US Treasury Secretary Steven Mnuchin may go to China. But is there a deal in sight? 

Beijing says it welcomes the planned visit, as the world’s two biggest economies continue to wrestle over their trade differences

PUBLISHED : Sunday, 22 April, 2018, 11:23am
UPDATED : Monday, 23 April, 2018, 12:24pm

China said on Sunday it welcomed plans by US Treasury Secretary Steven Mnuchin to visit the country to discuss trade and economic issues, amid tensions between the world’s two largest economies.

But analysts said there was no sign that Beijing and Washington were even close to resolving their differences, a task made harder by instability within the administration of US President Donald Trump.

“The Chinese side has received information that the US side hopes to come to Beijing to discuss economic and trade issues. China welcomes this,” China’s Ministry of Commerce said in a short online statement.

Mnuchin said on Saturday he might travel to China, a move that could ease tensions between the world’s two biggest economies, as international policymakers acknowledged Beijing needed to change its trade practices.

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The United States has threatened to impose tariffs on up to US$150 billion of Chinese imports to try to force changes in Beijing’s industrial policies, which Washington says are aimed at acquiring American intellectual property.

China has threatened retaliation against US exports if Washington pushes ahead with the tariffs. Beijing has also firmly denied that it was negotiating with the US over the tariffs.

The remarks from the two sides over the weekend were the first sign they could be trying to negotiate, but analysts were doubtful there would be any agreement reached soon.

“I wouldn’t read too much into it. If it happens it would be a positive sign, but there are still a lot of hard issues to discuss ahead,” said Christopher Balding, an associate professor at the HSBC Business School in Shenzhen.

“It’s very questionable whether this is just talking about whether or not there is possibility for a deal, or there’s actual movement.”

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In his discussion with Chinese officials in Washington, Mnuchin said the two sides covered the proposals that Chinese President Xi Jinping had made to open the Chinese market. 

“We are cautiously optimistic,” Mnuchin said. 

He said he was continuing to have discussions with his Chinese counterparts to try to resolve the differences over trade, adding that he might go to Beijing.

“A trip is under consideration,” Mnuchin said on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington. “I am not going to make any comment on timing, nor do I have anything confirmed, but a trip is under consideration.” 

Mnuchin also declined to say what he wanted from a trade deal with China, adding, “If we have a deal, you’ll know what it looks like when we have it.”

One Chinese analyst said the lack of detail in Mnuchin’s plan was telling.

“Mnuchin didn’t mention any specific date for the trip. My guess is the two sides are still divided over what to talk about and cannot agree on an agenda,” said Lu Xiang, a Sino-US specialist with government think tank the Chinese Academy of Social Sciences.

He said it was highly unlikely an agreement would be reached during the trip.

“The US side has always said tariffs were a way to negotiate, so it seems certain they will take this step,” he said. “But for China, the atmosphere isn’t right – the US is waving a stick.”

There was also the problem of instability in the Trump administration, Lu said.

“Mnuchin is young and among the more reasonable officials [in the US administration] … but it remains to be seen whether he would get political backing [for a deal with China],” he said.

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Mnuchin said he met China’s new central bank governor, Yi Gang, during the IMF and World Bank meetings and discussed the potential for China to open its markets to more foreign competition.

“I did meet with the Chinese here. The discussions were really more around the governor’s actions at the PBOC [People’s Bank of China] and certain actions they’ve announced in terms of opening some of their markets, which we very much encourage and appreciate.”

In a statement on Saturday to the International Monetary and Financial Committee, Yi said China would “vigorously” push forward the reform and opening of its financial sector, significantly relax market access restrictions, create a more attractive investment environment, strengthen the protection of intellectual property and actively expand imports.

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On Friday, Yi told a seminar in Washington that the US should also look at bilateral trade in the service industry, reiterating the pledge that China would continue to open its financial sector.

“China will continue its fundamental strategy of opening up its financial markets – and that will not be affected by the current trade friction with the US,” Yi was quoted as saying by financial magazine Caixin, which hosted the seminar.

Yi added that as that sector opened further, the US would see growth in its services trade with China.

Additional reporting by Reuters, Associated Press