Trump won't soften hard line on China: Advisers

Chinese Vice-Premier Liu He is visiting Washington at the end of this month, to continue trade talks between the US and China.
Chinese Vice-Premier Liu He is visiting Washington at the end of this month, to continue trade talks between the US and China.

Forced technology transfers, IP theft still top priority for US leader

WASHINGTON • As much as US President Donald Trump wants to boost markets through a trade pact with China, he will not soften his position that Beijing must make real structural reforms - including how it handles intellectual property (IP) - to reach a deal, advisers say.

Offering to buy more American goods is unlikely by itself to overcome an issue that has bedevilled talks between the two countries. Those talks are set to continue when Chinese Vice-Premier Liu He visits Washington at the end of this month.

The US accuses China of stealing intellectual property and forcing American companies to share technology when they do business in China. Beijing denies this.

With a March 1 deadline approaching to reach an agreement or risk an escalation of tariffs on another US$200 billion (S$272 billion) worth of Chinese goods, the two sides are still far apart on key structural elements critical for a deal, according to sources.

"We are not yet in a position where our concerns have been addressed sufficiently," one US official said, speaking on condition of anonymity. He said the Trump team, led by hardline US Trade Representative Robert Lighthizer, was focused on such structural issues as well as trade imbalances.

White House economic adviser Larry Kudlow told Reuters that forced technology transfers, IP theft and ownership restrictions remained a top priority for Mr Trump. "The President has said many times how crucial that is and he's not going to back down," Mr Kudlow said.

Lack of progress led the Trump administration to decline an in-person meeting with a lower-level Chinese delegation for preparatory talks ahead of Mr Liu's visit, said a source familiar with the situation.

The Financial Times reported that an offer for a preparatory meeting was rejected, but White House officials pushed back on the suggestion that any meeting was cancelled.

"With respect, the story is not true," Mr Kudlow told CNBC, referring to the FT report. "The teams remain in touch in preparation for high-level talks with Vice-Premier Liu He at the end of this month," said White House spokesman Lindsay Walters.


Mr Trump and Chinese President Xi Jinping agreed on a ceasefire in their trade war at the Group of 20 meeting in Buenos Aires last year, setting a 90-day period to discuss differences and agree on a deal. The talks have yet to produce anything on paper.

Mr Trump has painted developments in the US-China trade talks as largely positive, aware of the effect that the tensions have had on stock markets.

The S&P 500 registered its biggest four-week percentage gain since 2011 last Friday after dropping nearly 20 per cent from its record September close on Christmas Eve.

"We've really had a very extraordinary number of meetings and a deal could very well happen with China. It's going very well," Mr Trump told reporters at the White House last Saturday.

China has offered more than US$1.2 trillion in additional commitments on trade, Treasury Secretary Steve Mnuchin said last month. That is not sufficient for Mr Trump or his team.

"To think that this is going to end with simple 'commitments' is overlooking the historical experience that we've had," the US official said.

Chinese officials pledged to buy enough US products to wipe out the US-China trade deficit at talks in Beijing earlier this month, but also hedged its position, saying it depended on the demands of Chinese companies, said Dr Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Centre for Strategic and International Studies.

The Chinese have indicated they feel they have already addressed US concerns about IP rights through a new law and other actions, he added.

"These weren't sufficient to satisfy the US negotiation team. So we'll see if the Chinese give any more on those or if they still try to focus on sweetening the purchases side, and hoping that Trump bites on the potential big numbers," he said.

Barring progress at the end of the 90-day period, the Trump administration is scheduled to increase tariffs on US$200 billion worth of Chinese goods from the current 10 per cent to 25 per cent.

"All I'll say is the meetings coming up at the end of the month with Liu He are very important," Mr Kudlow said.


A version of this article appeared in the print edition of The Straits Times on January 24, 2019, with the headline 'Trump won't soften hard line on China: Advisers'. Print Edition | Subscribe