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China’s Economy Czar to Visit Washington for Trade Talks

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China’s Economy Czar to Visit Washington for Trade Talks

Finally, the U.S. and China’s top trade officials will meet for direct talks.

China’s Economy Czar to Visit Washington for Trade Talks
Credit: World Economic Forum / Sandra Blaser

The top U.S. and Chinese trade envoys will hold talks in Washington this month in a possible sign of progress toward ending a costly tariff battle over Beijing’s technology ambitions.

The Ministry of Commerce announcement of the January 30-31 event was the first sign of a next step by the two sides following negotiations in Beijing earlier this month between lower-level officials.

China’s economy czar, Vice Premier Liu He, was invited by U.S. Trade Representative Robert Lighthizer, the ministry said.

Economists and business groups said earlier that a decision by Liu and Lighthizer to take part in person would indicate technical discussions made enough progress to require high-level political decisions.

The two sides have imposed tariff hikes of up to 25 percent on tens of billions of dollars of each other’s goods in the fight over U.S. complaints Beijing steals or pressures companies to hand over technology. Washington also is pressing China to roll back plans for state-led industry development that its trading partners say violate its market-opening obligations.

The Washington talks are aimed at carrying out the December 1 agreement by Presidents Donald Trump and Xi Jinping to suspend further tariff increases for 90 days while they negotiate, said Ministry of Commerce spokesperson Gao Feng.

They are likely to take up more complex U.S. complaints about Chinese policy on which lower-level officials “couldn’t give a clear response,” said Yu Chunhai, a trade expert at Renmin University in Beijing.

Chinese officials have suggested Beijing might adjust its industry plans. But they reject pressure to abandon what they consider a path to prosperity and global influence. Xi has promised to “resolutely reform what should and can be reformed,” but also warned that China will “make no change where there should not and can not be any reform.”

Liu probably will tell U.S. officials “what China can and can’t do,” said Yu.

For their part, Chinese leaders object to U.S. export controls on “dual use” technology with possible military uses. They say Chinese companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.

“Such communication must be made between officials at a higher level,” said Yu.

Neither side has shown any sign of changing its basic position. Economists say the 90-day window, which expires on March 1, is too short to resolve conflicts that have strained their relations for nearly two decades.

Chinese exports to the United States held up through much of 2018 despite Trump’s tariff hikes but contracted by 3.5 percent in December compared with a year earlier as the penalties began to depress demand.

Liu held talks in June 2018 in Beijing with U.S. Commerce Secretary Wilbur Ross as trade tensions mounted. They failed to produce a settlement and Trump went ahead the next month with his first tariff hikes.

Liu made a surprise appearance at this month’s lower-level talks in Beijing. Financial markets took that as a positive sign. Global stock markets rose but then fell back after the meeting produced no agreements.

U.S.-Chinese relations are increasingly strained over technology, trade, and cyberespionage.

This month’s talks in Beijing went ahead despite the arrest of an executive of Chinese technology giant Huawei in Canada on December 1. The United States wants her extradited on charges that she lied to a bank about dealings with Iran.

On Thursday, The Wall Street Journal reported U.S. prosecutors are investigating whether Huawei stole trade secrets from U.S. companies.

The investigation was prompted in part by a lawsuit brought by T-Mobile U.S. Inc. that accused two Huawei employees of stealing technology for a robotic arm used to test mobile phones, the Journal said, citing unidentified sources. The two companies settled their dispute in 2017.

“We doubt the intentions behind this,” said a foreign ministry spokesperson, Hua Chunying. She said it would be “inconsistent with the rules of free and fair competition” if U.S. authorities “arbitrarily used the state apparatus to suppress Chinese enterprises.”

Beijing has tried to defuse pressure for more sweeping changes by emphasizing its growing importance as an import market and promising more access to its auto and some other industries.

Trump has complained repeatedly about the U.S. trade deficit with China. China reported Monday its 2018 trade surplus with the United States swelled to a record $323.3 billion.

Beijing also faces complaints from the European Union. The 28-nation trade bloc has filed a challenge in the World Trade Organization against Chinese licensing rules it says hinder foreign companies from protecting and profiting from their own technologies.

By Joe McDonald for Associated Press with additional reporting by The Diplomat.