Chinese top team to land in Washington for trade talks just before US decides which products to penalise

Delegation led by Xi Jinping’s top economic adviser will arrive in America just ahead of hearing to finalise tariffs on US$50bn of Chinese products

PUBLISHED : Friday, 11 May, 2018, 9:34pm
UPDATED : Saturday, 12 May, 2018, 12:19am

A top-level Chinese delegation will arrive in Washington for a second round of trade talks on Tuesday – just before the US finalises the list of Chinese products that will be hit with punitive tariffs, a source familiar with the situation has said.

China’s delegation will be led by Vice-Premier Liu He, Xi Jinping’s top economic adviser, who met a delegation from the White House in Beijing at the end of last week. 

In those talks, the American officials focused on their dissatisfaction with China’s hefty state support for technological development and the long-standing trade gap between the two countries but devoted little time to the issue of improving market access for foreign companies, another source who was briefed on the talks said.

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US President Donald Trump has frequently highlighted America’s trade deficit with China and has demanded a US$200 billion reduction. 

China’s Ministry of Commerce said on Thursday that both countries’ working teams were making preparations for the next round of dialogue. 

Lower-level officials from the two countries were expected to meet on Friday to make arrangements for the Chinese visit to Washington next week. 

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The trip will be Liu’s second one to Washington within three months.

On his first trip in late February, he offered to buy more US products as a way of reducing trade tensions but the US showed little interest in the proposal, one of the sources said. 

He is expected to repeat the offer next week, although it is not clear whether there will be substantial differences between the two proposals. 

China has long urged the US to lift export controls on hi-tech products, which would help cut the trade gap. However, the US is concerned about the security implications of such a measure and is increasingly uneasy that China’s state-sponsored technology sector is catching up.

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China may be forced to make concessions on the trade deficit and on improving market access for foreign firms but will not change its strategy for developing technology, according to Shi Yinhong, a professor in international relations with Renmin University and a government adviser. 

“The key is how fast and how much that China can do. There is a huge gap between what China can offer and what Trump wants,” said Shi.

He added that tough American demands to cut the trade deficit by nearly two thirds by 2020 and make substantial measures to open Chinese markets would harm the country’s economic security.

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Observers are doubtful that Liu’s trip will be able to prevent the US from imposing punitive measures on Chinese products – at least in the short term. 

The US Trade Representative Office will be holding public hearings on proposals to impose tariffs of 25 per cent on US$50 billion worth of Chinese imports next Wednesday and Thursday, a day later than originally scheduled.

The tariffs may come into force by May 22, although a US official has indicated that this deadline is likely to be extended.  

“Liu He’s upcoming visit to Washington indicates that a negotiated settlement remains the most likely eventual outcome, despite uncertainty on the path to reaching it,” financial services company Everbright Sun Hung Kai wrote in a report

The US Treasury Department is expected to unveil its proposals for restricting Chinese investment in the US technology sector on May 23.

“The conflicts are structural and fundamentally hard to fix. This trade confrontation is set to last over the long run,” Shi added.

Additional reporting by Reuters