Published: Wed, June 06, 2018
Finance | By Gustavo Carr

Why White House approach to China talks may backfire

Why White House approach to China talks may backfire

The warning came after U.S. Commerce Secretary Wilbur Ross and Chinese Deputy Prime Minister Liu He ended a new round of talks Sunday in Beijing aimed at settling a simmering trade dispute, in which Beijing pledged to buy more American products to narrow its trade surplus with the United States.

"If the United States introduces trade sanctions including tariff increases, all economic and trade achievements negotiated by the two parties so far will be void", said a Chinese government statement issued by the official Xinhua news agency.

A Chinese government statement noted that "the two sides have had good communication in various areas such as agriculture and energy, and have made positive and concrete progress while relevant details are yet to be confirmed by both sides".

At the end of last month's Washington talks the two countries released a joint statement.

The President also declared that the USA has had experience getting ripped off on trade matters for many years, and it was high time for them to get smart.

The Trump administration said Tuesday that US sanctions announced in March - including restrictions on Chinese investment, export controls and 25 percent tariffs on as much as $50 billion in Chinese tech exports - remain under development.

"The idea that we are somehow a national security threat to the United States is quite frankly insulting and unacceptable", he said. He called for tariffs on $50 billion of imports from China unless it addressed the issue of theft of American intellectual property.

China has offered to purchase close to $70 billion worth of U.S. good over the next year, according to the Wall Street Journal.

The latest agreement follows an earlier appeasement on May 31, when China said it would cancel certain restrictions on foreign investments in sectors China deems strategically important. The talks were focussed on getting China to move ahead with its recent promises to increase energy and farm imports from the U.S.

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Treasury Secretary Steven Mnuchin, who announced the tariff truce with China, said at the G7 summit in Canada that the USA was pushing for "structural changes" to the Chinese economy.

Top officials from Canada, France, Germany, Italy, Japan and British asked U.S. Treasury Secretary Steven Mnuchin to convey their "unanimous concern and disappointment" to the trade actions.

Treasury Secretary Steven Mnuchin told CNBC after the preliminary deal that China could increase purchases of United States energy by $40 to $50 billion and up the value of their agricultural imports by 35% to 40%.

Beijing pledged any tariffs on their goods would nullify any trade deal reached between the US and China.

Our correspondent says acrimonious debate is likely to continue next weekend when the leaders of the G7 countries - including Mr Trump - meet for a summit in Quebec.

Trump also has threatened to raise tariffs on an additional $100 billion of Chinese goods, but gave no indication this week whether that would go ahead.

The US was also facing push-back from Canada and the European Union, after the White House decided on 1 June not to extend a waiver from tariffs on imports of aluminium and steel imports from those two allies.

"The idea that our soldiers who have fought and died together in the mountains of Afghanistan and stood shoulder to shoulder, somehow this is insulting to them", he said in an interview with NBC's "Meet the Press". -China trade talks dissolved in a matter of days, expectations were low for Ross' visit this week.

In 2017, Trump vetoed the sale of a USA semiconductor manufacturer to a Chinese investor on national security grounds after Washington concluded the financing came from China's government. And he has threatened tariffs on up to $200 billion in Chinese imports, raising the potential for retaliation in a dispute involving the globe's two largest economies.

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