Analysis: The view from Washington

Trade talks with China yield little for the US

Lack of agreement signals that bilateral trade ties remain uncertain, say some analysts

The first US-China Comprehensive Economic Dialogue (CED) in Washington has dampened expectations of any quick fix to the United States' wide trade deficit with China.

The meeting on Wednesday came soon after the end of a 100-day plan to review trade relations, which had yielded some early dividends - in opening up the Chinese market to American beef, for instance.

But more deliverables did not emerge from Wednesday's meeting with China's Vice-Premier Wang Yang, which was co-chaired by Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross. A joint statement from Mr Ross and Mr Mnuchin merely said: "China acknowledged our shared objective to reduce the trade deficit which both sides will work cooperatively to achieve."

China's Ministry of Foreign Affairs made a more positive statement, said Ms Yun Sun, a fellow at the Stimson Centre, a think-tank in Washington, but this was diplomatese for "we achieved nothing but we want to make it look good".

The US' trade deficit with China last year reached US$347 billion (S$474 billion) - a gap President Donald Trump has insisted must be narrowed.

But while China's President Xi Jinping early this week had signalled a liberalisation of imports by China, Mr Wang apparently did not budge on Wednesday, even in the face of possible American action on Chinese steel.

Mr Trump has singled out steel as a major issue, a complaint that plays to his political base in post-industrial states which have suffered job losses he blames on free trade - though experts say a bigger factor is automation.

China's Vice-Premier Wang Yang speaking at the economic dialogue on Wednesday in Washington, as US Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross (far right) listened.
China's Vice-Premier Wang Yang speaking at the economic dialogue on Wednesday in Washington, as US Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross (far right) listened. PHOTO: AGENCE FRANCE-PRESSE

But while China's President Xi Jinping early this week had signalled a liberalisation of imports by China, Mr Wang apparently did not budge on Wednesday, even in the face of possible American action on Chinese steel.

 

The President has initiated a review of the US steel industry under a little-used provision in law which allows the imposition of tariffs or quotas on the grounds of national security.

Analysts were subdued in their assessments of the trade talks.

Dr Nicholas Lardy, a China scholar at the Peterson Institute for International Economics, told The Wall Street Journal: "Many expected at the 100-day point we would have much more substantive points of progress."

The lack of agreement, he said, signalled that US-China trade relations remain "very uncertain and subject to very high risks".

Ms Yun Sun told The Straits Times that the US had "misjudged President Xi Jinping's strategic personality", noting China had been annoyed by US arms sales to Taiwan and US pressure on China to lean on North Korea to end its nuclear missile programme.

From China's point of view, Beijing had delivered with early deals under the 100-day plan, but the US had not offered similar concessions, she said. Given this, that the talks produced nothing was not a surprise, she said.

But Mr James Keith, a former US ambassador and managing director for China and Asia at Washington-based consultancy McLarty Associates, told ST: "The process is working, there is dialogue, and the two sides will work out issues as in the past.

"There will be a little bluster, some deals to offset that, but there will be no breakdowns," he predicted.

A version of this article appeared in the print edition of The Straits Times on July 21, 2017, with the headline 'Trade talks with China yield little for the US'. Print Edition | Subscribe