U.S.-China deputy-level trade talks get underway in tense atmosphere

WASHINGTON: U.S. and Chinese deputy trade negotiators launched a new round of talks on Monday aimed at resolving the two nations’ 15-month trade war, with neither side showing any signs of giving ground.

About 30 Chinese officials, led by Vice Finance Minister Liao Min, entered the U.S. Trade Representative’s office for two days of negotiations, to be followed by the first minister-level trade talks in more than two months.

The White House officially confirmed that the high-level talks, involving Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would begin on Thursday.

“The two sides will look to build on the deputy-level talks of the past weeks. Topics of discussion will include forced technology transfer, intellectual property rights, services, non-tariff barriers, agriculture, and enforcement,” White House spokeswoman Stephanie Grisham said in a statement.

The talks are getting underway about a week before a scheduled increase in U.S. tariffs on $250 billion worth of Chinese goods, to 30% from 25%. U.S. President Donald Trump has said the tariff increase will take effect if no progress is made in the negotiations.

The two sides have been at loggerheads over U.S. demands that China improve protections of American intellectual property, end cybertheft and the forced transfer of technology to Chinese firms, curb industrial subsidies and increase U.S. companies’ access to largely closed Chinese markets.

Trump launched a new round of tariffs after the last high-level talks in late July failed to result in agricultural purchases or yield progress on substantive issues.

SOYBEAN PURCHASES, INVESTMENT FLOWS

As Monday’s talks got underway, the U.S. Agriculture Department reported more soybean exports to China, the latest in a recent flurry of buying by Beijing. China has booked deals for about 3.5 million tonnes of U.S. soybeans since early September, around 10% of its annual purchases prior to the trade war.

“Recently some of the statements coming out of Beijing have been a little more positive,” White House Economic adviser Larry Kudlow told Fox News Channel, adding that the Chinese have also recently bought U.S. pork and wheat.

“It is possible that some additional progress will be made with China toward the end of the week,” he said.

Reuters and other media outlets reported late last month that the Trump administration was considering ways to restrict U.S. portfolio investment flows into China, including the possible de-listing of Chinese firms from U.S. stock exchanges – a move that would mark a major escalation in the dispute between the world’s two largest economies.

But Kudlow said on Monday that delisting Chinese firms “is not on the table,” though the White House had formed a “study group” to examine investment issues.

“What we’re looking at, actually, is investor protection, U.S. investor protections… transparency and compliance with a number of laws,” he told reporters at the White House, citing complaints from exchanges.

IMPEACHMENT, HONG KONG COMPLICATIONS

In recent weeks, the U.S-China trade situation has become more complicated by the impeachment inquiry by U.S. Democrats on Trump’s request that Ukraine investigate business dealings by the son of Democratic presidential candidate Joe Biden.

Trump also publicly asked China last week to investigate Biden.

White House trade adviser Peter Navarro said on Monday that neither the impeachment inquiry nor Trump’s request that Beijing investigate his political rival would weaken the U.S. negotiating position. Navarro told National Public Radio that Trump wants a big deal with China or no deal at all.

Another complicating factor is U.S. support for pro-democracy protests in Hong Kong. Trump has explicitly linked the trade talks to Beijing’s handling of the Hong Kong protests and preservation of the territory’s rights, a stance that China views as interfering with its sovereignty.

A new U.S.-China flashpoint ignited on Monday over a tweet in support of Hong Kong protesters by an official of the National Basketball Association’s Houston Rockets. China’s state broadcaster dropped the team’s games and two Chinese corporate sponsors suspended ties after Rockets general manager Daryl Morey tweeted, “Fight for Freedom, Stand With Hong Kong.”

He swiftly deleted the tweet and apologized to fans in China, where the Rockets have a large following from the years that Chinese basketball star Yao Ming played on the team.