US seeks commitments from China
WASHINGTON — As President Donald Trump dangles the possibility of extending a March deadline to reach a trade deal with China, his advisers are trying to secure firm commitments from Beijing to purchase more U.S. products, prevent currency manipulation and end its practice of forcing American companies to hand over valuable technology.
Negotiators from both countries, who are meeting in Washington over the next two days, are expected to trade memos and haggle over phrasing as they try to make progress toward a deal. But U.S. officials are increasingly focused on ensuring that China, which has often reneged on promises to past administrations, actually adheres to any agreement.
Whether a substantive deal can be reached in the coming days remains unclear. So far, the Chinese have largely reiterated promises to allow foreign car companies and banks freer access to the Chinese market and to increase purchases of U.S. goods, including soybeans and semiconductors.
In recent meetings, the Chinese made only vague commitments on structural issues, including protecting intellectual property and paring back heavy subsidies to state-owned enterprises, said William Reinsch, a former U.S. trade official and now a senior adviser at the Center for Strategic and International Studies.
“The Chinese have not yet put forward anything close to what we’re asking on the so-called structural issues,” Reinsch said. “There are differences of opinion on whether they will.”
Complicating matters is Trump, who in recent days has appeared to undercut his advisers by saying that talks might outlast a March deadline that the president himself set in an effort to pressure China to cut a deal.
“I can’t tell you exactly the timing,” Trump said Tuesday, adding that the deadline he had set of midnight March 1 “is not a magical date. A lot of things can happen.”
On Thursday morning, U.S. trade representative Robert Lighthizer, flanked by Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and economic advisers Larry Kudlow and Peter Navarro, met with Vice Premier Liu He of China and a team of Chinese advisers in the executive office building next to the White House. The meeting kicked off two days of top-level talks in which Lighthizer, a longtime China critic, hopes to secure promises from Beijing to make lasting structural changes to its economy.
Much of the recent discussion has centered on deadlines and enforcement mechanisms to ensure that China keeps any promises for economic reforms. Lighthizer, Navarro and other trade advisers have often called out China for promising changes to U.S. officials in the past, but then failing to follow through. The administration is considering a process that would allow tariffs to kick back in if the Chinese are found to have reneged on a commitment.
In recent weeks, Trump has signaled that he is growing tired of the grinding pace of the negotiations, the infighting among his economic advisers and the increasing calls from rich Republican donors to wind down the trade dispute with China, according to a source familiar with the negotiations. Despite his desire to cut a deal quickly, increasing criticism from Democrats about being soft on China has pushed Trump to consider extending the talks in hopes of getting more concessions.
The tone of the negotiations between the two nations has grown more stern, the source said. In recent meetings, Chinese officials have pushed back more aggressively against the administration’s accusations that China has engaged in a pattern of illegally obtaining U.S. technology and information and that it has failed to make any changes the United States has called for.
Meanwhile, U.S. officials have come to realize that China has been repackaging promised reforms and trying to sell them as concessions to Trump. This has caused deep frustration among the administration’s China hard-liners, including Navarro and Lighthizer, who have been skeptical that China will actually agree to new, substantive commitments.
In the run-up to this week’s meeting, both sides have tried to begin formalizing the framework of an agreement around six memorandums of understanding. However, a detailed draft text of an agreement has not yet been written.
“The Chinese are playing for an extension,” said Michael Pillsbury, a Hudson Institute scholar who advises the Trump administration and speaks regularly with Chinese officials. “That’s one of their top goals right now.”
Pillsbury said that despite Trump’s hints about extending the deadline, they are expecting he will follow through on his “tariff man” instincts and raise levies on $200 billion worth of Chinese goods March 2. He said he believes that China has prepared a package of structural concessions to offer the United States after those tariffs are increased in an effort to get all the tariffs rolled back.
Both countries have also floated measures that could undermine years of efforts aimed at making China’s economy more marketoriented. The offers include large, state-directed purchases of technological goods, natural gas and soybeans, as well as closer management of China’s currency. Those measures would violate Chinese promises to the World Trade Organization and the International Monetary Fund.
But that may matter little to Trump, who has been largely focused on narrowing the trade gap between the two countries by getting China to buy more U.S. products. The U.S. trade deficit with China is likely to increase in 2019, said Derek Scissors, a resident scholar at the American Enterprise Institute, increasing pressure on Trump to reach a deal that involves more American products flowing East.
“We need large, quick purchases from the Chinese so the president isn’t ripped to pieces for violating the metric he ran on in 2016,” Scissors said.