Crunch time as high-level US-China trade talks resume

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WASHINGTON, Feb 22, 2019 (BSS/AFP) – With only eight days left in their
trade truce, top US and Chinese officials on Thursday returned to the
daunting task of bridging a chasm between the world’s two largest economies.

US President Donald Trump has repeatedly claimed the talks with Beijing
are going “very well,” but concrete signs of progress have not been apparent
in the three months since the two sides agreed to pause their trade war in
December.

China’s Commerce Ministry said Thursday the two sides would “go a step
further in deepening their communication.”

But analysts say the distance separating Washington and Beijing and the
short time remaining before the March 1 deadline make it likely the outcome
will feature banner announcements but fall short of Trump’s most far-reaching
goals.
“I think the consensus of people that have been following this thing is
that they’re not making nearly as much progress as the president tweets that
they’ve been making,” said William Reinsch, a former US trade official now at
the Center for Strategic and International Studies.

Chinese trade envoy Liu He is leading Beijing’s delegation in the fourth
round of negotiations with US Trade Representative Robert Lighthizer and
other American officials Thursday and Friday as they work to head off an
escalation of US tariffs.

Trump this week said a March 1 deadline to reach a deal was in fact “not a
magical date,” raising hopes that he could delay the plan to more than double
US duties on $200 billion in Chinese goods.

Since July, Washington and Beijing have hit each other with tariffs on
more than $360 billion in two-way trade, weighing on the manufacturing
sectors in both countries.

Washington has demanded that Beijing reverse much of its industrial
policy, charging that China has sought global dominance through the alleged
theft of American technology, massive subsidies and the promotion of mammoth
state-owned enterprises.

– When Trump can claim ‘victory!’ –

Trump has said the ultimate bargain will be struck at a meeting with
China’s President Xi Jinping.

Reinsch told AFP the two sides were likely to strike some kind of deal.

“I’m sure they’ll come up with something that will be more than cosmetic
but less than we’re asking,” he said.

“It’ll probably in the area of intellectual property theft and more open
investment in China because they’re the things that benefit them as well as
benefit us.”

But other changes — such as subjecting China’s state-owned enterprises to
free-market principles — could weaken the communist party’s hold on power,
making Chinese officials very reluctant to budge, he said.

China’s retaliatory tariffs have severely hit US farm exports. Bloomberg
reported Thursday that Beijing offered to increase purchases of American
agricultural exports such as soybeans, corn and wheat by $30 billion a year.

Elsewhere on Thursday, top Trump Cabinet officials said Washington was
focused on making sure any deal had teeth and could be enforced.

“I know our trade team is hard at work making sure that the American
people get that,” Secretary of State Mike Pompeo told Fox Business Network.

He said “this unlawful transfer of American wealth, American innovation”
over decades requires that china “put structural changes in place to prevent
it from taking place.”

“The Trump administration is determined to push back against it.”

Asked about an offer from China to buy more American crops, US Agriculture
Secretary Sonny Perdue said it was “premature” to discuss the details since
as any proposal will depend on reaching a “grand deal.”

“Clearly, the real issue is structural reforms regarding intellectual
property guarantees, enforceability of those provisions,” he said at a
separate event on North American trade.

“I think if we could get those kinds of assurances regarding China taking
intellectual property theft seriously, then we could see renewed and expanded
agricultural trade between the two countries.”

China’s economy slowed sharply amid the dispute, eroding prospects for
global growth this year.

Gary Clyde Hufbauer, a former US trade official now at the Peterson
Institute for International Economics, said he expected China to make a mega
offer to buy more American exports, and possibly even to remove tariffs on US
goods.

“I’m thinking there’ll be an eye-catching announcement as to how much
China will buy in the next year or so that will enable Trump to say ‘victory!
victory!'” he told AFP.

But should the agreement fail to hold — causing Washington to resume
imposing tariffs while accusing Beijing of backsliding — that could pose
prove embarrassing for the Americans, he said.

Wall Street closed lower on the talks’ first day, also driven down by
negative European and Japanese economic data.