China offers to buy more US products to reduce trade imbalance

National Economic Council director Larry Kudlow said that the United States continued to press demands about Chinese trade practices.

WASHINGTON (WASHINGTON POST) - China offered to boost its annual purchases of US products by "at least US$200 billion (S$268.58 billion)" on Friday (May 18) as two days of talks aimed at averting an open breach between the two countries ended in Washington, a top White House adviser said.

Mr Larry Kudlow, director of the National Economic Council, said that he welcomed the Chinese offer and that the United States continued to press demands about Chinese trade practices.

"They have to lower their tariff rates, they have to lower their non-tariff barriers. We have to have a verifiable process whereby the technology transfers and the theft of intellectual property stops," he told reporters at the White House.

Mr Kudlow spoke shortly before the talks between a US delegation led by Treasury Secretary Steven Mnuchin and a Chinese team headed by Vice-Premier Liu He, one of President Xi Jinping's closest advisers, ended for the day.

"China's come to trade. They are meeting many of our demands," said Mr Kudlow, who called the Chinese approach "constructive".

There was no immediate comment from the White House as of 11pm on Friday, several hours after the talks concluded.

China's state-run media said the discussions were "positive, constructive and fruitful".

Still, the bargaining poses a challenge for President Donald Trump, who has made rebalancing US trade relationships and recapturing lost manufacturing jobs a centrepiece of his agenda.

US Trade Representative Robert Lighthizer has pressed the President to seek a comprehensive reshaping of Chinese trade practices, such as forcing foreign companies operating in China to surrender their technological secrets.

That argues for a broader deal that would do more than shrink the bilateral trade gap, which most economists regard as unimportant.

But Mr Trump is mindful of the need for a political win to trumpet in the run-up to the November congressional elections, especially with his promised renegotiation of the North American Free Trade Agreement languishing.

He also can ill afford a split with China as he prepares to meet North Korean leader Kim Jong Un at next month's summit in Singapore.

Mr Kudlow's upbeat assessment came one day after Mr Trump said that the United States had been "ripped off" by China.

The two sides had swapped hardline demands during a first round of talks in Beijing this month.

The President is insisting on a dramatic reduction in the US trade deficit with China, which was US$375 billion in 2017 and has topped US$100 billion for 16 straight years.

Stepped-up Chinese purchases will focus on US agricultural goods, energy products such as liquefied natural gas and machinery, a senior administration official said.

Still, many economists say that it is difficult to imagine that China - which bought just US$130 billion worth of US goods last year - could somehow add an additional US$200 billion in purchases to that total.

China also repeated its longstanding demand that the United States relax its export controls on items such as supercomputers, riot control equipment, police surveillance systems, helicopters, missiles and various munitions.

The United States has prohibited sales of many of those items to China for almost 30 years, since the aftermath of the 1989 Tiananmen Square killings.

China wants the Trump administration to lift its penalties on ZTE, a Chinese telecom company that was barred from buying parts from American companies after it shipped products to Iran and North Korea despite international economic sanctions.

Mr Kudlow told Fox Business Network that ZTE would have to overhaul its top management to escape the draconian US punishment, which threatened to put it out of business.

"We're not talking about letting them off scot-free by any stretch," Mr Kudlow said.

After months of rising tensions between the two countries, Chinese officials in recent days appeared to signal an interest in de-escalating.

Mr Liu met with Mr Trump and top aides on Thursday, while in Beijing, his government ended an anti-dumping investigation into imports of US sorghum.

China said it had concluded that the anti-dumping and anti-subsidy measures it had imposed on sorghum imports in April would affect the cost of living for Chinese consumers and were not in the public interest.

A Foreign Ministry spokesman, Mr Lu Kang, told journalists not to "over-interpret" the announcement.

The sorghum probe had sparked concerns among American farmers that they might lose their largest export market for the crop.

China imported US$956 million of sorghum from the United States last year, according to the Chinese Commerce Ministry.

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