U.S.-China Trade Talks End, With Progress Uncertain – The New York Times

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U.S.-China Trade Talks End, With Progress Uncertain - The New York Times

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China and U.S. to Continue Trade Talks Next Week

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President Xi Jinping of China meeting with Treasury Secretary Steven Mnuchin, left, the United States trade representative Robert Lighthizer, second from left, and Chinese officials at the Great Hall of the People in Beijing on Friday.CreditCreditAndy Wong/Associated Press

By Keith Bradsher

BEIJING — Talks between the United States and China to end their trade war will continue in Washington next week, officials from both countries said on Friday, hours after high-level negotiations between American and Chinese diplomats ended in Beijing.

While the White House described “progress” in the talks, many issues remain unresolved and the discussions will continue as both sides try to reach an agreement ahead of President Trump’s March 2 deadline. Mr. Trump has threatened to raise tariffs on $200 billion worth of Chinese goods if a deal cannot be reached by that date, though he suggested earlier this week that he would push the deadline back if there were progress in the talks.

“These detailed and intensive discussions led to progress between the two parties,” the White House said in a statement. “Much work remains, however.”

American officials said that the talks focused on so-called “structural” reforms that the United States wants China to make and on China’s purchases of American goods and services. The White House on Friday said that any agreement between the two countries will be included in a “memoranda of understanding between the two countries.”

Treasury Secretary Steven Mnuchin said that he and Robert Lighthizer, the United States trade representative, had “productive meetings” with Liu He, China’s economic czar. Still, it wasn’t immediately clear late Friday whether they had moved significantly closer to resolving any of the thorny issues separating the two sides.

Mr. Lighthizer and Mr. Mnuchin also met with Xi Jinping, China’s top leader, on Friday afternoon at the Great Hall of the People.

But the talks did allow both sides to at least begin hashing out their differences. Both the United States and China began somewhat mechanically combining their respective lists of offers into a memorandum of understanding that included areas of disagreement in bracketed text, with each side’s sepárate views listed for each issue, said people briefed on the the talks. Compiling the various offers could someday make it possible for the countries’ leaders to go through the options more systematically.

But the broad areas of disagreement still left in the bracketed text mean that an actual, comprehensive understanding between the two sides remains elusive.

The negotiations did not include any big new concessions by China to limit its government-led push to build high-tech industries in competition with the West, said the people, who insisted on anonymity because of the diplomatic and financial sensitivity of the talks.

China Central Television, a state-controlled broadcaster, said early Friday evening on its website that progress had been made. It said the talks would continue in Washington next week.

“New progress has been made on important and difficult issues,” C.C.T.V. said, without providing any details. “Although there is still a lot of work to be done, we have hope.”

China is in the middle of a sharp economic slowdown, triggered partly by Beijing’s efforts to rein in debt but also by a sudden faltering in the willingness of consumers to spend and industries to invest. Many business leaders attribute the decline in consumer and investor confidence to the trade war.

That economic backdrop has given Chinese leaders an incentive to emphasize progress in the talks. Mr. Mnuchin has also stressed progress, allaying worries among stock market investors. Mr. Lighthizer has said little in public while pressing for a comprehensive trade deal.

The two sides have been struggling with more than 100 issues raised by the United States in a lengthy statement given to Chinese officials in May. In the preparations for this week’s talks, the sides had been unable even to agree on a draft framework for the broad outlines of a possible deal, so expectations for any comprehensive settlement had been low from the start.

Many of the issues, like how to handle the tech sector, have been festering between the United States and China for a long time. Many high-tech issues are also changing and evolving along with the sector, making it especially difficult to put in place a durable agreement.

“Particularly in the areas of technology regulation and standards, it will be a game of Whac-a-Mole at best,” said James Green, who was the top trade official at the United States Embassy in Beijing until August and is now a senior nonresident fellow at Georgetown University.

The United States had given China a March 2 deadline toward reaching a deal and threatened to raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent. But Mr. Trump suggested this week that he could give China more time if the talks showed progress.

The negotiations this week have encompassed some issues on which incremental progress has been made in recent weeks, people briefed on the negotiations said. China has agreed to disclose more of its government subsidies to the World Trade Organization, said these people, who insisted on anonymity because of diplomatic sensitivities in the talks.

Chinese officials have also expressed a willingness to let foreign companies participate in panels that set standards on important industrial issues, like fuel-economy averages for cars. But while that might give foreign companies a glimpse of upcoming rules, they would be in a minority and might not have much influence.

Big sticking points remain in the trade talks, said the people briefed on the negotiations.

The most difficult and intractable issue involves the Trump administration’s desire to put meaningful restrictions on China’s ability to keep investing enormous sums of money from the government, and from government-affiliated financial institutions, in a wide range of advanced manufacturing sectors that compete with American industries. These include areas like commercial aircraft manufacturing, semiconductors and artificial intelligence.

Another challenge for negotiators is that both sides perceive national security as being at stake in some of the issues.

China has been reluctant to unblock internet access to its market for some of Silicon Valley’s biggest and most successful businesses, like Facebook and Google. It fears that without stringent censorship, everything from democratic ideas to pornography would be harder to fight.

The Trump administration also sees national security at issue in a long list of products that the United States either already imports from China or might be likely to import in the next few years. These include many products, from nuclear reactor components to aircraft engine parts, from among the $50 billion of annual imports on which the administration imposed 25 percent tariffs in the summer.

China has tried repeatedly over the past year and a half to allay American concerns about its government-subsidized investments in high-tech industries by offering to guarantee very large purchases from the United States of everything from soybeans to helicopters.

But the Trump administration and the American business community have mostly been leery about such a potentially short-term fix if it does not address long-term issues involving China’s government-backed drive for high-tech competitiveness. Some market-oriented economists in China have also advocated limits on the government’s industrial policies, because they worry about the ever-rising debt associated with them.

“If we don’t address the deeper issues, neither side will be doing itself any favors,” said Tim Stratford, who is the chairman of the American Chamber of Commerce in China and the managing partner of the Beijing office of the Covington and Burling law firm.

Mr. Trump and Mr. Xi agreed in Buenos Aires on Dec. 1 on a stopgap compromise that does not fully satisfy either side but might prove durable. Mr. Trump agreed not to raise tariffs further then but kept in place the tariffs he had already imposed, while China removed most of the retaliation that it had imposed.

That deal has not satisfied trade hawks in the United States, who want broader changes in the bilateral relationship, or the more nationalistic wing of the Chinese Communist Party, which perceived the deal as representing, to some extent, a Chinese retreat.

Follow Keith Bradsher on Twitter: @KeithBradsher.

Ailin Tang contributed research from Shanghai and Alan Rappeport from Washington.

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