Ahead of G-20 summit, US says China has not improved its trade practices

US Trade Representative Robert Lighthizer testifying before a Senate subcommittee hearing in Washington, on July 26, 2018.
US Trade Representative Robert Lighthizer testifying before a Senate subcommittee hearing in Washington, on July 26, 2018.PHOTO: REUTERS

WASHINGTON - The United States on Tuesday (Nov 20) accused China of continuing - and even stepping up - unfair trade practices which led to Washington imposing punitive tariffs, signalling that the fundamental dispute between the two remains far from resolved ahead of a highly anticipated meeting between their leaders next week at the G-20 summit in Argentina.

"This update shows that China has not fundamentally altered its unfair, unreasonable, and market-distorting practices that were the subject of the March 2018 report on our Section 301 investigation," said US trade chief Robert Lighthizer in a statement accompanying his office's follow-up to the report in March this year on China's trade practices.

The unexpected and highly critical update was issued just over a week before the meeting between President Donald Trump and his Chinese counterpart Xi Jinping, which many see as a chance for both leaders to agree on a  truce before Jan 1 - when US tariffs on Chinese goods are set to rise to 25 per cent.

Tuesday's update underscores the Trump administration's belief that the course correction it is seeking from China has not materialised.

The 53-page update said China had not done enough to address America's concerns over its practices, and had even made clear - both in public statements and in government-to-government communications - that it would not change its policies despite the initial rounds of punitive tariffs in July and August.

"Indeed, China largely denied there were problems with respect to its policies involving technology transfer and intellectual property," said the update.

Chinese hackers have also stepped up their cyber attacks and Chinese intelligence agents have not stopped economic espionage campaigns in recent months, the update, citing industry reports and statistics, said.

Examples included a Chinese campaign to steal commercial aerospace technology, hackers seeking intelligence on the Alaska governor's trade delegation trip to China in August, and another campaign to steal US semiconductor technology.

This illicit activity gave Beijing unauthorised access to prized confidential information such as intellectual property, trade secrets and negotiating positions, added the update.

It also said Beijing continued to use foreign investment restrictions to require or pressure US companies to transfer their technology to Chinese entities.

It accused Beijing of continuing to "direct and unfairly facilitate" Chinese entities' systematic investment in US companies, helping them to get cutting-edge technologies in industries deemed important by state industrial plans.

Both sides have publicly dug in their heels in recent days, in particular during last weekend's Asia-Pacific Economic Cooperation (Apec) summit in Papua New Guinea.

US Vice-President Mike Pence, who attended the summit in place of Mr Trump, raised the stakes with a warning that America could more than double its tariffs on US$250 billion (S$344 billion) in Chinese goods, and vowing that the US "will not change course until China changes its ways".

Mr Xi, for his part, denounced protectionist actions as short-sighted and doomed to failure. Warning against escalating the conflict, he said: "History has shown that confrontation, whether in the form of a cold war, a hot war or a trade war, produces no winners."

Earlier, on Tuesday, White House National Economic Council director Larry Kudlow told Fox Business News that Mr Trump has stressed that "any deal between the two countries has got to be in American interests".

"Forced transfer of technology, intellectual property theft, cyber hacking into American companies, the lack of ownership for American companies, high tariff and non-tariff barriers, this must change. Inside the administration, I think there's widespread agreement on that," said Mr Kudlow in a TV interview.

"It (any deal) has to have, frankly, more than we have seen so far," he said.

But Mr Kudlow also said that Mr Trump was "taking an optimistic view", and added that very detailed communications were occurring at all levels of government ahead of the G-20 summit in Buenos Aires, beginning on Nov 30.