US-China trade war
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Steven Mnuchin said he was hopeful that the talks would make progress. Photo: Reuters

Chinese team arrives in US for trade war talks under shadow of latest Huawei charges

  • Americans waiting for Chinese response to list of demands, which include right to verify structural reforms
  • Criminal charges filed against Chinese tech giant could be another stumbling block in the talks

A high-level Chinese trade delegation landed in Washington on Tuesday for a fresh round of talks aimed at ending the trade war, but the US indictment against the telecoms giant Huawei may prove to be an additional stumbling block.

A diplomatic source said the US had presented a list of demands to China during their previous round of talks in Beijing in early January.

China said it would study the demands, and is expected to make counter proposals in the upcoming talks, the source said.

Both sides gave a positive assessment of the last talks, saying the discussions were “good”.

Even though that talk was at vice-ministerial level, Vice-Premier Liu He, who is leading the Chinese delegation in Washington, made a surprise appearance – signalling China’s eagerness to engage the Americans.

But the US Justice Department’s decision to file criminal charges against Huawei, which is accused of stealing technology and breaching sanctions against Iran, creates additional uncertainty.

Beijing has denounced the indictment as politically motivated and immoral.

The US is also seeking the extradition from Canada of the Huawei executive Sabrina Meng Wanzhou on charges of fraud relating to the alleged breach of sanctions.

“Perhaps it is to put on pressure on China, but China’s domestic politics looks so bad if they cut a deal. That doesn’t look good. I wonder about the calculus,” a former senior US trade negotiator said on condition of anonymity.

Huawei charges are US attempt to smear Chinese firms, Beijing says

“If it was still at the USTR {office of the US Trade Representative] I would have guessed this was coming – but the arrest would have been a big surprise. However, the indictment would definitely be disruptive, if I am preparing for the negotiations.”

“There are some really queer charges in a lengthy indictment, there’s no guarantee the negotiations will be successful. We may see some kicking the can down the road, the US may now apply additional tariffs.

Both sides have agreed on a March 1 deadline for the current round of negotiations, following talks between Chinese President Xi Jinping and US President Donald Trump in Argentina at the start of December.

Both agreed to suspend the imposition of additional tariffs after the talks, but failing to reach a deal by March could result in the US increasing tariffs on US$200 billion of Chinese imports from 10 per cent to 25 per cent.

The US has long demanded that China buys more American products, stop forcing US companies to transfer technology to their Chinese counterparts, and stop cyberattacks and theft.

US treasury chief plays down expectations that talks will end trade war

It has also demanded structural changes to Chinese industry and to be allowed to verify Beijing’s commitment to implementing its pledges.

The two nations have stepped up negotiations, rushing to meet the March deadline.

The White House said Trump will meet with Liu on Thursday.

“President Trump is committed to achieving greater market access for US exports and better treatment for our farmers, ranchers and businesses,” White House spokeswoman Sarah Sanders said.

The Chinese delegation includes central bank governor Yi Gang, National Development and Reform Commission deputy chief Ning Jizhe, finance vice-minister Liao Min, foreign vice-minister Zheng Zeguang, commerce vice-minister Wang Shouwen, agriculture vice-minister Han Jun, and industry and information technology vice-minister Luo Wen.

US officials said significant progress had been made, but also played down hopes that the two nations would strike a deal.

“We do have another 30 days after this, so my expectation is that we’ll make significant progress at these meetings, but I would just emphasise these are complicated issues,” Treasury Secretary Steven Mnuchin said.

Chinese Vice-Premier Liu He is leading the Chinese team in the talks. Photo: AP

“The scope of these talks will be the broadest and deepest in US-China history,” Kudlow said. “We’ve never had anything this comprehensive.”

Randall Kroszner, a former US Federal Reserve governor, said the indictment against Huawei and the trade talks should be kept separate.

“In principal, they are separate issues. One is about cars and soybeans, the other is about legal regime, intellectual property rights,” he told a media briefing in Hong Kong

“In most people’s minds, they are mixed together. I think both sides want to reach some sort of agreement related to the specific trade issues, so I don’t think it would prevent that from occurring, because I think both sides want that to occur.”

“There are some longer term issues that will persist, even if there is an agreement.

“I think there is a push on both the Chinese and US side trying to get some agreement related to narrow trade issues like cars, soybeans, etc.

“But there is the bigger issue of intellectual property rights, forced technology transfer, rule of law, etc, which are not going to be resolved at any time soon”.

Huo Jianguo, former director of a research institute under China’s Ministry of Commerce, said he was optimistic that the meeting could make some progress.

China, US ‘less belligerent’ as Chinese delegation heads to Washington

“This talk is to implement the consensus of the presidents' meeting in December and for that purpose, both sides have the urge to reach an agreement.”

But he said it was difficult to predict what the US demands for verifiable structural changes to the Chinese economy would yield.

“It's such a difficult issue, and there is contradictory information,” said Huo.

Shi Yinhong, an expert in US-China relations at Renmin University argued the divide between the two sides is still too huge to overcome.

“I am pessimistic that an agreement can be reached in the next few days,” said Shi.

Additional reporting by Owen Churchill

This article appeared in the South China Morning Post print edition as: Telecoms case casts shadow as Chinese delegation arrives