Vice Premier Liu He

Trade talks aimed at averting a U.S.-China trade war will resume in Washington on May 15. China’s Vice Premier Liu He will visit the U.S. capital “to continue the discussions with the President’s economic team”, White House Press Secretary Sarah Huckabee Sanders said. The announcement came only three days after a U.S. delegation led by Treasury Secretary Steven Mnuchin left Beijing after two days of talks that produced no apparent consensus, leaving open the possibility that punitive tariffs on USD50 billion worth of imports from China would take effect in the coming weeks. Vice Premier Liu He is prepared to discuss concrete steps to cut the trade deficit between the two countries, but would make no concessions on industrial policy – especially the Made in China 2025 development plan. It will be his second visit to the U.S. in three months’ time. Wu Xinbo, Director of the Center for American Studies at Fudan University, said Liu’s visit was likely to bring the first breakthrough in what was likely to be a long negotiating process.

During the talks in Beijing, the United States demanded that China cut the trade deficit the U.S. faced by at least USD200 billion by the end of 2020. Additionally, the U.S. called on China to halt state subsidies for industries under its “Made in China 2025” plan. In the meantime, China’s trade surplus with the U.S. continues to expand, growing by USD6.76 billion – or nearly 44% month-on-month – to USD28.78 billion in April. The surplus with the U.S. was USD22.19 billion in April, up from USD15.43 billion in March. In the first four months of this year, the surplus with the U.S. amounted to USD80.4 billion. The figure for the same period last year was USD70.9 billion. In U.S. dollar terms, China’s exports grew 12.9% last month, compared with the same period last year, while imports rose 21.5% year-on-year, faster than the 14.4% increase in March.

Analysts said the opening round of talks in Beijing last week served only to communicate each side’s position. According to the People’s Daily, the talks marked a change from the recent tit-for-tat exchanges between Beijing and Washington and sent a positive signal for the global economy, adding: “There is hope that the two nations will move away from confrontation and towards consultation.” China’s Commerce Ministry was studying measures to further lower import tariffs on some food, pharmaceuticals and medical instruments, which would at least partly address U.S. demands for easier access to China’s markets, the South China Morning Post reports.

Meanwhile, the Chinese Ambassador to the World Trade Organization (WTO) Zhang Xiangchen and his U.S. counterpart Dennis Shea defended their countries trade measures at a meeting of the trade body last week.The intensifying conflict has sparked worries that worldwide growth could suffer. The ECB warned this week that a rise in protectionist policies may damage the global economy.

The U.S. Trade Representative’s Office will hold a public hearing on May 16 and 17 about the USD50 billion worth of Chinese products that are facing 25% import tariffs following a Section 301 investigation into alleged unfair trade practices. Meanwhile China has ramped up inspections of pork shipped from the United States in a warning that it could retaliate in the trade war. Other U.S. agricultural products, including fruit, also face closer inspections of every arriving shipment. U.S. pork is now sitting at Chinese ports for up to two weeks, instead of a few days, industry sources said.