US taking harder line with China in trade talks, American chamber chairman says

Washington aims to press China to make changes for ‘fair trade relations based on reciprocity’, William Zarit told the Post

PUBLISHED : Friday, 04 August, 2017, 2:33pm
UPDATED : Friday, 04 August, 2017, 10:46pm

Washington is taking a tougher approach with Beijing in trade talks aimed at pressing China to open its market further, the chairman of the American Chamber of Commerce in China said.

William Zarit told the South China Morning Post in a Beijing interview this week that “the US market is quite open for China exports and investment, but that is not so much the case in China”. Washington seeks ways to press China to make changes for “more fair trade relations based on reciprocity”, he said.

Zarit’s comments came as tension between the world’s two biggest economies escalated after US President Donald Trump lashed out at China over its lack of cooperation in narrowing its huge trade surplus with the US and in curbing North Korea’s nuclear power and missile ambition.

Trump also pressured China to reduce its steel overcapacity and is likely to look into the country’s trade practices ahead of possibly imposing punitive trade sanctions against the Asian giant.

US Trade Representative Robert Lighthizer, a China hawk and a veteran in addressing trade disputes, may lead the assessment on China’s trade policy to see whether its practices are unfair or harmful to the US.

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Lighthizer served as deputy trade representative in the administration of US President Ronald Reagan and played a role in pressuring Japan to restrict exports to the US.

“This administration does have a little bit of a historical perspective on the trade relationship,” Zarit said. ”They are appearing they are tougher on China in trade and investment negotiations” after the US made only modest moves to balance bilateral trade in the last 20 years.

“Some people in the US administration, such as Robert Lighthizer and one of his staff, have a history of (working with) steel dumping cases. It is obvious that he will bring the experience to the administration.”

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Foreign businesses, including many US and European companies, have complained about having an unbalanced investment relationship with China. Chinese official data showed inflows of FDI from the US reached US$3.8 billion last year, up slightly from US$2.6 billion in 2015. Meanwhile, Chinese investment in the US tripled to US$45.6 billion last year, according to a report from the American Chamber of Commerce in China.

The first China-US Comprehensive Economic Dialogue in July in Washington failed to generate significant remedies to effectively reduce the US trade deficit, raising concern about growing trade confrontations between the two deeply intertwined economies.

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The results may indicate a lack of mutual trust between Beijing and Washington, Zarit said. But there’s still time for the two sides to reach a compromise on trade before Trump visits China later this year, he said.

However, there’s little Beijing can do to cut the US’ trade deficit because the imbalanced trade is a result of the two countries’ economic structures, China’s governmental researchers said.

China temporarily minimised the chances of starting a trade war with the US after Chinese President Xi Jinping met Trump at the US president’s Mar-a-Lago estate in Florida this April and both sides agreed to a 100-day plan for negotiating possible solutions to the trade imbalance.

But now the Chinese side may sense that Trump is “difficult” to deal with, Zarit said.

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He also said Made in China 2025, a Chinese government plan to upgrade the country’s manufacturing operations, may distort the market and lead to discriminatory policies against foreign players.

“There is a concern in the US that a number of technologies developed in the US on a competitive basis might be unfairly carved out and brought to China,” Zarit said.