US Treasury secretary Steven Mnuchin said the US and China are having a “very good conversation,” as a second day of negotiations over the two nations’ trading relationship got under way in Beijing. Photo: AFP
US Treasury secretary Steven Mnuchin said the US and China are having a “very good conversation,” as a second day of negotiations over the two nations’ trading relationship got under way in Beijing. Photo: AFP

US, China in ‘very good conversation’ on Trade, says Steven Mnuchin

The closed-door discussions between President Donald Trump's economic team and officials in Beijing began on Thursday and are scheduled to run through Friday

Washington: Treasury secretary Steven Mnuchin said the US and China are having a “very good conversation," as a second day of negotiations over the two nations’ trading relationship got under way in Beijing.

Commerce secretary Wilbur Ross, US trade representative Robert Lighthizer and White House adviser Peter Navarro, who are also on the US delegation, declined to comment to reporters when leaving their hotel Friday.

A White House official said late on Thursday that the atmosphere was “fairly positive" but the real test will be China’s ability to deliver on its promises of economic change.

The US has turned over to China a “detailed list of asks," Mark Calabria, chief economist to US Vice President Mike Pence, said during an event in Washington. While China hasn’t indicated any detail on what it may be prepared to agree to, a senior official sounded a defiant tone ahead of the meeting, and the state news agency warned against “unreasonable demands."

The closed-door discussions between President Donald Trump’s economic team and officials in Beijing began on Thursday and are scheduled to run through Friday.

China’s largest media outlets have been ordered to refrain from reporting any material beyond official press releases related to the talks, according to people familiar with the matter.

The US has tempered expectations of a major breakthrough from the discussions, which are expected to focus on concerns over China’s state-driven economy, forced technology transfers and America’s widening trade deficit with China.

Underscoring the friction, a US report released Thursday showed the trade gap with China surged by 16% to more than $91 billion in the first quarter of this year.

China’s government won’t accept any US preconditions for negotiations such as abandoning its long-term advanced manufacturing ambitions or narrowing the trade gap by $100 billion, a senior Chinese government official, who asked not to be named, said late Wednesday.

Chinese stocks in Hong Kong extended losses Friday, with the Hang Seng China Enterprises Index dropping for a third day amid uncertainty over the US-China talks. The S&P 500 Index fell 0.2% last session as investors digested mixed earnings, while the Dow Jones Industrial Index was little changed.

As Mnuchin and the others headed out for discussions, across town at Beijing’s Great Hall of the People, President Xi Jinping indicated China will continue to embrace globalism, saying it wants to actively take part in world governance. Those who reject the world will be rejected by the world, he said in a speech commemorating the 200th anniversary of Karl Marx’s birth.

Few details

No details of any planned press conferences related to the trade talks have been given by either side, and analysts aren’t optimistic about potential outcomes beyond the two countries possibly delaying on the threat of tit-for-tat tariffs.

“Our expectations are low. The US negotiating position is unclear—indeed it’s not even clear if the US representatives have a unified view on what they want to achieve," according to Tom Orlik, chief economist at Bloomberg Economics.

“The Chinese side has already made concessions and won’t rush to make more. The past few weeks have shown that markets can be roiled by tariff chatter, so that’s certainly a possibility in the next couple of days."

The meetings are an opportunity for the two sides to exchange their views after the official channel for US-China high-level economic talks were suspended last year.

“I’m very optimistic that what we will hear from this week is a lot of very nice sounding promises and commitments but we have to be diligent about making sure that those nice sounding promises and commitments are actually met. And that, only time will tell," Calabria said.

Trump has threatened to impose tariffs on as much as $150 billion of Chinese goods to punish China over its IP practices if the talks fail to yield progress, a move that China said would spark retaliation in equal measure on American exports.

The US is also looking at ways to crack down on Chinese investment in the US in an effort to balance the scales and protect sensitive technology. China has announced tariffs on $3 billion of U.S. goods such as pork and wine in retaliation for new global steel and aluminium tariffs imposed by Trump. The US levies were aimed at tackling China’s overcapacity.

Trump sounded a more positive note as his economic team entered the talks in Beijing. “Our great financial team is in China trying to negotiate a level playing field on trade!," Trump tweeted as they arrived in Beijing. “I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!"

China’s official Xinhua News Agency said in a commentary Wednesday that the US should show sincerity in trade talks instead of making unreasonable demands. China will take retaliatory steps of the same intensity if the US puts tariffs on its goods after the talks, Xinhua said.

Equal footing

The discussions should involve equal-footed consultation and mutual respect, and work toward mutual benefits, a Chinese foreign ministry spokeswoman told reporters in a regular briefing on Thursday. Chinese Vice Premier Liu He, Xi’s top economic adviser, is leading his nation’s delegation.

Another irritant in the relationship is a US ban on sales of crucial American technology to telecommunications-gear maker ZTE Corp. and a probe it is said to be leading against Huawei Technologies Co., China’s largest mobile and telecommunications company.

Xi said Wednesday that China must firmly control major technologies and rely on domestic innovation, echoing comments from days earlier when he used a visit to a semiconductor company in Wuhan to say the industry must make major breakthroughs. Bloomberg

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