U.S.-China Trade Talks Delayed, Not Derailed

Date: Thursday, August 20, 2020
Source: Wall Street Journal – Logistics Report

U.S.-China Trade Talks Delayed, Not Derailed

U.S. and Chinese trade negotiators plan to confer by video in the coming days over progress in fulfilling terms of the “Phase One” trade deal and U.S. actions against Chinese technology firms, according to officials in both nations.

The talks, which had been previously reported, were thrown into doubt Tuesday night when President Trump said that he had canceled talks with China because of his anger over the way Beijing handled the coronavirus pandemic. “I don’t want to talk to China right now,” he said.But afterward, Mr. Trump’s aides clarified that the president wasn’t talking specifically about the Phase One deal, but more generally. President Trump and Chinese President Xi Jinping haven’t spoken by phone since late March.The Chinese side has been preparing for an Aug. 15 talk between U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He on the status of the trade accord signed early this year. The U.S. side figured the conversation would occur a few days after that. The two sides still haven’t picked a specific date for the talks though planning continues, officials said.
It wasn’t clear why the two sides haven’t settled on a date, though a delay gives Chinese officials more time to buy U.S. goods and show that they are trying to live up to the deal’s ambitious purchase targets.“There are no scheduled talks at this point,” Mr. Trump’s chief of staff, Mark Meadows, told reporters aboard Air Force One as it returned from Phoenix to Washington late Tuesday. “Ambassador Lighthizer continues to have discussions with his Chinese counterparts involving purchases and fulfilling their agreement.”He said Mr. Trump’s remarks didn’t mean that the president was planning to scrap the Phase One accord, which Mr. Trump regularly touts. “I don’t think he said he was walking away from the trade deal,” Mr. Meadows said. “He said he was reviewing it.”Still, even Mr. Trump’s top advisers said they aren’t sure the Phase One accord would last until the Nov. 3 election. The president might see it in his political interest to kill the deal as a way of demonstrating that he is tough on China. Mr. Trump’s aggressive China policy is one of the pillars of his campaign.Asked Tuesday about the fate of the deal, Mr. Trump answered, “We’ll see what happens.”Trade experts closely following the talks said the discussions on the Phase One deal were always more about symbolism than substance.Talks would be a way to show that at least one part of the U.S.-China relationship was still on track. If Mr. Trump were to cancel them, the trade relationship will be one more casualty of an increasingly bitter struggle between the world’s two largest economies.For Beijing, the talks would offer it a forum to bring up its concerns over the intensifying U.S. actions against Chinese technology firms. In recent days, the Trump administration has threatened bans on the TikTok app owned by Chinese internet company ByteDance Ltd. and Tencent Holdings Ltd. ’s WeChat.U.S. actions also threaten to block Huawei Technologies Co. from obtaining advanced semiconductors to make smartphones and 5G telecommunications equipment.Mr. Liu, the Chinese vice premier, plans to raise the technology issues, citing the Phase One agreement’s language that calls on both sides to resolve “existing and any future trade and investment concerns as constructively and expeditiously as possible,” Chinese officials said.He also plans to argue that China is working hard to meet purchase targets.In the past few months, China has stepped up its buying of U.S. corn, soybeans and other farm products. However, the pace of the purchases, as measured in dollar terms, is falling short of what is needed to meet the targets, partly reflecting declining commodity prices amid the global pandemic.Chinese negotiators are expected to seek adjustments of the agreement to take into account the price fluctuations, the officials said.As of June, China’s purchases of all products covered by the trade pact were $33.3 billion, only at around 47% of their year-to-date targets, according to Chad Bown, a senior fellow and trade expert at the Peterson Institute for International Economics.For Washington, the meeting is a way to press Beijing to increase the pace of purchases. 
Earlier this week, Mr. Trump said on Fox News that Beijing was “more than living up to” the trade deal “because they know I’m very angry at them.”He said that China “made the largest order of corn, the largest order of soybeans in history,” a claim that agricultural experts said was hyperbole.Ken Morrison, who publishes a commodities newsletter, says that Chinese purchases of agricultural products are increasing in volume terms, but the Phase One deal set purchase goals in dollars. By that standard, Chinese purchases are “not even close” to a record, he said.