By Lingling Wei in Beijing and Bob Davis in Washington
Chinese and U.S. negotiators are mapping out talks to try to end
their trade impasse ahead of planned meetings between President
Trump and Chinese leader Xi Jinping at multilateral summits in
November, said officials in both nations.
The planning represents an effort on both sides to keep a
spiraling trade dispute -- which already has involved billions of
dollars in tariffs and comes with the threat of hundreds of
billions more -- from torpedoing the U.S.-China relationship and
shaking global markets.
Scheduled midlevel talks in Washington next week, which both
sides announced on Thursday, will pave the way for November. A
nine-member delegation from Beijing, led by Vice Commerce Minister
Wang Shouwen, will meet with U.S. officials led by the Treasury
undersecretary, David Malpass, on Aug. 22-23.
The negotiations are aimed at finding a way for both sides to
address the trade disputes, the officials said, and could lead to
more rounds of talks.
The talks represent a clear move by Beijing to get back on track
relations with Washington that were cordial early in the Trump
presidency and involved coordination to rein in North Korea. Those
relations have soured, especially after Mr. Trump's initial tariffs
on Chinese imports, which he said were designed to punish Beijing
for alleged intellectual-property violations and technology theft.
The resulting tit-for-tat of trade threats and retaliation has hit
China's currency and stock markets.
Mr. Xi has instructed lieutenants to try to stabilize the
bilateral relationship as soon as possible, according to advisers
to the Chinese government. A prolonged and broader conflict with
Washington, many officials and experts in China say, threatens to
derail the Chinese leader's plans to remake the economy and
transform China into a global superpower.
The talks, though, could also get derailed, especially as the
U.S. continues to levy tariffs. So far the U.S. has imposed levies
on $34 billion in Chinese goods, with tariffs on an additional $16
billion in goods scheduled to take effect next week. China has
matched those tariffs dollar-for-dollar.
U.S. officials have said the nation's strong economy is giving
Washington leverage in the negotiations.
"I think investors are moving out of China because they don't
like the economy, and they're coming to the USA because they like
our economy," said Lawrence Kudlow, the White House's top economic
official, at a cabinet meeting on Wednesday. "Right now, their
economy looks terrible."
But there are differing views on how to respond. The Treasury
and Mr. Kudlow's National Economic Council, which are more
sympathetic to Wall Street and the U.S. business community, have
put together a pared-down list of requests to China that they think
could be a basis for a deal. But the U.S. trade representative's
office, which is in charge of tariffs, wants to hold off on
negotiations, arguing that additional levies would give the U.S.
more bargaining power by October, said people briefed on the
discussions.
China's Foreign Ministry didn't respond to a request for
comment. The U.S. Treasury declined to comment ahead of next week's
talks.
So far, Mr. Trump hasn't decided between the two camps and will
weigh in when there is a deal on the table, U.S. officials
said.
Messrs. Trump and Xi would meet first at the leaders' summit of
the Asia-Pacific Economic Cooperation forum, which involves 21
economies, in mid-November, said officials in both nations. That
would be followed by a second session at the Group of 20 leaders'
summit in Buenos Aires at the end of November.
Negotiators often find that a scheduled meeting between two
leaders gives an urgency to negotiations and in this case would
signal the leaders' desire not to have the trade battle spin out of
control.
U.S. and Chinese leaders have often met at these summits, but
when Treasury Secretary Steven Mnuchin attended the G-20 meeting of
finance chiefs last month, he held no formal meetings with Chinese
officials.
Next week, while the negotiators meet, the U.S. trade
representative will hold public hearings on the administration's
plans for tariffs on an additional $200 billion in Chinese imports.
Beijing has pledged to respond in kind, and Chinese media are
urging the public to prepare for a protracted trade war with the
U.S.
"You're beginning to talk about serious economic effects," said
Josh Kallmer, senior vice president at the Information Technology
Industry Council, a trade association of high-technology companies,
which opposes tariffs.
In Beijing, senior Chinese officials in recent days have been
meeting with U.S. business executives, trying to get them to lobby
the Trump administration against its proposed tariffs. On Friday,
Zhang Mao, head of China's antitrust body, met with Craig Allen,
president of the U.S.-China Business Council, and some
representatives from American companies, according to the antitrust
body's website.
Mr. Zhang stressed the need to negotiate, according to the
statement, and called for U.S. companies operating in China to
"play an active role" in developing the bilateral trade
relationship.
In Washington, business groups have been urging the White House
to ease their demands of China. During May talks in Beijing, U.S.
negotiators handed Chinese counterparts an eight-point list that
would require China to cut the trade deficit by $200 billion, scrap
the industrial policies that have helped make China the world's
second-largest economy and pledge not to oppose the U.S. at the
World Trade Organization on lawsuits against Beijing. China never
came close to meeting those demands.
Treasury has worked on a more refined list of demands that hue
more closely to what business groups think are possible. They
include reduction of subsidies, elimination of overcapacity in
steel, aluminum and other industries, cessation of pressure on U.S.
companies to transfer technology, additional purchases of U.S.
goods and services and strengthening of the yuan, which has fallen
nearly 10% against the dollar since April, making U.S. products
more expensive in China and Chinese products cheaper in the
U.S.
The U.S. trade representative's office, in particular, argues
that Beijing hasn't made any credible efforts to deal with U.S.
complaints about intellectual-property transfer and theft. Some
Chinese officials believe that U.S. Trade Representative Robert
Lighthizer has an "old concept" of trade theory and are wary of
dealing with him, one of the Chinese officials says. U.S. officials
say that Mr. Lighthizer believes pressure on Beijing would force
U.S. and other foreign companies to relocate operations outside of
China, weakening Beijing's ability to develop new technologies.
Write to Lingling Wei at lingling.wei@wsj.com and Bob Davis at
bob.davis@wsj.com
(END) Dow Jones Newswires
August 17, 2018 15:39 ET (19:39 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.