China narrows scope for trade deal with US
Officials say Trump remains firm on a broader agreement
Chinese officials are signaling they’re increasingly reluctant to agree to a broad trade deal pursued by President Donald Trump, ahead of negotiations this week that have raised hopes of a potential truce.
In meetings with U.S. visitors to Beijing in recent weeks, senior Chinese officials have indicated the range of topics they’re willing to discuss has narrowed considerably, according to people familiar with the discussions.
Vice Premier Liu He, who will lead the Chinese contingent in high-level talks that begin Thursday, told visiting dignitaries he would bring an offer to Washington that won’t include commitments on reforming Chinese industrial policy or the government subsidies that have been the target of long-standing U.S. complaints, one of the people said.
That offer would take one of the Trump administration’s core demands off the table. It’s emblematic of what analysts see as China’s strengthening hand as the Trump administration faces an impeachment crisis — which has recently drawn in China — and a slowing economy blamed by businesses on the disruption caused by the president’s trade wars.
People close to the Trump administration say the impeachment inquiry isn’t affecting trade talks with China. Any attempt to portray anything different is an attempt to weaken the U.S. hand at the negotiating table and, they argue, would be a miscalculation by the Chinese.
U.S. stocks declined, the yen edged up and the yuan slipped Monday. Treasuries fluctuated.
China — beset by its own escalating political crisis in Hong Kong — was drawn into the Washington furor after Trump last week called for a Chinese investigation into his Democratic rival Joe Biden and the former vice president’s son, moments after threatening another escalation in the trade spat.
Trump insisted on Friday that there’s no linkage. Yet the president’s latest comments suggest why Chinese leaders, already frustrated with what they see as the president’s impetuous conduct in the trade talks, may see room to take advantage.
China’s leadership “are interpreting the impeachment discussion as a weakening of Trump’s position, or certainly a distraction,” said Jude Blanchette, an expert on China’s politics at the Center for Strategic and International Studies.
“Their calculation is that Trump needs a win” and is willing to make compromises on substance as a result, he said.
In a statement Monday, the White House said the gathering “will look to build on the deputyl-evel talks of the past weeks. Topics of discussion will include forced technology transfer, intellectual property rights, services, non-tariff barriers, agriculture, and enforcement.”
Trump has said repeatedly he would entertain only an allencompassing deal with China. People close to him say he remains firm in that view.
“We’ve had good moments with China. We’ve had bad moments with China. Right now, we’re in a very important stage in terms of possibly making a deal,” Trump told reporters on Friday. “But what we’re doing is we’re negotiating a very tough deal. If the deal is not going to be 100% for us, then we’re not going to make it.”
People familiar with the state of play say contacts that resumed over the summer after a breakdown in May have focused on how to resume negotiations and avoid further escalating the tariff wars that have unnerved financial markets.
Yet those talks have centered more on a timeline for implementing a limited deal rather than the substance of provisions where the two sides are at odds.
Discussions have focused on what U.S. administration officials view as a three-phase process, people familiar with the talks said. The sequence would involve large-scale purchases of U.S. agricultural and energy exports by China, implementing intellectual-property commitments China made in a draft agreement this year and, finally, a partial rollback of U.S. tariffs.
China’s Vice Premier Liu He, left, speaks with President Donald Trump during a trade meeting in April.