Trade gap snags U.S., China talks

Af­ter com­plaint strains ne­go­ti­a­tions, sides can­cel brief­ings

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - SALEHA MOHSIN, AN­DREW MAYEDA AND YE XIE

A one-day dis­cus­sion be­tween the world’s two big­gest economies got off to a tense start Wednes­day as U.S. Com­merce Sec­re­tary Wil­bur Ross up­braided China over the trade im­bal­ance and both govern­ments can­celed their clos­ing news con­fer­ences.

At open­ing re­marks be­tween the two sides, Ross com­plained about the trade gap with China in un­usu­ally blunt terms. While U.S. ex­ports to China have grown in re­cent years, im­ports from the Asian coun­try have ex­panded even faster, lead­ing to a $309 bil­lion trade deficit, Ross said Wednes­day. He spoke at the open­ing of the one-day U.S.China Com­pre­hen­sive Eco­nomic Dia­logue in Wash­ing­ton.

“If this were just the nat­u­ral prod­uct of free-mar­ket forces, we could un­der­stand it, but it’s not,” Ross said, as Chi­nese Vice Premier Wang Yang looked on. “So it’s time to re­bal­ance in our trade and in­vest­ment re­la­tion­ship in a more fair, eq­ui­table and re­cip­ro­cal man­ner.”

Mo­ments ear­lier, Wang said in his re­marks that co­op­er­a­tion be­tween the two coun­tries was the best way to pro­ceed. Trea­sury Sec­re­tary Steve Mnuchin said he was op­ti­mistic the sides could use the talks as a “mile­stone in our eco­nomic and fi­nan­cial re­la­tion­ship,” de­spite the chal­lenges that re­main.

Shortly af­ter the three spoke, the Trea­sury sent an email to re­porters say­ing the U.S. had can­celed a news con­fer­ence sched­uled at the end of the day, when Mnuchin and Ross were ex­pected to dis­cuss the out­come of the ne­go­ti­a­tions. The Trea­sury De­part­ment emailed a no­tice that

China had can­celed its own me­dia brief­ing shortly af­ter.

Crit­i­cism by Pres­i­dent Don­ald Trump’s ad­min­is­tra­tion of China marks a de­par­ture from past ver­sions of the dia­logue, typ­i­cally a chore­ographed event where, pub­licly at least, U.S. and Chi­nese of­fi­cials pledge to deepen the re­la­tion­ship be­tween the two pow­ers.

But this year’s meet­ing comes as ten­sions rise be­tween the two na­tions as Trump steps up pres­sure on China to rein in North Korea’s nu­clear pro­gram. His ad­min­is­tra­tion also is weigh­ing steps to cut steel im­ports, blam­ing China’s over­ca­pac­ity for cre­at­ing a global glut. On Tues­day in their pub­lic re­marks, the lead­ers ap­peared to side­step ma­jor dif­fer­ences in a lun­cheon ahead of the Com­pre­hen­sive Eco­nomic Dia­logue.

The meet­ing is the first un­der a new for­mat agreed to in April, when Trump met his Chi­nese coun­ter­part, Xi Jin­ping, in Florida and de­vel­oped a 100-day ac­tion plan. The U.S. and China cre­ated the dia­logue in 2008 to ce­ment ties be­tween the two coun­tries.

Un­der Trump and Xi, talks led to China re­open­ing its mar­kets to U.S. beef and pledg­ing to buy U.S. liq­ue­fied nat­u­ral gas, while al­low­ing greater ac­cess to its fi­nan­cial ser­vices sec­tor.

“What mat­ters most with the [meet­ings] and other forms of di­a­logues is to get the two sides to sit to­gether and talk, to avoid the mu­tual abuse trig­gered by lack of com­mu­ni­ca­tion,” said He Wei­wen, deputy di­rec­tor of the Cen­ter for China and Glob­al­iza­tion in Bei­jing.

Mnuchin said Tues­day that the U.S. wanted spe­cific de­liv­er­ables from the meet­ing. He said the U.S. will use the dis­cus­sions to push China on lift­ing for­eign-own­er­ship re­stric­tions in its fi­nan­cial ser­vices in­dus­try and re­mov­ing hur­dles for in­for­ma­tion and tech­nol­ogy sec­tors.

While Trump said he built a pos­i­tive rap­port with Xi dur­ing the April meet­ing at his Mar-a-Lago re­sort in Florida, there have been signs of grow­ing fric­tion as the U.S. pushes China to re­duce North Korea’s nu­clear threat.

The U.S. pres­i­dent in June said China hadn’t done enough to con­trol North Korea and its nu­clear-weapons pro­gram, though he ap­peared to brush off dif­fer­ences from that threat and about trade is­sues dur­ing the Group of 20 meet­ing ear­lier this month.

In a move that threat­ened to raise ten­sions, Mnuchin last month took steps to pe­nal­ize a Chi­nese bank, a Chi­nese ship­ping com­pany and two Chi­nese ci­ti­zens to re­duce North Korea’s ac­cess to the in­ter­na­tional fi­nan­cial sys­tem. Mnuchin said at the time that the mea­sures were “in no way tar­get­ing China” but in­stead fo­cused on “North Korea’s ex­ter­nal en­ablers.”

The sanc­tions pro­voked a fu­ri­ous re­sponse from China, with a For­eign Min­istry spokesman say­ing the mea­sures vi­o­lated un­der­stand­ings reached dur­ing the Mar-a-Lago meet­ings.

Re­newed ten­sion be­tween the U.S. and China could re­vive the threat of es­ca­lat­ing trade spats. The Trump ad­min­is­tra­tion has de­ci­sions pend­ing on the na­tional se­cu­rity im­pli­ca­tions of im­port­ing steel and alu­minum that could lead to quo­tas or tar­iffs. The Com­merce De­part­ment is ex­pected to hand over its rec­om­men­da­tion to Trump soon.

U.S. trade penal­ties would likely be coun­tered by China, caus­ing both economies to suf­fer, said Gary Locke, who served as U.S. am­bas­sador to China from 2011-2014, in an in­ter­view Wednes­day on Bloomberg TV. “The Chi­nese are aware that the United States can im­pose tar­iffs and du­ties and sanc­tions on China, but that will only lead to a trade war,” said Locke. “In a trade war ev­ery­one loses, there’s no win­ners.”


Trucks move ship­ping con­tain­ers last week at a port in China’s Shan­dong prov­ince. U.S. com­merce chief Wil­bur Ross com­plained to China’s ne­go­tia­tor Wednes­day that im­ports from China have grown much faster than U.S. ex­ports to China.

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