China ‘voiced concern over trade hawk Peter Navarro’ after talks with US in Beijing

US media reports suggest rift between White House trade adviser and Treasury Secretary Steven Mnuchin ahead of latest negotiations in Washington

PUBLISHED : Thursday, 17 May, 2018, 9:09pm
UPDATED : Thursday, 17 May, 2018, 11:33pm

Beijing was frustrated with fierce criticism from White House trade adviser Peter Navarro during the first round of talks with Washington and relayed its concern to the US, sources say.

The development comes as Chinese Vice-Premier Liu He is in Washington for more talks with the US delegation, led by Treasury Secretary Steven Mnuchin, on Thursday and Friday. 

The latest talks have been overshadowed by reports in US media that there is a rift between Navarro, a trade hawk who has said China threatened America’s economic dominance, and Mnuchin, who is seen as more moderate.

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People familiar with the trade talks said Navarro had been very harsh on China during the negotiations in Beijing two weeks ago, and demanded that it fundamentally change its industrial policy. 

“Navarro is not good from China’s perspective. He is too tough and not sincere about solving problems. His intention is to contain China,” a source said.

Lu Xiang, a US affairs specialist at the Chinese Academy of Social Sciences, said it was counterproductive to have Navarro involved in the talks. “Navarro’s views on economics and Sino-US relations have always been illogical and absurd, so I think having him as a member of the US negotiating team would not be beneficial to either side,” Lu said. 

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Navarro was initially excluded from this week’s talks because of concerns about his behaviour in the Beijing negotiations, Bloomberg reported, citing White House officials. 

He was not on the list of US officials who will take part in the second round of talks released by the White House on Wednesday, but an official later told Bloomberg that Navarro would participate.

The talks are aimed at staving off a trade war between the world’s two biggest economies, after the first round failed to make any progress. Washington has vowed to impose hefty punitive tariffs on Chinese goods over what it deems unfair trade practices, and Beijing has said it would also slap tariffs on US products. 

But US President Donald Trump this week extended an olive branch to China, suggesting that he would be open to reversing a ban on US firms from selling parts to Chinese telecoms company ZTE.

There are tensions within the US finance team between the moderates and hardliners, with Navarro and Mnuchin having a public shouting match in Beijing, according to Politico.

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Navarro is said to have confronted Mnuchin, believing he had been excluded from certain meetings with Chinese officials, with the pair screaming and cursing at each other on the lawn in front of a government building where the talks were being held, the US-based news outlet said.

Navarro was also concerned that Mnuchin was leading the US down the wrong path on trade with China, Politico said, citing a source briefed on the trip.

A source also told Politico that Chinese officials had indicated their distaste for Navarro, who has written a book titled Death by China.

Wei Zongyou, a Sino-US relations specialist at Fudan University in Shanghai, said that there were “different voices within the US government” but that both sides needed to work together to find a compromise. “Those in the US administration are not entirely in agreement,” he said. “Navarro is a well-known hardliner, and he hopes to gain political influence beyond his personal capabilities by being tough on China.”

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Gregory Moore, an international relations professor at the University of Nottingham in Ningbo, said there was a lack of clarity over Navarro’s role in the trade talks.

“[Trump] sort of uses people to suit his needs, so it could be that Navarro is someone that he needed to send a message that he wanted to be tough on China,” he said. “With ZTE, he’s going to now be nicer to China maybe because China helped him get the North Korea meeting. It may be a way of telling China that we’ll be nice to you if you’re nice to us.”

Liu visited Washington two months ago, before the tariffs were announced in March, after Beijing had also sent senior diplomat Yang Jiechi to negotiate – but neither of them managed to defuse tensions with the Trump administration.

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On Wednesday, Liu met former Secretary of State Henry Kissinger and members of the US Congress, telling them that trade confrontations would be harmful to both sides. 

Ahead of the second round of talks, China’s commerce ministry has demanded concrete action from the US to resolve the ZTE case.

Ministry spokesman Gao Feng told reporters that China would not compromise on its core interests when dealing with the US, and called on Washington to end its Section 301 investigation into Chinese trade practices.

“Trade cooperation between China and the US … should follow market economy rules. We resolutely defend our own interests and will not trade our core interests,” Gao said. “We don’t want to see trade frictions escalate. Of course, we are also well prepared for all possibilities.”

Gao added that Beijing was actively pushing ahead with industrial reforms and working toward policy changes announced by President Xi Jinping during the Boao Forum in April.