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US-China Trade talks begin with Trump calling for “level playing field”

 

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Top Trump administration officials, including three Cabinet-level officials, two senior advisers and one prominent ambassador, are arriving in China armed with tough talk about Beijing’s need to change its trade practices.

The Split

But the group appears to lack one essential element: a clear set of demands for their Chinese counterparts. To deliver a win for the White House on trade in China and elsewhere, senior administration officials will first need to negotiate among themselves.

“There doesn’t seem to be a comprehensive, coherent U.S. request to China,” says Wendy Cutler, a former U.S. trade negotiator.

“There are so many people on the U.S. delegation that it leads me to believe that it will be characterized by both sides putting down many markers in terms of what they may be able to do, what they won’t do and what issues are of primary concern.”

The key split in the delegation lies between the hardliners who are sceptical of China and want to push for deep concessions and more moderate officials who are more likely to accept modest concessions from Beijing. The China trade hardliners headed to Beijing include Trump trade advisor Peter Navarro and U.S. Trade Representative Robert Lighthizer while Treasury Secretary Steve Mnuchin and economic advisor Larry Kudlow are more likely to accept China’s concession.

The tensions with China are not the only trade negotiation where Trump and his advisors are still deciding what they will accept. Trump announced tariffs on steel and aluminium in early March but delayed implementing them in the European Union, Canada and Mexico following an outcry from business leaders and key allies. This week, he again delayed for a month the tariffs targeting those countries with the White House saying the administration would focus on “quotas that will restrain imports” in ongoing talks.

China’s Response

China has offered to open its auto and financial sectors, according to a New York Times report earlier this week. China has already announced related concessions this year, including allowing U.S. auto companies access to the Chinese market without a local partner. However, Trump has indicated those moves will not be enough, saying on Twitter this week the “Massive Trade Deficit” with China “should have been fixed years ago, not now.”

Chinese foreign ministry spokeswomen Hua Chunying says Beijing hopes to make progress with America – but only if there is mutual respect.

“The outcome should be mutually beneficial and win-win.”

The official Xinhua news agency, usually a good gauge of the Chinese government’s views, has also taken a firm line by warning that China could cope with a trade war, stating that “China will inevitably suffer losses, but China has the political advantage of a centralised and unified leadership and support of a massive domestic market.”

“The U.S. wants greater access to China’s market, but it should not use trade actions as a battering ram to force China to open its doors. It is already in the process of opening them wider,” the English-language newspaper said. In doing so, China expected Washington to reciprocate and open its market to Chinese investment and competition, it said.

A breakthrough deal to fundamentally change China’s economic policies is viewed as highly unlikely during the two-day visit, though a package of short-term Chinese measures could delay a U.S. decision to impose tariffs on about $50 billion worth of Chinese exports.

What are your views on Trump’s tough talks on Trade with China? Are you hopeful?

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