US-China economic talks: Outcome clouded by cancelled news conferences, US demands 'more fair' trading ties

US Secretary of the Treasury Steven Mnuchin (left) and Chinese Vice Premier Wang Yang pose for a photo before an opening session at a US and China comprehensive Economic Dialogue.
US Secretary of the Treasury Steven Mnuchin (left) and Chinese Vice Premier Wang Yang pose for a photo before an opening session at a US and China comprehensive Economic Dialogue. PHOTO: AFP

WASHINGTON (REUTERS) -  Senior US and Chinese officials concluded contentious economic talks on Wednesday (July 19) but the outcome was clouded by the cancellation of closing news conferences and US demands for a “more fair” trading relationship with Beijing.

US Treasury and Commerce Department officials declined immediate comment on the annual summer dialogue between Washington and Beijing, while the Chinese delegation’s leader, Vice Premier Wang Yang, left the Treasury building without speaking to reporters.  

Investors interpreted the negative signals from the talks and lack of new trade announcements as making it more likely that the Trump administration would forge ahead with broad steel tariffs or quotas based on a national security review, sending steelmakers’ shares soaring.  

Shares of United States Steel Corp closed up 4.8 per cent, while AK Steel rose 3.6 percent and Nucor rose 2.2 per cent. The potential steel tariffs, which could be announced in the coming weeks, were expected to be a difficult topic in the  US-China talks.

Commerce Secretary Wilbur Ross has blamed massive Chinese excess capacity for a global steel glut that is hurting US producers.

“Investors are essentially handicapping a probability that Trump will announce a broad-based anti-dumping measure on steel imports,” said Longbow Research analyst Christopher Olin.  

In opening remarks to the US-China Comprehensive Economic Dialogue, Ross sharply criticised China’s US$347 billion (S$475 billion) trade surplus with the United States, saying it was not the product of market forces and the bilateral trading relationship needed to change.

“We must create more balance in our trade by increasing exports of made-in-America goods to China,” Ross said at the Treasury Department. “There are significant opportunities to do this if we can work together to remove the significant barriers that continue to exist.”

 

Neither the Treasury nor the Chinese embassy offered explanations for why their news conferences scheduled for late afternoon were cancelled.  It was unclear whether the talks covered US demands that China put more pressure on North Korea to curb its nuclear and missile development efforts, an issue that Trump has linked to US-China trade.

The Trump administration could impose new sanctions on small Chinese banks and other firms doing business with Pyongyang within weeks, administration sources said last week.  

The meeting came at the end of a 100-day effort to craft an economic plan aimed at reducing the US goods trade deficit with China. So far, China has agreed to resume purchasing US beef after a 14-year hiatus and committed to buy US liquefied natural gas and open some parts of its financial services markets, such as card payment services.  

Even if the US and Chinese governments fail to agree on better trade terms, corporate chief executives from the two countries pledged to deepen their cooperation and joint investment efforts.  

Led by Blackstone Group CEO Stephen Schwarzman and Alibaba Group CEO Jack Ma, a group of 20 executives said they were committing to increase bilateral trade, including the export of US agricultural goods, liquefied natural gas and consumer products to China.

“A stable, growing economic relationship between the United States and China is mutually beneficial to the people of our two countries and for the world,” Ma and Schwarzman said in a joint statement.  

US Treasury Secretary Steven Mnuchin repeated calls by his predecessors for Beijing to re-balance its economy toward household consumption and away from exports and investment, a move he said would foster healthier, more sustainable growth.

“Foreign participation in the Chinese financial sector will help improve the allocation of resources to the most productive sectors of the Chinese economy and contribute to a stronger global financial system,” Mnuchin said.  

Wang said at the opening that two sides should maintain a healthy dialogue and warned against starting down the path of confrontation over trade.

“Dialogue cannot immediately address all differences, but confrontation will immediately damage the interests of both,” Wang said.