China, US stand their ground in latest trade talks

Deepening skirmish likely to drag on as both sides wait for the other to cave in, say analysts

The US is trying to force China to open up its own market and, across a broader strategic front, to curb China's acquisition of American technology. PHOTO: AFP

Two days of talks in Washington between American and Chinese delegations on trade ended inconclusively on Thursday.

The lack of any outcome was not unexpected; the talks were relatively low-level. The Chinese side was led by a vice-minister of commerce, Mr Wang Shouwen, and the United States by Mr David Malpass, an under-secretary at the Treasury Department.

These were exploratory sessions, Commerce Secretary Wilbur Ross said on Wednesday at an event in Kentucky. "Any time you have interaction, there's always some hope of some sort of progress. In terms of a big breakthrough, no, these talks are not destined, as of today, for a big breakthrough."

In a statement on Thursday, White House deputy press secretary Lindsay Walters said: "We concluded two days of discussions with counterparts from China and exchanged views on how to achieve fairness, balance and reciprocity in the economic relationship...

"We appreciated the Chinese delegation coming to the United States to participate in these meetings."

This leaves the deepening trade war between the two to drag on. Analysts do not expect either side to bend any time soon - potentially until after the US' Nov 6 mid-term elections.

The talks came as the US placed tariffs on another US$16 billion (S$22 billion) worth of imports - and is considering tariffs on an additional US$200 billion worth of Chinese products.

Meanwhile, however, a range of American domestic sectors are already hurting from the tariffs on imports from China - and others are worried about additional pain which would, in many cases, force lay-offs.

They made this clear at parallel hearings this week at the US Trade Representative's office, where dozens of companies and trade groups voiced their concerns.

Three days of hearings were extended to six to cater to the number of companies and trade groups.

The key issue is the integration of global supply chains.

In many cases, American manufacturers depend on foreign-sourced materials as inputs and indigenous manufacturing simply cannot restart quickly enough to fill the gap. Tariffs on those imported inputs, from plastics to metals, will immediately raise costs.

The bottom line, analysts say, is that China is waiting for Mr Trump's resolve to crack, but he is gambling on the buoyant American economy to take the edge off the pain.

"The primary focus at these talks was mutual probing - probe whether the other side is cracking under the pressure, whether the other side is ready to make concessions," Ms Sun Yun, director of the China Programme at the Stimson Centre in Washington, told The Straits Times.

"The answer is no, neither side is ready.

"The Chinese... are hoping the damage from tariffs will begin to outweigh the benefits of tax cuts and that will shift American public opinion. They hope the mid-term elections will show what the American people prefer and Trump may have to modify his positions."

Also, reaching a deal on trade is politically loaded for both sides.

The US is trying to force China to open up its own market and, across a broader strategic front, to curb China's acquisition of American technology. "The Chinese are accusing the US of using a coercive economic strategy to prevent China's rise," Ms Sun said.

Chinese President Xi Jinping has less to worry about on the public opinion front, but he cannot afford to be seen in elite party circles as cracking under pressure from Mr Trump - despite their apparently good personal relationship.

"Whether Mr Trump can succeed will determine his domestic political authority and credibility. The same applies to Mr Xi. That is why reaching a deal is so difficult," Ms Sun said.

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A version of this article appeared in the print edition of The Straits Times on August 25, 2018, with the headline China, US stand their ground in latest trade talks. Subscribe