China Cancels Trade Talks With U.S. -- 2nd Update
22 September 2018 - 5:38AM
Dow Jones News
By Lingling Wei
China scotched trade talks with the U.S. that were planned for
the coming days, according to people briefed on the matter, further
dimming prospects for resolving a trade battle between the world's
two largest economies.
The decision to pull out of the talks follows the latest
escalation in trade tensions.
On Monday, President Trump announced new tariffs on $200 billion
in Chinese imports, prompting Beijing to retaliate with levies on
$60 billion in U.S. goods. Mr. Trump then vowed to further ratchet
up pressure on China by kicking in tariffs on another $257 billion
of Chinese products.
Chinese officials have said they wouldn't bend to pressure
tactics. By declining to participate in the talks, the people said,
Beijing is following up on its pledge to avoid negotiating under
threat.
"Nothing the U.S. has done has given any impression of sincerity
and goodwill," Chinese Foreign Ministry spokesman Geng Shuang said
at a news briefing Friday. "We hope that the U.S. side will take
measures to correct its mistakes."
The latest exchange of tariffs, which take effect this coming
Monday, brings China and the U.S. closer to a full-blown trade
war.
Still, Beijing is leaving open the possibility of engaging in
fresh negotiations with Washington next month, said the people
familiar with the matter.
Treasury Secretary Steven Mnuchin sent an invitation to Vice
Premier Liu He, President Xi Jinping's economic czar, two weeks ago
asking for a fresh round of talks this month.
Previous negotiations had ended without any breakthroughs.
Trump officials perceived the offers from Beijing -- largely
involving more Chinese purchases of U.S. agricultural and other
products -- as inadequate in addressing the White House's demand
for a fairer playing field for American businesses in China.
Originally, Vice Commerce Minister Wang Shouwen, who led China's
negotiating team in the last round, was to again lead a group for
the talks in the U.S. and then Vice Premier Liu himself would
follow up with a trip to Washington on Sept. 27 and Sept. 28. Both
of those trips have now been called off, the people said.
"There are no meetings on the books right now," a senior White
House official said Friday. "The President wants us to continue to
engage to try to achieve a positive way forward, but it does take
China to come to the table in a positive way."
Whether the two countries resume high-level trade negotiations
could shape the path of future tariffs threatened by the Trump
administration. People familiar with the administration's plans
have said Mr. Trump is expected to issue a formal statement to
begin the process of crafting the next tranche of tariffs that, if
fully implemented, would cover virtually all U.S. imports of
Chinese goods, which totaled $505 billion in 2017.
While the threat of more tariffs might intensify the rhetorical
pressure on Beijing, these people have said, the actual
administrative process -- including holding public hearings,
receiving written public comments and conducting internal impact
studies -- would take weeks before any fresh measures would take
effect.
With the new tariffs imminent and the threat of possibly more
coming, Chinese officials in recent days have questioned whether
now is the time to negotiate. Many in China's policy circles
believe that Beijing should wait to negotiate until after the
U.S.'s November midterm elections. They say Mr. Trump isn't ready
to cut a deal and is bashing China now to appeal to his political
base, though he may be more amenable after the elections.
Meantime, Beijing is hoping that a possible summit in late
November, around the time of the Group of 20 meetings, could
provide an opportunity for both sides to reach a settlement. To
prepare for the potential top-level meeting, Chinese officials are
still looking for ways to restart negotiations, the people said.
"The matter might be revisited in October," one of the people
said.
So far, Beijing's strategy has been to respond forcefully to the
Trump administration's trade offensive. But because China imports
less from the U.S. -- just under $130 billion last year -- than
vice versa, Beijing is running out of products to penalize. If
Beijing moves to retaliate by targeting American businesses
operating in China, as some officials have proposed, the country's
leadership runs the risk of souring the foreign-investment
environment and causing foreign capital to flee at a time the
Chinese economy is slowing.
That is why President Xi has also ordered his officials to keep
engaging with Washington and U.S. businesses, according to Chinese
officials and government advisers. For instance, Mr. Liu in recent
weeks has gone out of his way to reassure U.S. companies that there
won't be retribution against them.
So far, the trade conflict has had limited impact on the Chinese
economy. Many government advisers and economists expect growth to
tick down in the coming months as a result of weakening Chinese
exports and higher unemployment rates. "The trade war will affect
China's transition toward higher-quality growth," said Wang Yiming,
vice president of the State Council's Development Research
Center.
Vivian Salama contributed to this article.
Write to Lingling Wei at lingling.wei@wsj.com
(END) Dow Jones Newswires
September 22, 2018 00:23 ET (04:23 GMT)
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