U.S., China trade talks resuming as rhetoric toughens

BEIJING >> Two months after 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 Tuesday 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 technology 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 Lighthizer are due to meet Tuesday and Wednesday in Shanghai with a delegation led by China’s economy czar, Vice Premier Liu He.

Chinese leaders are resisting U.S. pressure to roll back plans for government-led development of industry leaders in robotics, artificial intelligence and other technologies. 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 EvansPritchard of Capital Economics.

“Neither side seems any closer to offering major concessions,” said Evans-Pritchard. “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 property rights, forced technology transfer and subsidies for (Chinese) state-owned enterprises,” said Jeff Moon, a former U.S. diplomat and trade official who specialized 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 administration imposed curbs on U.S. technology sales to Huawei, the biggest global maker of network gear for phone companies and the No. 2 smartphone brand. U.S. officials view Huawei as a national secu

rity 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 administration’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 parties

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 usually upbeat 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 negotiations. The gap between their current positions is very big,” said the Global Times, published by the ruling Communist Party newspaper People’s Daily.