China pledges to open market in bid to avert US trade war

Chinese Premier Li Keqiang reiterated pledges to ease access for American businesses.
Chinese Premier Li Keqiang reiterated pledges to ease access for American businesses.

Premier makes promise even as Beijing calls on WTO members to unite against US moves

BEIJING • Chinese Premier Li Keqiang said China and the US should maintain negotiations and he reiterated pledges to ease access for American businesses, as Beijing scrambles to avert a trade war.

Mr Li made the comments yesterday even as China called on World Trade Organisation (WTO) members to unite to prevent the US from "wrecking" the WTO.

He told a conference that included global chief executives that China would treat foreign and domestic firms equally, would not force foreign firms to transfer technology and would strengthen intellectual property rights, repeating promises that have failed to placate Washington.

"With regard to trade imbalances, China and the United States should adopt a pragmatic and rational attitude, promote balancing through expansion of trade, and stick to negotiations to resolve differences and friction," Mr Li said at the the China Development Forum, according to state radio.

The US asked China in a letter last week to cut a tariff on US cars, buy more US-made semiconductors and give US firms greater access to the Chinese financial sector, The Wall Street Journal reported yesterday, citing unidentified sources.

Alarm over a possible trade war between the world's two largest economies has chilled financial markets as investors fear dire consequences should trade barriers go up due to US President Donald Trump's bid to cut the US$375 billion (S$491 billion) trade deficit with China.

US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer listed steps they want China to take in a letter to newly appointed Vice-Premier Liu He, who oversees China's economy, the Journal said, quoting sources with knowledge of the matter.

Despite a steady stream of fierce rhetoric from Chinese state media lambasting the US for being a "bully" and warning of retaliation, Chinese and US officials are busy negotiating behind the scenes.

China has offered to buy more US semiconductors by diverting some purchases from South Korea and Taiwan, the Financial Times reported, citing people briefed on the talks.

Chinese officials are also working to finalise rules by May - instead of the end of June - to allow foreign financial groups to take majority stakes in Chinese securities firms, the Financial Times said.

"I anticipate that for political reasons it would be logical for China to respond," Blackstone Group chief executive Stephen Schwarzman told Reuters yesterday on the sidelines of the China Development Forum.

"That is why I view this more as a skirmish, and I think the interests of both countries are served by resolving some of these matters."

Fears of a trade war mounted this month after Mr Trump imposed tariffs on steel and aluminium imports, and then last Thursday specifically targeted China by announcing plans for tariffs on up to US$60 billion of Chinese goods.

A US inquiry had found China guilty of intellectual property theft and unfair trade, by forcing US investors to turn over key technologies to Chinese firms. Last Friday, China responded to the US tariffs on steel and aluminium by declaring plans to levy additional duties on up to US$3 billion of US imports.

Yesterday, Beijing's envoy Zhang Xiangchen told delegates at the Geneva-based WTO that Mr Trump's plan to impose tariffs on Chinese goods under Section 301 of the 1974 US Trade Act broke WTO rules. "The US is setting a very bad precedent by bluntly breaching its commitment made to the world. WTO members should jointly prevent the resurrection of 301 investigations and lock this beast back into the cage of the WTO rules," he said.

"Unilateralism is fundamentally incompatible with the WTO... The WTO is under siege, and all of us should lock arms to defend it."

REUTERS

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A version of this article appeared in the print edition of The Straits Times on March 27, 2018, with the headline 'China pledges to open market in bid to avert US trade war'. Print Edition | Subscribe