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China, US open trade talks as Beijing says exports rebound

Trump may let the deadline slide if talks are going well; additional duties on $US200 billion of Chinese goods if they don't.


BEIJING — US and Chinese negotiators opened talks Feb. 14 on a sprawling trade dispute as Beijing reported its January exports rebounded despite President Donald Trump’s tariff hikes.

Trump said earlier the talks could help decide whether he escalates the fight over China’s technology ambitions by going ahead with more penalty duties March 2 on US$200 billion of Chinese goods.

The battle between the two biggest economies has fueled fears it will drag on weakening global growth. China’s economy grew at its slowest pace in three-decades last year, adding to pressure on communist leaders to reach a settlement.

Both sides have expressed optimism but released no details. US Trade Representative Robert Lighthizer and his Chinese counterpart, Vice Premier Liu He, shook hands at the start of the meeting at a government guesthouse but said nothing to reporters.

The US delegation also includes Treasury Secretary Steven Mnuchin and David Malpass, a Treasury undersecretary who is Trump’s nominee for World Bank president.

Trump said that while he is not inclined to extend the deadline, he might let it “slide for a little while” if talks go well. Earlier, the White House called March 2 a “hard deadline.”

Economists and business groups say the planned two days of negotiations allow too little time to reach a final settlement, but Beijing hopes to persuade Trump enough progress is being made to forestall the new tariff hikes.

There was no indication whether negotiators are making progress on the thorniest dispute: US pressure on Beijing to scale back plans for government-led creation of Chinese global leaders in robotics and other technologies.

A Ministry of Commerce spokesman, Gao Feng, told reporters at a regular weekly briefing that he had no details on the status of the talks.

Meanwhile, customs data released Feb. 14 showed Chinese exports in January rose 9.1% from a year earlier, recovering from December’s 3.5% decline.

Exports to the United States sank 2.4%, squeezed by Trump’s tariff hikes on billions of dollars of Chinese products. Imports of American goods plunged 41.2%, reflecting retaliatory Chinese duties and orders to importers to find other suppliers.

The fight reflects growing frustration among Beijing’s trading partners over official plans to subsidize and promote fledgling Chinese technology industries. Washington, Europe, Japan and other governments say those violate Beijing’s market-opening obligations. Some American officials worry they might erode U.S. industrial leadership.

Trump raised tariffs in July over complaints Beijing steals or pressures companies to hand over technology. The dispute includes cyber-spying traced to China, the country’s multibillion-dollar trade surplus with the United States and support for state industry.

Beijing has offered to narrow its trade surplus by purchasing more American soybeans, natural gas and other exports. But the government has resisted pressure to cut back development plans it sees as a path to prosperity and global influence.

A deal on changes in Chinese industrial and market regulations might be possible in three months, said Yu Miaojie, a Peking University economist. But he said Beijing likely will insist it is entitled as a developing country to retain protection for its industries.

“It is hard to reach an agreement within a short time on structural reforms if the United States demands too much,” Yu said. He said his own view is that China “already has offered too much,” given its relatively low state of development.

“It is equivalent to the US demanding China define itself as a very advanced and perfect economy, which is not true,” he said. “China is a developing country and its reforms need to take place step by step.”

While the January trade data were stronger than expected, Julian Evans-Pritchard of Capital Economics said global demand for Chinese exports is weakening.

“The broad trend in shipments still appears to be pointing down,” he said in a report.

Chinese officials reject complaints that foreign companies are required to hand over technology. But business groups and foreign governments point to rules they say compel companies to disclose trade secrets or share technology with state-owned partners.

Chinese officials also balk at US pressure to accept an enforcement mechanism to monitor whether Beijing carries out its promises.

Beijing has tried to deflect pressure by emphasizing China’s growth as an export market. It has announced changes over the past year to open finance and other fields, including allowing full foreign ownership in its auto industry for the first time.

 

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