China denies making $200bn deficit offer

Scraps anti-dumping probe into US sorghum imports

China

denied yesterday that it had offered a package to slash the US trade deficit by up to $200 billion, hours after it dropped an anti-dumping probe into US sorghum imports in a conciliatory gesture as top negotiators meet in Washington.

US officials had said on Thursday that China was proposing trade concessions and increased purchases of American goods aimed at cutting the US trade deficit with China by up to $200 billion a year.

“This rumour is not true. This I can confirm to you,” Chinese Foreign Ministry spokesman Lu Kang told a regular news briefing.

“As I understand, the relevant consultations are ongoing and they are constructive,” he said, adding that he could not elaborate on the specifics of the negotiations.

Chinese Vice Premier Liu He is in Washington this week for talks with US officials led by US Treasury Secretary Steven Mnuchin aimed at heading off a trade war.

A White House statement described the meetings as part of “ongoing trade discussions” and said Trump met the Chinese delegation led by Liu and the US team led by Mnuchin.

“The United States officials conveyed the president’s clear goal for a fair trading relationship with China,” the White House said.

Earlier yesterday, China announced that it was ending its sorghum investigation, which had effectively halted a trade worth roughly $1.1 billion last year and roiled global grain markets and spurred worries about rising costs domestically.

The United States is China’s dominant source of imported sorghum, a product grown in states such as Texas and Kansas that lean towards Trump’s Republican Party, whose congressional majorities are under threat in mid-term elections in November.

Explaining the dropping of the sorghum investigation, China’s Commerce Ministry said it “would have a widespread impact on consumer living costs, and does not accord with the public interest.”

Getting to a $200 billion reduction of the US-China trade deficit on a sustainable basis would require a massive change in the composition of commerce between the two, and the news from the unidentified US officials in Washington had been met with scepticism from economists.

“That’s an enormous number and it suggests that there could be some impressively ambitious accounting,” said Scott Mulhauser, a former chief of staff at the US embassy in Beijing and US Export-Import Bank official who now advises companies on trade.

US trade gap with China swelled to record $375 billion last year.

One US source said earlier that US aircraft maker Boeing Co would be a major beneficiary of the Chinese offer to narrow the trade gap if Trump were to accept it.

Boeing is the largest US exporter and already sells about a quarter of its commercial aircraft to Chinese customers.

Another person familiar with the talks had said the package may include some elimination of Chinese tariffs already in place on about $4 billion worth of US farm products including fruit, nuts, pork, wine — and sorghum.

The United States shipped 4.76 million tonnes of sorghum to China in 2017, worth about $1.1 billion, accounting for the bulk of Chinese imports of the grain used in animal feed and Chinese liquor.

In April, China forced US sorghum exporters to put up a 178.6% deposit on the value of sorghum shipments to the country after launching an investigation in February following Trump’s imposition of steep tariffs on imports of solar panels and washing machines.