreading from trade to national-security issues. Vice-President Mike Pence, in a recent speech, railed against China’s acquisition of sensitive technology and its confrontational military posture.

Pence accused Beijing of meddling in US politics, leaving China’s leadership perplexed over the scope of their mounting challenges with Washington, said Craig Allen, president of the US-China Business Council, a trade group of large US firms.

“They are not clear that responding on the trade issues would be sufficient to be able clear the air bilaterally,” Allen said.

For Beijing, making a formal offer presents a number of risks, individuals briefed by the Chinese said. First, it would reveal China’s negotiating position. Second, Beijing fears Trump could make any offer public in a tweet or statement as a way to lock in any concessions by China.

There is history behind Beijing’s concerns. During negotiations over China’s entry to the World Trade Organisation in 1999, then-President Clinton turned down an offer by China’s premier at the time, Zhu Rongji, that included deep concessions and a reorganisation of the Chinese economy.

The Clinton administration made Zhu’s offer public, hoping to prevent the Chinese from backsliding. Instead, Zhu was pilloried at home by hard-liners, and it took months of negotiations to finally persuade China to accept a deal similar to the one it initially offered.

China’s ambassador to the US, Cui Tiankai, said Beijing wanted more discussions before it would put forth a specific offer. “People have to sit down together,” he said in an interview. “Then each side should make its own proposal.”

He said Beijing is wary of negotiating with the Trump administration because Trump rejected several previous offers after other senior US negotiators indicated they would be accepted. “You cannot have some tentative agreement one day and reject it next day,” he said.