US, China to hold key trade talks this week

Top US and Chinese officials will meet here this week for the next round of high-level trade talks aimed at "re-balancing" the bilateral economic relationship and end the tariff spat between the world's two largest economies, the White House has said.

US Treasury Secretary Steven Mnuchin will lead a high-level delegation for the talks with a high-powered Chinese delegation, led by Vice Premier Liu He, which has arrived in the US capital.

A US delegation led by Mnuchin, who is also US President Donald Trump's special envoy, held talks in Beijing on May 3 with a Chinese team headed by Liu, a close confidant of President Xi Jinping and also a member of the powerful Politburo of the ruling Communist Party of China (CPC).

"These meetings are a continuation of the talks held in Beijing two weeks ago and will focus on re-balancing the United States-China bilateral economic relationship. Additional information will be made available during the course of the visit," the White House said yesterday.

The US delegation, among others, comprises Commerce Secretary Wilbur Ross and United States Trade Representative Robert Lighthizer.

A trade spat between the top two economies of the world began last month with Trump imposing tariffs on steel and aluminium imports into the US from China, which also retaliated by imposing additional tariffs worth about USD 3 billion on 128 US products.

The two countries have not yet implemented their tariff increases to reach a negotiated settlement.

Earlier, Senate Finance Committee Chairman Orrin Hatch met with Liu.

"During our meeting, I emphasised the importance of respecting intellectual property rights and the ability of American businesses to export and do business in China without being forced to transfer technology to Chinese companies – goals I share with the Trump administration," Hatch said.

While imposing tariffs would harm both countries, the theft of American intellectual property in China is a persistent and serious problem that must stop, he asserted.

"It's China's responsibility to change its policies that are harming American businesses and workers and I am committed to continuing to work with them and the administration to help improve the US-China bilateral trade relationship," Hatch said.

Ahead of the trade negotiations, Ross said that China's announced decision to subsidise a dozen of the most promising technologies to become dominant in them by the year 2025 was a major problem.

"We welcome legitimate competition, but we cannot tolerate competition that is based on massive government subsidies and industrial cyber espionage," he said.

Ross warned that the trade war would hit China more than the US.

"The pain in China would be widespread," he said.

"It is difficult to handicap the outcome, but my hope is that the strong personal relationship between President Trump and President Xi will facilitate an agreement, just as it seems to be doing relative to North Korea.

"The one sure thing is that President Trump meticulously honours his campaign promises, and key among them is making our trade relations with China much fairer," Ross said.

Noting that some pundits have said this activity on trade will result in retaliation and undo the benefits of deregulation and the tax cuts, Ross said it was an exaggeration.

If China retaliates with a 25 percent tariff on USD 50 billion of US exports, it would lose a major fraction of that volume but not all.

"For the sake of argument, assume that we lost all of that volume. The hit would be only USD 50 billion," he said.

"This would be painful to the direct targets, but have less than a three-tenths of one percent impact on our USD 18 trillion economy, and it would partly be offset by the reduced imports of the goods on which we imposed our original 25 percent tariffs. Some portion of those would be produced domestically," Ross said.

Hoping that the talks would result in a fair deal, Ross said, "But if that does not happen, a trade tit-for-tat will not be economically life-threatening to the US".

The US, the world's largest economy, has a trade deficit of almost USD 500 billion with China, the world's second-largest economy.