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China-US relations

China, US headed for ‘significant outcomes’ on trade and North Korea: Beijing’s top US envoy

Cui Tiankai spoke less than a week before Donald Trump arrives in Asia for a two-week trip that will include bilateral meetings with counterpart Xi Jinping

PUBLISHED : Tuesday, 31 October, 2017, 5:11am
UPDATED : Tuesday, 31 October, 2017, 1:25pm

China and the US will achieve “significant outcomes” on economic and trade issues and deepen cooperation towards containing the North Korean nuclear threat when President Donald Trump meets President Xi Jinping next month in Beijing, China’s ambassador to the US said in Washington.

At the same time, Ambassador Cui Tiankai warned in a press briefing at the Chinese embassy that nobody would “be able to contain China” – a reference to the Trump administration’s intention to help India balance China’s power in the Asia-Pacific region.

“I’m quite confident there will be significant outcomes on the economic and trade fronts,” Cui told reporters. A trade surplus, “in the long run, will not help China’s economy. It might even hurt China’s economy. We want more balanced trade relations with other countries.”

Cui said he expected Xi and Trump to reach more agreements on removing nuclear weapons from the Korean Peninsula and give “clear guidance on how two countries could handle this issue together”.

When asked whether Trump’s Asian policy, which advocates “a free and open Indo-Pacific”, and the US’s proposed advanced arms sales to India constituted a containment strategy, Cui said: “I don’t think anybody would be able to contain China”.

Cui’s comments came a week before Trump embarks on his first state visit to China – part of a 12-day Asian trip beginning on Friday. Trump will arrive in Beijing on November 8 after stopping in Japan and South Korea, two US allies.

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Trump is expected to take part in the events of a typical state visit, including reviewing a military guard of honour, official talks, a banquet and “some special arrangements” for Trump and his family, according to the Chinese embassy.

The two presidents will have “sufficient time to have this top level strategic conversation between them,” Cui said, adding that Trump’s visit in Beijing might be the “most important part of his Asia visit, and hopefully the most productive and constructive”.

Cui, 65 this month, had been asked to postpone his retirement amid preparations for the Trump visit because of the importance Beijing places on the meeting, according to diplomatic sources.

Trump’s talks in Beijing are expected to focus on efforts to restrain North Korea’s nuclear weapons programme and rebalance a bilateral economic relationship that has been characterised by large US trade deficits.

The trade gap, pegged at US$239 billion for the first eight months of this year, was $347 billion in 2016, according to US Census Bureau data.

China is the US’s largest trading partner and accounts for around half the trade deficit.

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In Beijing, US Commerce Secretary Wilbur Ross will lead a business delegation of 29 American companies, most of which are energy and commodities firms, for “immediate results” and “tangible agreements”, Reuters reported.

Calling the Beijing leg of Trump’s trip “very important”, Ross sounded cautious about agreements related to limits on US access to Chinese markets when he addressed the New York Economic Club last week. Ross said addressing US complaints around intellectual property rights, “forced localisation, and forced technology transfers … are very important issues that are going to take a little time to resolve”.

“It’s important to think about how far are private companies willing to go in compromising to keep the Chinese market accessible to them,” Annelise Riles, a professor of Far East legal studies at Cornell Law School, said in an interview with the South China Morning Post. Riles focuses on “the transnational dimensions of law, markets and culture”.

“They’re willing to make big sacrifices in terms of giving the government access to the data of their users and giving the government access to their technology; and so, to the extent that private companies are willing to make sacrifices, China doesn’t have to.”

Scott Kennedy, a China expert at the Washington-based Centre for Security and International Studies, told the Post that during Trump’s visit in Beijing, China could loosen foreign ownership caps for joint ventures in some sectors where Chinese companies already have a competitive edge.

“This is an area that the US and others have raised with China again and again, and it’s possible that China may be open to concessions, ” Kennedy said. Foreign ownership caps in China vary across industries, with some at 49 per cent, 50 per cent or 20 per cent.

In May, the two sides had agreed that by July 16 China would allow wholly foreign-owned financial services firms in China to provide credit rating services, and to begin the licensing process for credit investigation.

But the world’s two largest economies appeared on the verge of a trade war in July after failing to reach agreement in Washington during the first round of the US-China Comprehensive Economic Dialogue.

In August, under Trump’s order, US Trade Representative Robert Lighthizer initiated an investigation into China’s intellectual property rights under Section 301 of the US Trade Act of 1974.

The investigation is to “determine whether acts, policies and practices of the Government of China related to technology transfer, intellectual property and innovation are unreasonable or discriminatory and burden or restrict US commerce”, according to a statement from the USTR’s office.

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The Section 301 investigation could bring tariffs on China if the two sides fail to reach an agreement to solve the dispute after Lighthizer concludes the process and releases the results.

Ambassador Cui said trade disputes should be handled in a very constructive and pragmatic manner, in an effort not to “undermine the overall economic relationship”. He added that China is preparing for the economic outcome of President Trump’s visit in this spirit.

On North Korea, Cui said China’s position is consistent. “We always stand for the denuclearisation of the entire Korean Peninsula. We always stand for peace and stability. And we always advocate negotiation [to bring a] solution.

“If we fail to have negotiation resumed, if we allow the situation go on like this, it could get more dangerous,” Cui said.

Some pundits have said Trump’s approach to North Korea threatens to exacerbate the situation.

“The consensus across political points of view and across national backgrounds [in Asia] seems to be that Trump throws a wild card into this because he’s a bit of a bull in a China closet and he doesn’t understand the way things work in Asia and how these relationships are managed,” Riles said.

“Leaders in Japan, South Korea and China are going to take the opportunity to school Mr. Trump in how diplomacy with Asian characteristics works and to get him to trust the system a little more.”

Riles is founder of Meridian 180, an online forum on subjects including security issues, financial regulation and data governance translated into Chinese, English, Korean and Japanese.

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When asked if China would support direct talks between the US and North Korea, Cui responded that China is open to “any talks between any parties, as long as they are conducive to a peaceful negotiation solution”.

On Sunday, the Pentagon’s top general, Joseph Dunford, hosted a trilateral meeting with his South Korean and Japanese counterparts at US Pacific Command headquarters in Hawaii to exchange views on North Korea, according to the US Department of Defence. Trump will visit the headquarters on November 3.

The Pentagon said the parties “together called upon North Korea to refrain from irresponsible provocations that aggravate regional tensions, and to walk away from its destructive and reckless path of development”.

Cui said the situation on the Korean Peninsula would be “one of the priorities” for the discussion between the two presidents.

He also expects that greater US-China cooperation on repatriating fugitives and returning stolen assets “will also be part of outcome of Trump’s visit”.

The two countries concluded their first round of Law Enforcement and Cybersecurity Dialogue in early October. Both sides will continue to work together to prevent their countries from becoming safe havens for fugitives and will identify viable fugitive cases for cooperation, according to the US Department of Homeland Security.

Cui declined to disclose the “viable fugitive cases”, saying there is ongoing discussion and coordination on this issue between the two sides.

During his Asia trip, Trump is to unveil the US’s new Asia policy with a speech on November 10 at the Asia-Pacific Economic Cooperation (Apec) meeting.

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Trump will present the US’s vision for “a free and open Indo-Pacific region”, the White House said. Although the policy’s details are unclear, an analyst said its purpose was to bring India deeper into East Asia and the Pacific as a balancing power against China.

Dennis Wilder, a former chief of China studies in the CIA and senior East Asia director at the National Security Council, told the Post this week that the policy “seems to be some sort of response to [China’s] Belt and Road Initiative, and [US State Secretary] Rex Tillerson made it clear that in some way we need to be in the game”.

The Pentagon and US State Department both made it clear last week that the US intends to pull India more closely into the Pacific region and establish an emerging Washington-Delhi strategic partnership.

US State Secretary Tillerson told the Centre for Security and International Studies in Washington last week that the Trump administration is determined to “dramatically” deepen relations between the two parties. The US has offered an arms deal to India that would include advanced American F-18 and F-16 fighter jets.

“I would hope China would not just see this as a containment strategy. And I don’t think that’s what it is,” Wilder added. “But if I was China, I [would] ask the Trump administration this question.”

Ambassador Cui said he doubted the US’s proposed arms sales to India would benefit the region. “I don’t think it will serve either country’s interests if there is confrontation between the two countries [China and India],” Cui said. “And I don’t think anybody would be able to contain China.”

Cui also did not comment on whether his retirement has been delayed, as he is staying in the post to help steer relations through Trump’s maiden visit to China. “The embassy will always be there, personnel could change,” the ambassador said.

Additional reporting by Robert Delaney