U.S.-China trade talks end in discord as demands show wide rift
Date: Monday, May 7, 2018
China’s official Xinhua News Agency reported Friday afternoon that both sides reached a consensus on some trade issues while acknowledging major disagreements on some matters. It said they would continue discussions, without providing specifics for when they would start again. Neither side briefed the media, and the U.S. delegation led by Treasury Secretary Steven Mnuchin departed Beijing in the evening.
While a cure-all deal was always a long shot, the discord between the world’s two biggest economies means skittish global markets will continue to face ongoing trade tensions. The immediate question—which may not be answered until President Donald Trump takes to Twitter—is whether the U.S. got enough wins to delay planned tariffs of up to $150 billion on Chinese imports.
“A disagreement over trade practices that has built up over more than two decades will take much more than two days to resolve,” said Shane Oliver, the head of investment strategy at AMP Capital Investors Ltd. in Sydney. “A negotiated solution remains most likely but it will take time with a lot of posturing and near-death moments along the way.”
Heading into the talks, both sides outlined a series of tough demands, with the U.S. focused on reducing a deficit in goods it says reached a record $375 billion last year.
The U.S. delegation asked China to reduce support for high-tech industries, allow U.S. companies non-discriminatory access in China and cut the trade deficit by at least $200 billion by the end of 2020 from 2018, according to a document seen by Bloomberg. It also called on China to avoid any retaliation, drop World Trade Organization cases and agree to quarterly reviews of its progress in meeting targets.
The Chinese side—led by Vice Premier Liu He, President Xi Jinping’s top economic adviser—asked the U.S. to stop its 301 investigation into Chinese intellectual property abuses, drop planned 25 percent extra tariffs on Chinese goods and end discrimination against Chinese companies in national security reviews, according to a separate document also seen by Bloomberg. China also asked the U.S. to open its e-payment market and approve China International Capital Corp.’s application for a financial license.
China also warned that U.S. companies may be excluded from its domestic market, saying any of its moves to reduce investment restrictions may not be applicable to American businesses if the Trump administration doesn’t agree to treat Chinese companies equally, the document said.
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