China and U.S. put trade war on hold
May 22, 2018 Category China News Round-up, Weekly
China and the U.S. put a looming trade war on hold after Chinese Vice Premier Liu He held two days of trade talks in Washington. He also had an in-depth discussion with U.S. President Donald Trump, a meeting which was not announced in advance and was upgraded from a 15-minute “protocol call” to 45 minutes of “talks of substance”. The U.S. put the imposition of tariffs on USD50 billion of Chinese imports on hold, while China agreed to buy more U.S. agricultural and energy products to help narrow the record USD375 billion bilateral trade deficit. “There was a consensus on taking effective measures to substantially reduce the United States’ trade deficit in goods with China,” the White House said in a joint announcement, adding that the U.S. will send a team to China to work out the details. Vice Premier Liu He said: “This is a positive, pragmatic, constructive and fruitful visit. Both sides have reached a lot of consensus on the healthy development of Sino-U.S. trade relations.”
U.S. Treasury Secretary Steven Mnuchin said: “Right now we have agreed to put the tariffs on hold while we try to execute the framework” agreement on reducing China’s trade surplus with the U.S. Mnuchin confirmed that Commerce Secretary Wilbur Ross will lead another round of trade talks in Beijing. “We are immediately going to follow this up with Secretary Ross going there with very hard commitments in agriculture, where we expect to see a very big increase, 35% to 40% increases in agriculture this year alone,” Mnuchin said. “In energy, doubling the energy purchases. I think you could see USD50-60 billion a year of energy purchases over the next three to five years.” Both countries would also step up trade cooperation in the areas of health care, hi-tech products and finance.
China pledged to strengthen intellectual property laws, including the Patent Law, and continue negotiations. Both sides also agreed to encourage two-way investment and to strive to create a fair, level playing field for competition. But President Trump warned in a tweet that “the U.S. has very little to give, because it has given so much over the years. China has much to give!”
In a concession to the U.S., China has terminated anti-dumping and countervailing duty investigations into imported sorghum from the United States. China’s Ministry of Commerce (MOFCOM) scrapped the anti-dumping duty of 178.6% imposed on April 18, saying it increased costs for consumers and was against the public interest. The government will also return temporary antidumping deposits collected at Chinese customs.
China may also invite foreign companies to take part in its “Made in China 2025” plan to support its domestic technology sector. The strategy has been singled out by Washington as a prime example of Beijing’s “unfair trade practices”, saying it is using preferential policies to unfairly boost Chinese firms. But China will refuse to give up this strategy. “Made in China 2025 is a national strategy – we will not give it up, no matter what,” a government source said. “Just like any other country, China has the right and it has reasons to upgrade its industry. We cannot accept that we will always be the supplier of cheap products.”
Before the agreement was reached, China’s Foreign Ministry had dismissed rumors that China had offered to cut its trade surplus with the United States by USD200 billion. The U.S. and China had proposed tens of billions of dollars in tariffs in recent weeks, fueling concerns about the outbreak of a full-on trade war that could hurt businesses globally.
President Trump said he was working together with President Xi Jinping to get ZTE back in business as soon as possible after his Commerce Department had banned all U.S. companies from selling components to ZTE for seven years to punish the company for failing to punish staff involved in circumventing U.S. sanctions on Iran. Wu Xinbo, Director of the Center for American Studies at Fudan University in Shanghai, said that by conceding ground on the ZTE issue, the U.S. was showing its openness to finding a solution to the recent trade tensions. But U.S. and Chinese officials insisted that the trade negotiations and the ZTE case were two different issues.
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