US, China trade talks in Beijing called 'candid and constructive'

(From left) US Deputy Trade Representative Jeffrey Gerrish, US Ambassador to China Terry Branstad, US Treasury Secretary Steven Mnuchin, US Trade Representative Robert Lighthizer, China's Vice-Premier Liu He, Yi Gang, governor of the People's Bank of
(From left) US Deputy Trade Representative Jeffrey Gerrish, US Ambassador to China Terry Branstad, US Treasury Secretary Steven Mnuchin, US Trade Representative Robert Lighthizer, China's Vice-Premier Liu He, Yi Gang, governor of the People's Bank of China, and National Development and Reform Commission Vice-Chairman Ning Jizhe pose for a group photo.PHOTO: AFP

WASHINGTON (REUTERS) - The United States and China said they made progress in trade talks that concluded on Friday (March 29) in Beijing, with Washington calling them candid and constructive, as the world's two largest economies try to resolve a bitter, nearly nine-month trade war.

"The two parties continued to make progress during candid and constructive discussions on the negotiations and important next steps," the White House said in a statement, adding that it looked forward to the visit to Washington next week by a Chinese delegation led by Vice-Premier Liu He.

The statement gave no other details on the nature of the progress.

"We are still making good headway including these talks," White House economic adviser Larry Kudlow said in an interview on CNBC on Friday.

US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer were in the Chinese capital for the first face-to-face meetings between the two sides since President Donald Trump delayed a scheduled March 2 increase in tariffs on US$200 billion (S$270 billion) worth of Chinese goods, citing progress in negotiations.

China's state news agency Xinhua said the two sides discussed "relevant agreement documents" and made new progress in their talks, but did not elaborate in a brief report.

"@USTradeRep and I concluded constructive trade talks in Beijing," Mnuchin said on Twitter.

Earlier, Mnuchin told reporters that US officials had a"very productive working dinner" on Thursday. He did not elaborate and it was not immediately clear with whom he had dined.

Trump imposed tariffs on US$250 billion of Chinese imports beginning last July in a move to force China to change the way it does business with the rest of the world and to pry open more of its economy to US companies.

Though his blunt-force use of tariffs has angered many, Trump's push to change what are widely viewed as China's market-distorting trade and subsidy practices has drawn broad support.

Lobbyists, company executives and US lawmakers from both parties have urged Trump not to settle simply for Beijing's offers to make big-ticket purchases from the United States to help reduce a record trade gap.

LOST IN TRANSLATION?

Details of where the two sides made progress were not immediately clear. Going into the talks, people familiar with the negotiations had said there were still significant differences on an enforcement mechanism and the sequence of when and how US tariffs on Chinese products would be lifted.

Mnuchin and Lighthizer greeted a waiting Liu at the Diaoyutai State Guest House just before 9am, and in two brief appearances before journalists, the three mingled and joked with members of the opposite teams.

Analysts had anticipated the scope of this round of talks, which wrapped up about 24 hours after the US delegation arrived, to be quite narrow, but that both countries hoped to signal they were working hard toward a resolution.

Reuters reported previously that the two sides were negotiating written pacts in six areas: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.

A US administration official told Reuters earlier this week that Lighthizer and Mnuchin were "literally sitting there going through the texts", a task typically delegated to lower-level deputies.

One person with knowledge of the talks said "translation is definitely an issue", referring to discrepancies between the Chinese- and English-language versions.

On Thursday, Premier Li Keqiang said Beijing would sharply expand market access for foreign banks and securities and insurance companies, fueling speculation that China may soon announce new rules allowing foreign financial firms to increase their presence.

Kudlow said on Thursday the United States may drop some tariffs if a trade deal is reached, while keeping others in place to ensure Beijing's compliance.

"We're not going to give up our leverage," he told reporters in Washington.

'THERE ARE GOING TO BE PROBLEMS'

There remains scepticism that any deal can permanently resolve US-China trade tensions.

"Whatever implementation mechanism China agrees to, whether it is monthly or quarterly meetings or other check-ins, there are going to be problems," James Green, a senior adviser at McLarty Associates who until August was the top USTR official at the embassy in Beijing, told Reuters.

"Either the purchases are going to be off, or the market access is not going to be there. And then the question is, 'When do you consider putting tariffs back on?'" he added.

"The trade issue is not going to be put to bed."

Trump's demands include an end to Beijing's practices that Washington says result in the systematic theft of US intellectual property and the forced transfer of American technology to Chinese companies.

US companies say they are often pressured into handing over technological know-how to Chinese joint venture partners, local officials or regulators as a condition for doing business in China.

The US government says technology is often subsequently transferred to, and used by, Chinese competitors.

The issue has proved tough for negotiators as U.S. officials say China has previously refused to acknowledge the problem exists to the extent alleged by the United States, making it hard to discuss resolution.

China says its laws enshrine no requirements on technology transfers that are a result of legitimate transactions.