Dayton Daily News

Pessimism looming over possible China trade deal

Deal could halt trade war, help calm markets.

- Alan Rappeport ©2019 The New York Times

As a critical WASHINGTON — round of talks with China kicks off next week, the Trump administra­tion is increasing­ly pessimisti­c that Beijing will make the kind of deep structural changes to its economy that the United States wants as part of a comprehens­ive trade agreement, according to officials involved with the talks.

The United States is now weighing whether large Chinese purchases of U.S. goods and more modest economic changes will be enough for a deal to end a damaging trade war between the two nations and help calm volatile markets.

A Chinese delegation led by Liu He, China’s vice premier, will meet with Robert Lighthizer, the Trump administra­tion’s top trade negotiator, and Treasury Secretary Steven Mnuchin on Jan. 30 and 31. The two countries are racing to strike an agreement by March 2, a deadline set by President Donald Trump and President Xi Jinping of China.

If no deal is reached by that date, Trump has said the United States will raise tariffs on $200 billion worth of Chinese goods.

“I would have a hard time, especially considerin­g what’s happening in Washington, believing that this will be wrapped up in a little bow by March,” said Charles Freeman, senior vice president for Asia at the U.S. Chamber of Commerce.

Over the weekend, Trump expressed hope that a deal could be reached but dismissed suggestion­s that the United States would roll back tariffs in advance of concession­s from China.

“We have taken in tremendous amounts of money in the United States because of the sanctions,” Trump told reporters Saturday, apparently confusing sanctions and tariffs. “If we make a deal, certainly we wouldn’t have sanctions.”

Despite Trump’s optimism about reaching a deal, others in the administra­tion and on Capitol Hill have been more circumspec­t.

“This is an ongoing process with the Chinese that is nowhere near completion,” a Treasury spokesman said, rebutting the suggestion that Mnuchin had recommende­d rolling back tariffs.

Last week, Sen. Chuck Grassley of Iowa, Republican chairman of the Senate Finance Committee, said that Lighthizer, who is leading the talks, had told him there had been no progress on the “structural” changes that the administra­tion sought from China.

Lighthizer, a longtime China hawk, has been pushing to ensure that China fulfills promises that Xi made to Trump during a meeting in Buenos Aires, Argentina, last year. Lighthizer has expressed concern to colleagues and business groups that Trump could accept a watered-down deal that reduces the trade deficit but offers only symbolic structural changes to help end the trade war and lift the stock market.

To those who see the negotiatio­ns as the best opportunit­y to rebalance the trade relationsh­ip between Washington and Beijing, the prospect of rolling back tariffs without sweeping concession­s by China would fail to achieve Trump’s goal of ending what he has deemed its unfair trade practices.

“He wants to brag about what he got, not stop tariffs and be able to brag about nothing,” said Derek Scissors, a China expert at the conservati­ve American Enterprise Institute.

A slimmed-down deal could also open Trump up to criticism from Democrats, who in some cases are more

President Donald Trump has focused on narrowing the trade gap between what the U.S. imports from China and what it exports, but the administra­tion is also pressuring Beijing to scale back subsidies of state-owned enterprise­s, drasticall­y open its markets to foreign investment and end its long-standing practice of forcing U.S. companies to hand over trade secrets.

For years, U.S. companies, including technology firms and automakers, have been clamoring for such changes as they try to gain access to China’s growing market. But many are beginning to fear that if the continuing brinkmansh­ip between the world’s two largest economies is not resolved, U.S. companies will be left in an even worse position. NEW YORK TIMES aligned with the president’s aggressive approach to pressuring China than many Republican­s.

“Anything less than a full effort to secure a fundamenta­l reset of the U.S.-China trade relationsh­ip is a betrayal of the American economy and the future of American workers, industry, consumers and innovators,” said Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Committee. “The Trump administra­tion needs to stiffen its spine and get tough in these China talks.”

 ?? DAN KOECK / THE NEW YORK TIMES ?? Trump administra­tion officials have been debating whether they can push more tariffs on China without facing significan­t repercussi­ons. China’s economy is already slowing and any further weakening could hurt global economic growth.
DAN KOECK / THE NEW YORK TIMES Trump administra­tion officials have been debating whether they can push more tariffs on China without facing significan­t repercussi­ons. China’s economy is already slowing and any further weakening could hurt global economic growth.

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