The world's top two economies yesterday kicked off high-level trade negotiations aimed at soothing tensions that have set off fears of a global trade war.
A high-powered United States delegation led by Treasury Secretary Steven Mnuchin was in Beijing yesterday morning for two days of talks with a Chinese team headed by Vice-Premier Liu He, a top economic adviser to President Xi Jinping.
As they arrived, President Donald Trump tweeted that "Our great financial team is in China trying to negotiate a level playing field on trade!"
Mr Mnuchin told reporters at the hotel that he was "thrilled to be here" but did not make further comments.
The Americans are seeking to resolve key concerns such as the burgeoning trade deficit with China, and market entry rules that require US firms to set up joint ventures and transfer technology to Chinese firms.
The team comprising Commerce Secretary Wilbur Ross, US Trade Representative Robert Lighthizer, White House economic adviser Larry Kudlow, and anti-China trade hawk Peter Navarro will leave Beijing this evening, according to the US Embassy in Beijing.
WHAT THE U.S. WANTS:
• US President Donald Trump wants to cut the country's trade deficit of US$375 billion (S$499 billion) with China by US$100 billion.
• He has accused Beijing of "unfair trade practices" that involve forced technology transfer and intellectual property theft.
• The US wants China to allow more imports of US goods and services and open up its vast markets to US firms. • Specific requests include lowering tariffs on US cars and freeing US firms in China from joint venture and technology transfer rules.
TIT FOR TAT:
• The US slapped tariffs on solar panels, washing machines, aluminium and steel, citing Chinese dominance of the global supply chain. • China imposed tariffs on US$3 billion of US imports, including fresh fruit, nuts, wine and pork, in response to steel and aluminium tariffs.
• The US proposes tariffs on US$50 billion worth of Chinese goods, mostly high-tech electronics.
• China said it will levy an additional 25 per cent tariff on 106 US imports, including soya beans, cars, chemicals and aircraft, in response to proposed US duties on high-tech goods.
• Mr Trump upped the ante, saying he is considering adding another US$100 billion in tariffs "in light of China's unfair retaliation".
Washington and Beijing have been threatening to slap additional tariffs worth billions of dollars on each other's goods.
Mr Trump wants to cut his country's US$375 billion (S$500 billion) trade deficit with China by US$100 billion, and help US firms gain greater access to the vast Chinese market without being subjected to "unfair trade practices".
On Wednesday, an unnamed Chinese official was quoted in the media as saying that China will not make major concessions on changing its industrial policies or narrowing the trade gap by US$100 billion.
The official China Daily warned that the US delegation will return home "empty handed" if they turn a deaf ear to China's side of the story.
"China wants the talks to produce feasible solutions to put an end to the ongoing feud and the US' unfair trade practices," it added.
DEAL WILL TAKE TIME
Both countries are evenly matched in terms of economic power, and this will require several back-and-forths before an agreement can be reached.
SHEN DINGLI, a Sino-US relations expert from Shanghai's Fudan University.
It also cautioned that China "will stand up to the US' bullying as necessary" and "will have strong support from the international community".
Analysts say it is unlikely that the two-day meeting will yield any major outcomes as such trade negotiations tend to be long-drawn.
"Both countries are evenly matched in terms of economic power, and this will require several back-and-forths before an agreement can be reached," said Sino-US relations expert Shen Dingli from Shanghai's Fudan University.
Citing China's successful accession to the World Trade Organisation in 2001, after 10 long years of negotiations, Professor Shen said he is confident a deal will eventually be struck but "it won't be this time around".
However, Mr Mei Xinyu, a researcher with the Commerce Ministry's Chinese Academy of International Trade and Economic Cooperation, noted the fact that the Americans are willing to come to Beijing for talks is "a sign of improvement".
"The high-level representation of the delegation also shows that the US places high importance on the visit," he said.
"The possibility of a trade war was started by the Americans. By coming for talks, they are putting things back on the right track. This offers possibility for further dialogues and negotiations," Mr Mei added.