China denies offering deal on US trade gap

A field of sorghum grain is seen at a farm outside of Texhoma, Oklahoma, US.
A field of sorghum grain is seen at a farm outside of Texhoma, Oklahoma, US.PHOTO: REUTERS

Earlier, Beijing said it is dropping probe into US sorghum imports

BEIJING • China denied it had offered a package to slash the US trade deficit by up to US$200 billion (S$269 billion), hours after it dropped an anti-dumping probe into US sorghum imports in a conciliatory gesture as top negotiators meet in Washington.

United States officials had said on Thursday that China was proposing trade concessions and increased purchases of American goods aimed at cutting the US trade deficit with China by up to US$200 billion a year.

"This rumour is not true. This I can confirm to you," Chinese Foreign Ministry spokesman Lu Kang told a regular news briefing yesterday.

"As I understand, the relevant consultations are ongoing and they are constructive," he said.

Chinese Vice-Premier Liu He is in Washington this week for talks with US officials led by US Treasury Secretary Steven Mnuchin aimed at heading off a trade war between the world's two biggest economies.

Earlier yesterday, China announced it was ending its sorghum investigation, which had effectively halted a trade worth roughly US$1.1 billion last year, roiled global grain markets and spurred worries about rising costs domestically.

The United States is China's dominant source of imported sorghum.

Getting to a US$200 billion reduction of the US-China trade deficit on a sustainable basis would require a massive change in the composition of commerce between the two, and the news from the unidentified US officials in Washington had been met with scepticism from economists.

"That's an enormous number and it suggests that there could be some impressively ambitious accounting," said Mr Scott Mulhauser, a former chief of staff at the US Embassy in Beijing and US Export-Import Bank official.

The US goods deficit was US$375 billion last year. The top-line number in the reported Chinese offer would largely match a request presented to Chinese officials by Trump administration officials in Beijing two weeks ago.

President Donald Trump has also threatened to impose tariffs on up to US$150 billion of Chinese goods to combat what he says is Beijing's misappropriation of US technology through joint venture requirements and other policies.

Beijing has threatened equal retaliation, including tariffs on some of its largest US imports such as aircraft, soya beans and cars. The two biggest US exports to China were aircraft at US$16 billion last year, and soya beans, at US$12 billion.

One US source said earlier that US aircraft maker Boeing would be a major beneficiary of the Chinese offer to narrow the trade gap if Mr Trump were to accept it. Boeing is the largest US exporter and already sells about a quarter of its commercial aircraft to Chinese customers.

Another person familiar with the talks had said the package may include some elimination of Chinese tariffs already in place on about US$4 billion worth of US farm products including fruit, nuts, pork, wine - and sorghum.

A White House statement described the meetings as part of "ongoing trade discussions" and said Mr Trump met the Chinese delegation led by Mr Liu and the US team led by Mr Mnuchin.

"The United States officials conveyed the President's clear goal for a fair trading relationship with China," the White House said.

The US shipped 4.76 million tonnes of sorghum to China last year, accounting for the bulk of Chinese imports of the grain used in animal feed and Chinese liquor.

In April, China forced US sorghum exporters to put up a 178.6 per cent deposit on the value of sorghum shipments to the country after launching an investigation in February following Mr Trump's imposition of steep tariffs on imports of solar panels and washing machines.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 19, 2018, with the headline 'China denies offering deal on US trade gap'. Print Edition | Subscribe