Prospects of ma­jor US-China deal dim

High-stakes trade talks re­sume

The Korea Times - - WORLD BUSINESS -

BEI­JING/WASHINGTON (Reuters) — Sur­prised and up­set by the U.S. black­list­ing of Chi­nese com­pa­nies, China has low­ered ex­pec­ta­tions for sig­nif­i­cant progress from this week’s trade talks with the United States, Chi­nese gov­ern­ment of­fi­cials told Reuters, even as Pres­i­dent Don­ald Trump on Wed­nes­day ex­pressed fresh op­ti­mism.

While Bei­jing the­o­ret­i­cally wants to end the trade war, Chi­nese Com­mu­nist Party of­fi­cials are not op­ti­mistic about the size or scope of any agree­ment with Washington in the short­term, the Chi­nese of­fi­cials said.

Top U.S. and Chi­nese trade and eco­nomic of­fi­cials will meet in Washington on Thurs­day and Fri­day to try to end a 15-month-old trade war that is slow­ing the global econ­omy and threat­ens to up­end decades­old trade sys­tems. Chi­nese Vice Pre­mier Liu He, U.S. Trade Rep­re­sen­ta­tive Robert Lighthizer and Trea­sury Sec­re­tary Steven Mnuchin are due to take part.

With­out sig­nif­i­cant progress, Trump is set to hike the tar­iff rate on $250 bil­lion worth of Chi­nese goods to 30 per­cent from 25 per­cent next Tues­day.

Speak­ing to re­porters in Washington, Trump said: “If we can make a deal, we’re go­ing to make a deal, there’s a re­ally good chance.”

“In my opin­ion China wants to make a deal more than I do,” Trump added.

Based on the cur­rent sit­u­a­tion, there is a pos­si­bil­ity that this week’s talks be­tween the world’s two largest economies could end in a dead­lock, ac­cord­ing to a Chi­nese of­fi­cial briefed on prepa­ra­tions for the talks who spoke on con­di­tion of anonymity. Asked about the prob­a­bil­ity of reach­ing an agree­ment, the of­fi­cial said, “This is not an easy task. It re­quires a lot of prepa­ra­tion work and con­sen­sus on both sides.”

For trade re­la­tions or over­all ties be­tween the two coun­tries to im­prove, more time is needed, Chi­nese of­fi­cials said.

While pre­vi­ous lower-level talks be­tween U.S. and Chi­nese of­fi­cials aimed to cre­ate a good at­mos­phere for the up­com­ing meet­ing, the U.S. black­list­ing of 28 Chi­nese com­pa­nies has gen­er­ated a neg­a­tive at­mos­phere in­stead, Chi­nese of­fi­cials said.

The U.S. De­part­ment of Com­merce on Mon­day black­listed video sur­veil­lance firm Hikvi­sion and 27 oth­ers, days ahead of the talks. The Com­merce De­part­ment barred the tech­nol­ogy and ar­ti­fi­cial in­tel­li­gence com­pa­nies from do­ing busi­ness with U.S. firms, cit­ing hu­man rights vi­o­la­tions of Mus­lim mi­nor­ity groups in Xin­jiang. Chi­nese of­fi­cials said the ac­tion in­ter­fered with China’s sovereignt­y.

Both sides should not es­ca­late dis­putes or they will drift apart, said a sec­ond Bei­jing-based Chi­nese of­fi­cial briefed on the talks this week.

The trade talks come in the wake of tit-for-tat bans on cer­tain visas for each other’s of­fi­cials and a con­tro­versy sparked by a Twit­ter post by an ex­ec­u­tive with the Na­tional Bas­ket­ball As­so­ci­a­tion’s Houston Rock­ets sup­port­ing anti-gov­ern­ment protests in Hong Kong.

“We can add the Diplo­matic war to the Fi­nan­cial war, Cur­rency war and Tech­nol­ogy war, that we al­ready have,” John Browning, man­ag­ing di­rec­tor at bro­ker­age BANDS Fi­nan­cial in Shang­hai, said in a note to in­vestors.

While there is a huge con­tin­gent of high-level Chi­nese of­fi­cials trav­el­ing to Washington, “to my jaded per­cep­tion it looks less than a del­e­ga­tion rather a funeral cortege,” Browning wrote.

The U.S. de­mand that the Chi­nese Com­mu­nist Party fun­da­men­tally change how it di­rects China’s mas­sive econ­omy to shift to a more Western model of free-mar­ket cap­i­tal­ism is ir­ra­tional and mis­guided, a Chi­nese di­plo­mat in the United States said.

“What we achieved dur­ing the past few decades shows that our sys­tem is good for de­vel­op­ment in China,” the of­fi­cial said, speak­ing on con­di­tion of anonymity.

China would not ask the United States to shift to an econ­omy that re­lies heav­ily on state-owned en­ter­prises, or ask it to start fully fund­ing ed­u­ca­tion, as China’s does, he said, so why should Washington ex­pect the same from Bei­jing?

AFP-Yon­hap

U.S. Trade Rep­re­sen­ta­tive Robert Lighthizer, left, takes part in U.S.-China trade talks with China’s Vice Pre­mier Liu He, right, in the Eisen­hower Ex­ec­u­tive Of­fice Build­ing on in Washington, D.C., in this Feb. 21 file photo.

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