Sun, Jun 03, 2018 - Page 16 News List

Ross ‘treading water’ in Beijing: source

BIGGER ISSUES:When the US and China conclude their general trade talks, they would have to address their complex conflict over intellectual property rights, a US official said

Reuters, BEIJING

US Commerce Secretary Wilbur Ross is today to meet Chinese Vice Premier Liu He (劉鶴) , a US government official said, as officials from the world’s two biggest economies try to calm an escalating trade spat that has rattled financial markets.

Ross yesterday morning arrived in Beijing for trade talks with Chinese officials after US President Donald Trump’s administration renewed its tariff threats against China, and with key US allies in a foul mood towards Washington after they were hit with duties on steel and aluminum.

Ross, who was preceded to Beijing this week by more than 50 US officials, is expected to try and secure long-term purchases of US farm and energy commodities during the two-day visit to help shrink the US trade deficit. The US team also wants to secure greater intellectual property protections and an end to Chinese subsidies that have contributed to overproduction of steel and aluminum.

The purchases Washington wants Beijing to commit to are aimed at reducing the US$375 billion annual US trade deficit with China. Trump has demanded that China take steps to reduce the gap by US$200 billion annually by 2020.

While US officials have sent conflicting signals during the dispute with China, one person familiar with planning for Ross’ visit said his aim was to keep a dialogue going.

Ross is “going there to tread water,” the person said, declining to be identified due to the sensitivity of the matter. “The more Trump is irritating allies and asking Chinese to buy stuff, the better off they are, because he’s not sitting there and attacking the hard issues.”

Those hard issues include what the US complains is rampant theft of intellectual property, as well as Beijing’s support for cutting-edge technologies under its Made in China 2025 policy.

On Friday, the Chinese Ministry of Commerce said it was still reviewing San Diego-based Qualcomm Inc’s US$44 billion acquisition of NXP Semiconductors NV.

Some people familiar with the matter have told Reuters that approval could depend on progress of broader talks and a reprieve from a US government ban on sales by US companies to China’s ZTE Corp (中興通訊), which was penalized for illegally supplying telecommunications gear to Iran and North Korea.

Reuters on Sunday last week reported that Qualcomm was expecting to meet this week in Beijing with China’s antitrust regulators in a final push to secure clearance for the deal.

However, that meeting never materialized and the San Diego-based firm is now waiting to see the outcome of the Ross talks before officials travel to China, a person familiar with the matter said yesterday.

The Trump administration might soon claim as much as US$1.7 billion in penalties from ZTE as it looks to punish and tighten control over the Chinese telecommunications company before allowing it back into business, people familiar with the matter said.

As part of any new agreement, the US wants ZTE to hire a new person to police its compliance and is also seeking unfettered site visits to check ZTE’s claims about components without coordinating with Chinese government officials, as required by a non-public agreement between the countries, the people said.

Last year, ZTE paid more than US$2.3 billion to US suppliers, a senior ZTE official told reporters last month.

Qualcomm, Broadcom Inc and Intel Corp, as well as smaller optical component makers Acacia Communications and Oclaro Inc are among ZTE’s suppliers.

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