BEIJING: The United States has demanded that China cut its US trade surplus by $200 billion, end subsidies for advanced technology industries and sharply cut import tariffs to US levels, two people familiar with US-China trade talks said on Friday.
The lengthy list of demands was presented to Beijing prior to the start of talks Thursday and Friday between top-level Trump administration officials and their Chinese counterparts to try to sort out disputes that have threatened a damaging trade war between the world’s two largest economies.
The talks ended with China’s Xinhua news agency describing them as “constructive, candid and efficient” but with disagreements that remain “relatively big". The US side has yet to give its account of the talks, and there was no sign that President Donald Trump would back off on his threat to impose tariffs on up to $150bn in Chinese goods over allegations of intellectual property theft.
Speaking with reporters in Washington on Friday, Trump said he was determined to bring fairness to the US-China trading relationship.
“We’re going to have some incredible trade deals announced,” Trump said, adding he had “great respect” for China’s President Xi Jinping. “That’s why were being so nice, because we have a great relationship.” The US delegation, led by Treasury Secretary Steven Mnuchin, has left China.
China during the meetings asked that the United States ease crushing sanctions on Chinese telecom equipment maker ZTE Corp , people with knowledge of the matter said.
Washington’s demand for a $200bn cut from China’s US goods trade surplus doubles Trump’s previous request for a $100bn cut. China had a record goods trade surplus of $375bn in 2017.
Trump has also demanded “reciprocity” between US and Chinese tariffs, frequently complaining about China’s 25 per cent passenger vehicle tariff while the equivalent US tariff is 2.5pc.
The US team demanded that China lower tariffs to levels no higher than those imposed by the United States, the people familiar with the demands said. The delegation also asked China to halt subsidies for advanced technology linked to its “Made in China 2025,” the sources said.
The 2025 industrial plan seeks to upgrade China’s manufacturing sector to more advanced products, including information technology, semiconductors and aircraft - sectors where the United States is highly competitive.
Chinese officials believed the US proposal was “unfair,” the Wall Street Journal reported, quoting people with knowledge of the negotiations.
“I think the US is asking for the impossible. Reducing the deficit by $200bn by 2020 is quite an unrealistic demand, but it may also be a negotiation tactic to start high first,” said Tommy Xie, economist at OCBC Bank in Singapore.
In a proposal submitted by the Chinese side, Beijing offered to increase US imports and lower tariffs on some goods, including cars, according to the sources.
But China requested that the United States treat Chinese investment equally under national security reviews, stop issuing any new restrictions on investments, and halt a proposal to implement 25pc tariffs under its “Section 301” probe.
China also offered to reconsider anti-dumping duties on US sorghum, according to the proposal.
Xinhua’s statement said there had been exchanges of opinion on intellectual property protections, expanding US exports and bilateral services trade. It gave no indication of what actions might be taken but said the two sides committed to resolve their trade disputes through dialogue.
Published in Dawn, May 5th, 2018