U.S., China to talk trade but with low hopes
Analyst: Negotiators still facing same issues between nations.
Two months after BEIJING —
U.S.-Chinese talks aimed at ending a tariff war broke down, both sides are trying to temper hopes for a breakthrough when negotiations resume today on an array of disputes that has grown to include tension over China’s tech giant Huawei.
Rhetoric has hardened despite the June agreement by Presidents Donald Trump and Xi Jinping to revive efforts to end the costly fight over China’s tech- nology ambitions and trade surplus.
“I don’t know if they’re going to make a deal,” Trump said Friday. “Maybe they will, maybe they won’t. I don’t care.” He repeated his claim that the United States is prospering by “taking in tens of billions of dollars” from his tariff hikes on Chinese products. In reality, those are paid by U.S. companies and consumers who buy Chinese goods.
U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Ligh- thizer are due to meet today and Wednesday in Shanghai with a delegation led by China’s economy czar, Vice Premier Liu He.
Chinese leaders are resist- ing U.S. pressure to roll back plans for government-led development of industry leaders in robotics, artificial intelligence and other tech- nologies. Washington complains those efforts depend on stealing or pressuring foreign companies to hand over technology. Some American officials worry the U.S. is losing its lead.
For their part, American negotiators have resisted Beijing’s demand that they remove all punitive tariffs immediately. Washington wants to keep some in place to ensure China keeps its promises.
“The same issues that caused the talks to break down are still there,” said Julian Evans-Pritchard of Capital Economics.
“Neither side seems any closer to offering major concessions,” said EvansPritchard. “It’s very hard to see how they can reach a deal this time if they were unable to do that in March.”
U.S. priorities include “industrial policy issues such as intellectual prop- erty rights, forced technol- ogy transfer and subsidies for (Chinese) state-owned enterprises,” said Jeff Moon, a former U.S. diplomat and trade official who special- ized in China. “Enforcing any agreements is also a top priority.”
Economists are warning that with both sides still far apart, the truce is fragile.
After talks broke down in May, the Trump administra- tion imposed curbs on U.S. technology sales to Huawei, the biggest global maker of network gear for phone com- panies and the No. 2 smartphone brand. U.S. officials view Huawei as a national security threat and warn that its equipment could be used for cyberespionage.
Beijing retaliated by announcing it would create its own list of “unreliable entities” subject to unspecified controls. Authorities have yet to announce which companies might be targeted.
On the eve of the talks, the Chinese government accused Washington on Monday of “arrogance and selfishness” after Trump pressed for the World Trade Organization to stop allowing Beijing and other governments to receive more lenient treatment as developing economies.
Trump told Lighthizer in a memo Friday the he wants the WTO to prevent member governments from claiming developing country status if their economies do not need beneficial treatment. Developing countries are allowed more time to open their economies and more leeway to subsidize exports.
China needs that status to “achieve real trade fairness,” said a foreign ministry spokeswoman, Hua Chunying.
The Trump administra- tion’s remarks “have further exposed its wayward arrogance and selfishness,” Hua said.
Trump has suggested he would consider easing up on Huawei if it meant getting a better trade deal.
“Trump — in his eagerness to find negotiating leverage — linked national security and trade with regard to Huawei to create a new bargaining chip,” Moon said. Members of Congress from both par- ties likely would object to any concessions on Huawei.
The tariff hikes are battering exporters on both sides and disrupting trade in goods from soybeans to medical devices. China’s imports of American goods fell 31.4% in June from a year ago while exports to the United States fell 7.8%.
Mnuchin is usuallyupbeat in public about the talks. But he tried to temper hopes when he announced plans for the Shanghai meeting, telling broadcaster CNBC that negotiators face “a lot of issues” and he expects to hold more talks, probably in Washington.
“China and the United States will face tough nego- tiations. The gap between their current positions is very big,” said the Global Times, published by the ruling Communist Party news- paper People’s Daily.
Washington “still hopes to force Chinese concessions,” the newspaper said. It rejected “destructive surgery on China’s economic system” and called on Wash- ington “not to deny the legit- imacy of China’s demands.”
China agreed earlier to narrow its multibillion-dollar trade surplus with the United States by purchas- ing more American soybeans, natural gas and other exports. But it revoked that pledge after one of Trump’s tariff hikes last year.
Chi n ese leaders have grown more skittish, saying any agreement must be “balanced,” reflecting frus- tration that American officials would portray the talks as a victory for Washington, with China bearing the costs.
“If the responsibilities all come from China, it is not an agreement but a surrender,” said Tu Xinquan, director of the China Institute of International Trade and Economics.
Moon, who runs the China Moon Strategies consultancy, dismissed Beijing’s call for balance as “an excuse to object to reforming even the most protectionist aspects of China’s trade policy.”
Trump’s demands for changes in Chinese industrial policy strike at the heart of a state-led development model the ruling Communist Party sees as a path to prosperity and greater global influence.
The decision to add Huawei Technologies Ltd. to a U.S. “entity list” that limits exports threatens China’s first global tech brand.