China still ‘preparing’ delegation for US trip despite Donald Trump’s threat to increase tariffs
- US President said he will increase punitive tariffs on US$200 billion of imports from 10 per cent to 25 per cent on Friday in a tweet posted on Sunday
- Liu He could depart Beijing on Thursday, three days later than previously scheduled, and leave Washington a day later, says a source
China is still preparing to send a delegation to Washington for the trade talks despite the latest threats by US President Donald Trump to increase tariffs, Foreign Ministry spokesman Geng Shuang said on Monday.
“There have been many times that the US side has threatened to increase tariffs,” Geng said when asked about Trump’s tweets on Sunday which threatened to impose punitive tariffs on US$200 billion of imports from China tariffs beginning on Friday. “China’s positions are clear and the US side is well aware of them.
“[We had hoped] to make progress in our trade talks and [we] hope the US side can work together with us and move in the same direction so we can achieve a deal that can benefit both sides. Everyone in China and abroad is very concerned about the next round of talks, and we are also learning about the relevant changes. The Chinese delegation is preparing to go to the US for the negotiations.”
The People’s Bank of China (PBOC) announced Monday morning that it had cut the required reserve ratio – the amount of money banks must hold in reserve at the central bank – for smaller banks to help spur lending to small businesses, who would be hit hardest by higher trade tariffs. The PBOC said the move was part of its on-going adjustments to help small businesses, making no mention of Trump’s tariff threat.
There were high hopes that Liu He’s trip to Washington this week for the 11th round of talks would produce a deal to end the trade war which has ravaged the global economy for almost a year.
Liu could depart Beijing on Thursday, three days later than previously scheduled, and leave Washington a day later, the source who has been briefed on the latest arrangements confirmed.
Another source said both sides remain committed to a final agreement, but Trump’s threat puts the Chinese delegation in a difficult position as any agreement could be perceived by the domestic audience as a capitulation to the White House.
Trump’s threat of additional sanctions on Chinese imports revealed his impatience due to a lack of sufficient concessions from China, with sources suggesting that President Xi Jinping vetoed additional concessions proposed by his negotiators.
Sources familiar with the discussions said the proposals submitted to Xi included one that promised more concessions.
“Xi told them ‘I’ll be responsible for all possible consequences’,” the second source said. Chinese negotiators subsequently presented a tougher proposal to Washington, although it is not clear if they pitched an amended proposal to Xi after the latest round of talks in Beijing last week.
Everyone in China and abroad is very concerned about the next round of talks, and we are also learning about the relevant changes. The Chinese delegation is preparing to go to the US for the negotiations.
Trump also stated the US may impose extra duties on additional goods shipped from China, with US$325 billion in Chinese goods still untouched by the stand-off set to become subject to the 25 per cent “soon”.
Lu Xiang, an expert on China-US relations from the Chinese Academy of Social Sciences, said Trump was pursuing a strategy of putting maximum pressure on China.
“If China cancels the trip, Trump would blame China for the failure of the trade negotiations,” he said.
One possible response from China could be to send a smaller delegation to US, he said.
“After the intensive talks, China is familiar with the style of Trump and his administration. Trump’s flip-flop announcement is not a big surprise for China, but China should be prepared for the worse-than-worst scenario”, added Lu.
Trump’s latest move followed signals that the most recent round of talks in Beijing last week did not yield progress on some key US demands, including a curtailment of China’s subsidies to its state-owned enterprises – one of the factors that prompted the US government to start the trade war.
Lighthizer was in Beijing with US Treasury Secretary Steven Mnuchin last week for the 10th round of talks since the trade war started.
Mnuchin said just before he and Lighthizer headed to Beijing last week that the US side expected to “either recommend to the president we have a deal or make a recommendation that we don’t”.
Reaction from China did not confirm the seemingly fixed deadline, and suggested that Beijing is resisting pressure from Trump’s team.
