The US is expected to raise concerns over its trade deficit with China, mandatory technology transfers and market access, while for Beijing, Washington’s move to impose unilateral trade measures will be top of the agenda. 

The talks come as the two countries exchange tit-for-tat tariff threats after the US accused China of unfair industrial practices and policies based on its investigation under Section 301 of the Trade Act, and amid growing concerns over Chinese technological advances.

Washington is due to finalise its list of Chinese imports – worth US$50 billion – that will be subject to 25 per cent punitive tariffs later this month, and it could slap sanctions on another US$100 billion of products from China. Restrictions on Chinese investment in the United States are also in the pipeline.

China responded to that move by announcing it would impose the same amount of tariffs on American products including cars, planes and agricultural goods.

“The gap is wide and deep between the Chinese economic model, based on strengthening state-owned and state-influenced enterprises characterised by government funding and domestic market protection, as opposed to the economic model of other major trading countries based on market forces,” said William Zarit, chairman of the American Chamber of Commerce in China.

“This will not be reconciled in one or two days. I am hopeful though that progress will be made during the visit, with the end game being a commercial relationship based on fairness and reciprocal treatment that will benefit the US and like-minded trading partners, as well as China,” Zarit said.

US President Donald Trump tweeted shortly after the US delegation arrived in Beijing that he hoped to meet China’s leader Xi Jinping in the near future, raising hopes that a consensus could be reached in the talks.

“Our great financial team is in China trying to negotiate a level playing field on trade! I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!” he said.

Zhu Feng, director of the Institute of International Studies at Nanjing University, said the trade confrontation was likely to continue but there was still room for both sides to find common ground.

“It is important to communicate with each other to try to settle on a deal that is acceptable to both countries,” Zhu said.

Rivalry between the two countries goes much further than trade. At the annual Asian Development Bank conference in Manila on Thursday, the US called for reforms to strengthen its dominance in the multilateral banking system – a move aimed at countering Beijing’s growing influence through the Asian Infrastructure Investment Bank it set up in 2016.

Meanwhile in northeast China, local governments have directed farmers to expand their soybean plantations, labelling it as “a top political task for current agricultural production”. American soybeans could be subject to retaliatory measures announced by Beijing in the ongoing tariffs dispute. 

Zhu Min, former deputy managing director of the International Monetary Fund, said a trade war would not help domestic troubles in the US, nor would it curtail China’s development, but it would create risks for the global economy. 

“A trade war will damage the global supply chain,” Zhu said. “The ball is firmly in the US’ court, since they started this.”

He added that Beijing’s plan to support domestic technology, Made in China 2025, would be non-negotiable because it was part of the country’s development strategy.

Additional reporting by Sidney Leng and Alice Shen