China-US relations

How US played hardball over top Chinese economic adviser’s Washington trip

Beijing planned for Liu He to head a 40-strong delegation, but US only accepted a quarter of that number 

PUBLISHED : Wednesday, 07 March, 2018, 2:00pm
UPDATED : Wednesday, 07 March, 2018, 11:46pm

China had planned to send a large delegation of about 40 people to accompany its most senior economic adviser, Liu He, on his recent visit to Washington but after the US objected the number was cut to about 10, sources told the South China Morning Post.

That meant Liu, President Xi Jinping’s right-hand man, travelled with a smaller entourage when he left Beijing late last month.  It included Vice-Minister of Commerce Wang Shouwen, Vice-Minister of Finance Zhu Guangyao and Vice-Minister of Foreign Affairs Zheng Zeguang.

Chinese state media portrayed Liu’s five-day visit positively, but the downsizing of the delegation showed the Trump administration is playing hardball with Beijing.

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Liu was the second member of the Communist Party’s powerful Politburo to visit the United States last month, following Yang Jiechi, China’s top diplomat, who also sought to defuse escalating tensions between the world’s two largest economies.

Both visits failed to yield substantial results, with Beijing failing to persuade Washington to restart the comprehensive economic dialogue (CED), a key negotiating channel that was suspended by the US last year. 

The only visible achievement from Liu’s trip was an agreement, reported by People’s Daily, to hold further talks on trade and economic issues “in the near future” in Beijing. The report did not give any further details.

But two US sources familiar with the discussion said Washington was in no hurry for those talks to take place.

“There is a restriction on sending secretaries to China as the US suspended the CED since last year,” one source said. The other said “junior” officials – deputy or assistant secretaries at most – could visit Beijing for such talks.

People’s Daily reported that Liu had “candid and constructive” talks with US Treasury Secretary Steven Mnuchin, US Trade Representative Robert Lighthizer, a hardliner on trade with China, and Trump’s top economic aide Gary Cohn. 

Cohn resigned from the White House on Tuesday after disagreeing with the Trump administration’s plan to impose tariffs on steel and aluminium imports.

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Besides concerns about China’s trade surplus with the US, there has long been criticism in Washington of Beijing’s reluctance to further open up its markets, big state subsidies for Chinese companies and demands that technology be transferred in exchange for access to the Chinese market.

“The time for promises is over,” one source said, adding that concrete actions, such as unilateral reform to open up market access and level the playing field for foreign companies operating in China, was the only way for China to “prove its sincerity”.

The government work report delivered by Premier Li Keqiang on Monday at the opening session of the annual meeting of the National People’s Congress in Beijing largely reiterated the commitment to opening up announced in November and offered no clues of new measures that would “exceed expectations” promised by Liu in Davos in January.

The latest US national security and defence strategy listed China as a “strategic rival” and called for strong economic, military and technological responses to confront it.

“These strategic concerns are now slowly translating into concrete policies,” Arthur Kroeber, the research head of China-focused research firm Gavekal Dragonomics, said in a report this month.

Following a US investigation of China’s industrial policies and technology trade practices, there has been widespread speculation that US President Donald Trump’s trade actions will soon be narrowed to focus on China.

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Possible sanctions include tariffs on many Chinese goods, penalties on Chinese firms, and restrictions on Chinese technology investment and the export of hi-tech products.

“The alliance of trade and security hardliners is pushing for the US to engage in a sort of economic or technological cold war with China, where the aim is not to negotiate for mutual advantage, but to punish and diminish the enemy,” Kroeber said.