China, US near deal on reprieve for ZTE

Washington and Beijing are nearing a deal that would remove an existing US order banning American companies from supplying Chinese telecommunications equipment maker ZTE.

Beijing may scrap farm import tariffs if ban on American supplies to Chinese firm lifted

BEIJING • Washington neared a deal to lift its ban on US firms supplying Chinese telecoms gear maker ZTE Corp, sources said yesterday, and Beijing announced tariff cuts on car imports, further easing trade tensions between the world's two largest economies.

The reprieve for ZTE, which was hit by a seven-year ban last month that had crippled its operations, could include China removing tariffs on imported US agricultural products, as well as buying more US farm goods, two people briefed on the matter said.

Washington and Beijing stepped back from the brink of a full-blown trade war after talks last week, with the United States appearing to set aside for now its demands that China revamp key planks of its industrial policy in exchange for buying more farm products.

US President Donald Trump has adopted a more conciliatory stance in the trade dispute with China as North Korea, whose chief ally is Beijing, has called into question a summit planned for next month in Singapore with Mr Trump.

Many in the US government and in industry are dismayed that Mr Trump appears to be backing off his tough stance on forcing China to open its markets more and tackle what they see as China's unfair trade and market access practices.

The steep cut in import tariffs for cars and car parts follows China's pledge last month to open its car market, the world's largest, that included a timeline to remove longstanding caps on foreign ownership of automotive ventures.

Import tariffs will be cut to 15 per cent for most vehicles from 25 per cent from July 1, the Ministry of Finance said, a move likely to boost carmakers that ship high-end cars to China, such as Tesla and German giants BMW and Daimler's Mercedes-Benz.

Tariffs for car parts would be cut to 6 per cent from mostly about 10 per cent.

The ZTE deal, while not yet cemented, was likely to be finalised before or during a planned trip by US Commerce Secretary Wilbur Ross to Beijing next week to help reach a broader pact to avert a trade war, both sources said.

The Chinese government's top diplomat, State Councillor Wang Yi, will stop in Washington today on his way back from Argentina to "exchange views on China-US bilateral relations", China's Foreign Ministry said yesterday.

Chinese officials had viewed the US punishment as an attack exposing their country's dependence on imports of key technologies.

"The release of hostage ZTE will be the start of China and the US to implement their trade agreements," Mr Hu Xijin, editor-in-chief of the Chinese state-backed Global Times tabloid, said on his Twitter account after news of the deal.

Separately, Russia and Japan have warned that they could retaliate against US tariffs on steel and aluminium by imposing sanctions worth almost US$1 billion (S$1.34 billion) combined, filings published by the World Trade Organisation (WTO) showed yesterday.

Russia said the US plan would add duties of US$538 million to its annual exports and Japan put the sum at US$440 million; both said they had the right to impose equal costs on US exports.

Meanwhile, the European Union has reached out to the US to talk about strengthening free and fair trade within the framework of the WTO and it is up to Washington to respond, Germany's Economy Minister said yesterday.

"It is now up to the US to grab our hand and avoid an escalation that would hurt everyone," Mr Peter Altmaier said in a statement, adding that the EU was ready to talk about market access for industrial goods and energy issues.


A version of this article appeared in the print edition of The Straits Times on May 23, 2018, with the headline 'China, US near deal on reprieve for ZTE'. Print Edition | Subscribe