By Bob Davis in Washington and Lingling Wei in Beijing
A last-ditch effort by the Trump administration failed to get
China to accept its demand for a $200 billion cut in the U.S.
bilateral trade deficit, as Chinese officials resisted committing
to any specific targets after two days of contentious
negotiations.
The two days of deliberations in Washington ended with both
sides arguing all night on Friday over what to say in a joint
statement, people briefed on the matter said. The Chinese had come
willing to step up purchases of U.S. merchandise as a measure to
narrow China's $375 billion trade advantage. But U.S. negotiators
pushed the Chinese delegates to approve a specific target of $200
billion in additional Chinese purchases. The Chinese refused any
such target in specific dollar amounts, and the matter is now in
the hands of President Donald Trump and President Xi Jinping, the
people said.
The two sides released a joint statement shortly after the
Chinese delegation was scheduled to return home, but it made no
reference to the specific purchasing amounts that the U.S. had
wanted.
"Both sides agreed on meaningful increases in United States
agriculture and energy exports," the statement said, adding that
"the delegations also discussed expanding trade in manufactured
goods and services. There was consensus on the need to create
favorable conditions to increase trade in these areas."
Chinese officials were wary of appearing to make concessions to
Washington, and insisted the statement note that any Chinese
purchases of U.S. goods and services are intended to "meet the
growing consumption needs of the Chinese people."
Beijing negotiators had come to Washington to settle a feud
resulting from the Trump administration's impatience with China's
large trade advantage. The U.S. side is also frustrated over
allegations China pressures U.S. firms to transfer advanced
technology and steals U.S. intellectual property. Washington has
demanded China address these issues, under threat of U.S. tariffs
on as much as $150 billion in Chinese goods. Should the U.S. make
good on those threats, Beijing has promised to respond with its own
tariffs on U.S. imports.
The procedural steps toward implementing the first tranche of
threatened U.S. tariffs on $50 billion in Chinese imports could be
completed by as early as next week, but in the joint statement, the
two sides agreed to continue talking. New tariffs don't appear
imminent.
Liu He, the Chinese vice premier who led Beijing's delegation,
said "both sides agreed to avert a trade war and to stop imposing
tariffs on each other," the official Xinhua News Agency
reported.
Souring the mood among Chinese officials were some U.S. media
reports that China had accepted a U.S. request that Beijing slash
its vast merchandise trade surplus by $200 billion, an amount that
would cut by more than half the U.S. trade deficit with China. The
Chinese side saw those reports as a last-minute effort by Trump
administration officials to pressure Beijing into a public
agreement that would meet U.S. objectives.
Early Friday, Larry Kudlow, director of the National Economic
Council, had told reporters that China offered to boost its annual
purchases of U.S. products by "at least $200 billion." Mr. Kudlow
also said "they are meeting many of our demands. There is no deal
yet, to be sure."
While Beijing has been wary of committing to numerical targets
of specific purchase amounts, it has in general offered to buy more
U.S.-made autos, energy and agricultural products as a way to ease
the trade tensions between the two nations that have rattled global
financial and commodities markets.
Mr. Liu, the head of the Chinese delegation, impressed
Washington officials, Mr. Kudlow said in a Friday interview with
White House reporters, adding that the vice premier is a "smart
guy, a market guy."
One of Washington's central demands is that China reduce its
merchandise trade surplus by at least $200 billion by the end of
2020, even though economists in both nations say the trade deficit
is affected by investment and savings patterns in both nations --
not trade policy. Beijing has rejected most U.S. demands in the
past and has continued to hold firm.
The U.S. Agriculture Department recently asked agriculture
companies to come up with a list of products whose production could
be ramped up rapidly for export to China, a person following the
talks said. At the same time, China put together a list of
high-tech products that are barred by U.S. export controls for sale
to China but are allowed by other nations.
Beijing argues that if the U.S. would ease the export controls
on these items, it would purchase more from the U.S., the person
briefed on the matters said. Even so, some U.S. officials believe,
the additional Chinese purchases would only total $50 billion to
$60 billion in the next year or two, far short of the U.S.
goal.
One Chinese request is for a reprieve on China's ZTE Corp. from
crippling U.S. sanctions over its trade with Iran and North Korea.
Mr. Trump said early last week that he would work with Mr. Xi to
get the telecommunications-equipment maker "back into business,"
defending such a move as part of a trade deal the U.S. is
negotiating with China.
However, "there is no firm agreement on ZTE as of yet," a person
familiar with the discussions said. U.S. lawmakers from both
parties have criticized any effort to ease restrictions on the
company, calling ZTE a security threat, with Sen. Marco Rubio (R.,
Fla.) tweeting on Saturday: "If we don't wake up & start
treating this as a national security issue, China is going to win
again."
China's top diplomat, Foreign Minister Wang Yi, is due in
Washington this coming week and is expected to discuss the ZTE
controversy, a person briefed on the issue said.
Settling the trade fight is taking on a degree of urgency as the
tensions start hurting businesses in both countries. U.S. goods,
including sorghum, soybeans and cars, have faced growing hurdles
when entering China, while a U.S. order banning American companies
from selling components to ZTE not only threatens the survival of
the company but also that of other state-owned Chinese
companies.
Responding to Mr. Trump's promise of a reprieve for ZTE, Beijing
has made a number of conciliatory gestures. China's antitrust
regulators had delayed for months U.S. private-equity firm Bain
Capital's $18 billion deal for Toshiba Corp.'s memory-chip unit,
but on Thursday, the Japanese firm said regulators had allowed the
deal to proceed. Chinese regulators also promised this week to
restart their review of U.S. chip maker Qualcomm Inc.'s bid for NXP
Semiconductors NV.
China has also offered to hold back penalties on a variety of
U.S. agricultural products it announced in early April as
retaliation for U.S. tariffs on Chinese steel and aluminum exports.
China is a top buyer of U.S. farm products. On Friday, China's
Commerce Ministry announced an end of its antidumping investigation
into imported U.S. sorghum.
Write to Bob Davis at bob.davis@wsj.com and Lingling Wei at
lingling.wei@wsj.com
(END) Dow Jones Newswires
May 19, 2018 16:53 ET (20:53 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.