US may back down on trade talks push for China to axe subsidies
- Sources say strong resistance from Beijing has prompted a retreat on a key condition for ending the trade war
- Focus is now on areas where Washington demands are considered more achievable
US negotiators have become resigned to securing less than they would like on the issue of China’s industrial subsidies, after strong resistance from Beijing, marking a retreat on a core objective for the trade talks, according to two sources briefed on the discussions.
The sources said the US negotiating team had tempered demands that China curb industrial subsidies as a condition for a deal to end the trade war which, after nine months, has cost billions of dollars, roiled financial markets and upended supply chains.
US President Donald Trump’s administration slapped tariffs on US$250 billion worth of imports of Chinese goods to press demands for an end to policies – including industrial subsidies – that Washington says hurt US companies competing with Chinese firms. China responded with its own tit-for-tat tariffs on US goods.
The issue of industrial subsidies is thorny because they are intertwined with the Chinese government’s industrial policy. Beijing grants subsidies and tax breaks to state-owned firms and to sectors seen as strategic for long-term development. Chinese President Xi Jinping has strengthened the state’s role in parts of the economy.
In the push to secure a deal in the next month or so, US negotiators have become resigned to securing less than they would like on curbing those subsidies and are focused instead on other areas where they consider demands are more achievable, the sources said.