Tue, Oct 08, 2019 - Page 11 News List

China reportedly narrows scope for trade deal with US

Bloomberg

Chinese officials are signaling that they are increasingly reluctant to agree to a broad trade deal pursued by US President Donald Trump ahead of negotiations this week.

In meetings with US visitors to Beijing in the past few weeks, senior Chinese officials have indicated that the range of topics they are willing to discuss has narrowed considerably, people familiar with the discussions said.

Chinese Vice Premier Liu He (劉鶴), who is to lead the Chinese contingent in high-level talks to begin on Thursday, told visiting dignitaries that he would bring an offer to Washington that would not include commitments on reforming Chinese industrial policy or Chinese government subsidies that have been the target of longstanding US complaints, one of the people said.

That offer would be in opposition to one of the Trump administration’s core demands.

The Chinese ministries of foreign affairs and commerce in Beijing did not immediately respond to faxed requests for comments.

China was drawn into a Washington furor after Trump last week called for a Chinese investigation into former US vice president Joe Biden and his son Hunter.

Trump on Friday said that there is no link between the trade negotiations and the call for an investigation, which might become part of an impeachment inquiry into Trump.

China’s leadership “are interpreting the impeachment discussion as a weakening of Trump’s position, or certainly a distraction,” said Jude Blanchette, an expert on China’s elite politics at the Center for Strategic and International Studies.

“Their calculation is that Trump needs a win” and is willing to make compromises on substance as a result, Blanchette said.

Trump has said that he would entertain only an all-encompassing deal with China.

People close to him say he remains firm in that view.

“We’ve had good moments with China. We’ve had bad moments with China. Right now, we’re in a very important stage in terms of possibly making a deal, but what we’re doing is we’re negotiating a very tough deal,” Trump told reporters on Friday. “If the deal is not going to be 100 percent for us, then we’re not going to make it.”

Hopes have always been limited that China would agree to give up its economic model in a trade deal with the US. A draft agreement reached in April before talks broke down included few substantive commitments from China to abandon the sort of industrial policies the Trump administration and others before it have complained about, people familiar with the talks said.

One reason for that is US Trade Representative Robert Lighthizer’s focus on “pragmatic” demands for Chinese change, rather than calls for a wholesale abandonment of Beijing’s industrial policy that some believe should be required of Beijing.

Lighthizer declined to comment on the state of negotiations through an aide.

While he is unlikely to accept any Chinese offer that does not address industrial subsidies or policy, people close to him say he might be willing to embrace “sequencing” a deal and an “early-harvest” agreement, as long as broader talks continue.

Still, people close to the administration say that Trump’s trade chief probably needs some kind of commitment resembling a concession on subsidies and industrial policy to sell the agreement in the US.

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