US Commerce chief Wilbur Ross in China for talks to avoid trade war

US Commerce Secretary Wilbur Ross is expected to press China to commit to buying more US agriculture, energy, and other products during his visit.
US Commerce Secretary Wilbur Ross is expected to press China to commit to buying more US agriculture, energy, and other products during his visit. PHOTO: AFP

BEIJING (AFP, REUTERS) - US Commerce Secretary Wilbur Ross arrived in Beijing on Saturday (June 2) for talks aiming to ease tensions over tariffs that have heightened fears of a trade war between the world’s two biggest economies, Chinese state media said.  

Despite announcing a truce earlier this month, the United States is working to finalise planned sanctions on Beijing – including restrictions on Chinese investment, export controls and 25 percent tariffs on $50 billion in Chinese tech goods.  

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods.

Ross held "small-scale" discussions on Saturday afternoon and will begin "formal" negotiations on Sunday, Chinese state television CCTV reported, without elaborating. 

He also met with Vice-Premier Liu He, who is President Xi Jinping's pointman on economic policy, a US government official told AFP.

His visit comes as fears of an all-out global trade war intensified after the European Union, Canada and Mexico drew up retaliatory measures to Washington’s stinging steel and aluminium tariffs that came into effect on Friday.  

US President Donald Trump first announced trade sanctions on China, largely focused on the Asian giant’s theft of US intellectual property, in March.  

 
 
 

Beijing on Wednesday lambasted “sudden flip-flops” in US policy after the Trump administration said it would still move to impose the sanctions against it – just over a week after announcing a truce.  

But as Ross arrived, China appeared to soften its position.  

“China’s door for negotiation remains open,” said foreign ministry spokeswoman Hua Chunying on Friday. The US and China “should adopt a sincere attitude and follow the spirit of equality and mutual respect to seek a win-win solution through dialogue and consultation”, she added.  

The final list of Chinese imports covered by the US tariffs list will be announced June 15 and imposed shortly thereafter, while the proposed investment restrictions and enhanced export controls will be announced by June 30, according to the White House.  

Trump has accused China of forcing American firms to hand over their industrial secrets to Chinese companies in order to do business in the country, a charge that Beijing has rejected.  

The US leader has also threatened to impose tariffs on an additional $100 billion in Chinese goods if Beijing retaliates.  

Zhu Feng, a professor of international relations at Nanjing University, told AFP he was “not very optimistic” about the outcome of the latest trade negotiations.  

“The chance that there will be no trade war at all is low. I’m afraid that the most practical option for the two sides is now to limit the extent of the conflict,” he said.

Two administration officials familiar with the matter said Ross' negotiations of specific commitments on Chinese purchases of US agricultural and energy commodities would take place over the weekend despite a report that initial haggling with Beijing this week could delay or cancel it.

The Wall Street Journal reported that Chinese officials were reluctant to get locked into long-term commitments.

The purchases are aimed at reducing the US$375 billion (S$501 billion) US trade deficit with China. Trump has demanded that China take steps to reduce the gap by US$200 billion annually by 2020.

In Beijing, China reiterated its commitment to the current, rules-based trading system centered around the World Trade Organization.

While many countries share US frustration over Chinese trade and economic practices, critics of US policy under President Donald Trump have warned that Washington risks alienating the European Union, Canada and Mexico with 25 percent tariffs on steel and 10 percent on aluminium.

"All countries, especially the major economies, should resolutely oppose all forms of trade and investment protectionism," foreign ministry spokeswoman Hua Chunying told a regular media briefing, when asked about the US move.

This weekend's trade talks come as Washington is engaged in fragile negotiations towards what would be a historic summit between Trump and North Korean leader Kim Jong Un, whose main diplomatic backer is China.

Ross, who was preceded in Beijing this week by more than 50 US officials, is expected during a two-day visit starting on Saturday to press China to commit to buying more US agriculture, energy, and other products to narrow the US$375 billion trade deficit.

While US officials have sent conflicting signals during the dispute with China, one person familiar with planning for Ross' visit said his aim was to keep a dialogue going.

Ross is "going there to tread water," the person said, declining to be identified due to the sensitivity of the matter.

What had appeared to have been a trade truce between Beijing and Washington was upended this week when the White House said it would follow through on its threat to activate tariffs on US$50 billion worth of Chinese imports, as well as impose restrictions on Chinese investments in the United States and tighter export controls.

Washington and Beijing have threatened tit-for-tat tariffs on goods worth up to US$150 billion each.

"The more Trump is irritating allies and asking Chinese to buy stuff, the better off they are, because he's not sitting there and attacking the hard issues," the person said.

Those hard issues include what the U.S. complains is rampant theft of intellectual property, as well as Beijing's support for cutting-edge technologies under its Made in China 2025 policy.

QUALCOMM STILL IN QUESTION

On Friday, China's markets regulator said it was still reviewing San Diego-based Qualcomm Inc's US$44 billion acquisition of NXP Semiconductors.

Some people familiar with the matter have told Reuters that approval may depend on progress of broader talks and a reprieve from a US government ban on sales by US companies to China's ZTE Corp, penalised for illegally supplying telecommunications gear to Iran and North Korea.

Reuters reported on Sunday that Qualcomm was expecting to meet this week in Beijing with China's antitrust regulators in a final push to secure clearance for the deal.

Qualcomm made its latest submission regarding the deal to China's State Administration for Market Regulation early this week, people familiar with the matter told Reuters.

China's exports have mushroomed since joining the World Trade Organisation in 2001, making it the world's second-largest economy. It has positioned itself as a defender of the global trade system in the face of Washington's tougher stance under Trump.

China hopes its people and those of the United States, especially consumers, will continue to gain from mutually beneficial US-Sino trade relations, Vice Finance Minister Zhu Guangyao said on Friday.

Asked about Ross' visit, the China's foreign ministry spokeswoman declined to give any details, referring the question to the commerce ministry, the government department that will host him and which has not given details either.

"Of course, we have said that China's door to dialogue and consultations is open," Hua said.