China is looking to dazzle a visiting U.S. trade delegation this week, arranging a session with President Xi Jinping and planning pledges to cut tariffs and ease regulations. It will likely take more than that to impress the visiting Americans and head off a looming trade war.
It will be a high-stakes meeting, starting Thursday. U.S.-China economic relations have sunk to their lowest point in decades with the U.S., angry over alleged Chinese pressure on U.S. firms to transfer technology to Chinese partners and other misdeeds, threatening tariffs on $150 billion in Chinese goods and prohibitions on Chinese purchase of U.S. technology.
The trade mission gives both sides a chance at easing those tensions, but chances of a quick resolution are slim.
The U.S. team plans to take tough positions, say U.S. officials, who are skeptical that China’s pledges will amount to much. The U.S. hasn’t sent an advance team to Beijing for preliminary negotiations, as is typical. Rather, when the two sides meet, the U.S. may simply note President Donald Trump’s threats of tariffs and U.S. complaints, and wait to see what the Chinese offer, figuring that will force China to offer even deeper structural changes and faster action.
It is a risky strategy that could help produce deep changes in China’s economy if successful, but deepen hostilities if the tactics backfire.
“If the trip isn’t well coordinated and China doesn’t have a sense of U.S. red lines, the discussions are unproductive,” said Michael Hirson, a former U.S. Treasury representative in Beijing who is now a Eurasia Group analyst. He figures it is likely that the U.S. will levy tariffs on tens of billions of dollars of Chinese imports over the coming months.
Among the ideas that Chinese are likely to put forward, say Chinese officials: Cutting a 25% tariff on foreign vehicles; easing the quota on the number of imported films which are shown in China on a revenue-sharing basis; buying more U.S. goods to help cut the vast U.S. trade deficit; and offering to negotiate a U.S- China free-trade deal, which could cover many structural issues and be enforced by trade sanctions.
Reference: WSJ
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