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Wendy Wu

Jane Cai

Zhenhua Lu

China and the United States have failed to reach a deal on ways to ­reduce their trade imbalance ­despite high-level talks in ­Washington.
Observers said relations ­between the two countries had worsened but China and the US would both take steps to avoid an all-out confrontation between their closely tied economies.
The talks on Wednesday ­followed a 100-day trade deficit reduction plan that came out of a meeting between President Xi ­Jinping and his US counterpart Donald Trump in Florida in April.
Officials built momentum for this week’s talks by rolling out a ­series of initiatives, such as resuming US beef exports to China.
But the two sides failed to reach a consensus on how to cut the US trade deficit and China’s excess steel capacity. They also could not agree on expansion of US access to China’s market.
In a sign of the discord, the ­parties cancelled their post-talks press conference and did not ­produce a joint statement.
US and China talks in Washington end in deadlock as threat of trade war rises
Vice Finance Minister Zhu Guangyao said it was unlikely that they could “solve all the problems through merely one meeting”.
Zhu also said trade imbalances could not be resolved by suspending or reducing imports from China. Instead, the US should ­increase exports to China.

However, when asked if he would slap tariffs on steel imports, Trump said “it could happen”.
Pang Zhongying, a senior ­fellow at the Ocean University of China, said the US had continued to “wave the stick of a trade war to put pressure on China”.
“But it did not work. China has realised the concerns of the US and will study future steps to talks,” Pang said. “Both sides need to talk and make effort. Maybe we need a second or third 100-day ­action plan.”
Chinese, US executives call for ‘prompt resolution’ of economic rows amid fears of trade war
In separate statements after the talks, the US said China ­acknowledged the need to reduce the trade deficit, while the Chinese delegation said both sides would promote cooperation.
Fears of a trade war have risen since Trump lashed out at China last month over what he said was its failure to rein in North Korea’s nuclear weapon ambitions.
Arthur Kroeber, managing director of Hong Kong-based financial services firm Gavekal Dragonomics, said earlier that trade action against China would lead to more harm for the United States.
“We may well see a rise in forceful rhetoric and symbolic action, but moves that would really crimp the economic relationship remain far off,” Kroeber said.
He Weiwen, former economic and commercial counsellor at China’s consulate general in New York and San Francisco, said Trump’s threats on steel seemed to be a response to domestic political pressure. He said Chinese steel accounted for just 3 per cent of US total steel imports, affecting less than 0.2 per cent of jobs in the United States.
China may find itself in trade war with US over North Korea, experts warn
Mei Xinyu, a researcher at a Ministry of Commerce think tank, said a deal would take a “long time and several rounds of negotiation” because China was still getting used to Trump’s tactics of demanding more at the start.
Mei said there was a big difference in position between the two countries. “The US wants to reduce trade deficits, but China thinks the gap should mainly be narrowed by economic restructuring in the world’s largest economy,” he said.
Steve Tsang, director of the SOAS China Institute, said US-China relations were at “an unusual stage” because Trump was still short of staff to deal with China and had yet to figure out a clear China policy.
“The US side is therefore ­unable to get the Chinese side to deliver much and unable to decide how to respond. The Chinese side knows this and is making the most of it,” Tsang said.
China and US to open their markets further, easing fears of trade war
“The key question is what Trump will do. We don’t know as he [Trump] does not seem to work within the normal policy making framework and process. Xi and the Chinese government will seek to maximise advantage from this American disarray for as long as possible. When Trump finally thinks that he has been taken for a ride, his reactions may well prove rather disagreeable from Beijing’s perspective.”
Additional reporting by Jane Cai, Shi Jiangtao and Zhenhua Lu


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Zhu Guangyao, China's vice Finance Minister, speaks at a press conference at the G20 Media Center in Hanghzou, capital city of east China's Zhejiang province. 02SEP16 SCMP / Simon Song

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Differences on steel and market access stand in way of agreement in Washington but both sides likely to work to avoid trade war, analysts say
