US economy

Trump adviser raises hopes on China trade talks


Donald Trump’s top economic adviser has raised hopes of rapid progress with China on trade talks, saying he was seeing “tremendous urgency”. But beneath his bullish assessment lay a host of unanswered questions.

Larry Kudlow said in a briefing with reporters on Monday that a formal process would soon be set up between the two countries following a truce announced by President Trump and his Chinese counterpart Xi Jinping, with US trade representative Robert Lighthizer leading the talks from the American side. 

While Mr Trump declared after Saturday’s meeting that the Chinese had agreed to remove their tariffs on imported US cars, Mr Kudlow acknowledged Washington did not yet have a “specific agreement”. 

And there were signs of confusion over the timetable on the US side, with the White House correcting remarks from Mr Kudlow suggesting the 90-day deadline for the negotiations would start at the beginning of January. The administration clarified that the clock would start ticking on December 1. China did not mention a timeline in its own official communication after the dinner. 

More broadly, while Mr Kudlow said the administration was “pretty close” to striking agreements with the Chinese on theft of intellectual property and forced transfers of technology from US companies, analysts questioned whether a breakthrough was imminent on such entrenched and complex issues.

The notion that as-yet-unquantified purchases of US products by the Chinese would rein in America’s yawning trade deficit was also met with scepticism. 

Gregory Daco of Oxford Economics said: “The announced immediate review of China’s policies of industrial subsidies, technology transfers, non-trade barriers and intellectual property are of little significance until followed up by bilateral negotiations and concrete action plans. The next three months will determine whether an implementable trading framework is adopted, or tensions escalate further.” 

The understanding reached on Saturday will hit the pause button on a months-long trade war between Washington and Beijing, with the US agreeing not to boost tariffs on $200bn of Chinese imports from 10 per cent to 25 per cent on January 1, as planned. 

For its part, China agreed to buy US goods to narrow the trade gap between the countries and move ahead with structural changes to its economy to address practices such as intellectual property theft and the forced transfer of technology that the US regards as unfair. 

Mr Kudlow said on Monday that the US had been “quite disappointed with the lack of results and follow-through” in its past discussions with China. But he emphasised the personal involvement of Mr Xi over the weekend as a reason for being “cautiously optimistic”. 

As evidence, he touted among other things China’s immediate commitment to Mr Trump to crack down on fentanyl, a synthetic opioid being produced in the country and sold into the US. 

Mr Kudlow suggested the topic of Chinese tariffs on US cars would be one test of how serious Beijing was. “This is an area where that word ‘immediately’ comes in. Let’s get rolling, folks. Today is Monday, the dinner was Saturday, feel free to make important steps that would give more credibility,” he said. 

On Tuesday China’s state-run Securities Daily cited an unnamed auto industry expert as saying government departments were discussing the possibility of lowering tariffs on US cars but could not say when or by how much.

But the expert gave a “personal prediction” that Beijing would lower tariffs back to their pre-increase level, described in the article as 15 per cent, adding there was “hope of seeing results before the year’s end”.

In a telephone interview with the Financial Times, US Treasury Secretary Steven Mnuchin urged Beijing to flesh out its pledges.

“There’s a 100 per cent unanimous view on our economic team that this needs to be a real agreement,” Mr Mnuchin said. “These can’t be soft commitments from China. There need to be specific dates, specific action items”.

Additional reporting from James Politi in Washington and Hudson Lockett in Hong Kong



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.