US, China envoys hold last talks before March 1 deadline

BEIJING (AP) — US and Chinese negotiators are meeting this week for their final trade talks before President Donald Trump decides whether to escalate a dispute over technology with a March 2 tariff hike on USD200 billion of imports from China.

The two days of talks starting today allow too little time to resolve the war over Beijing’s technology ambitions that threatens to drag on weakening global economic growth, businesspeople and economists say. They believe China’s goal is to make enough progress to persuade Trump to extend his deadline.

There are few signs of movement on their thorniest issue: Washington’s demand that Beijing scale back plans for government-led creation of global champions in robotics and other technology. China’s trading partners say those violate its market-opening obligations and some in America worry they might erode US industrial leadership.

This week, Beijing wants “to see the threat of additional tariff imposition being removed for as long as possible,” with minimal conditions attached, said Louis Kuijs of Oxford Economics. Trump’s December agreement to postpone more tariff hikes while the two sides negotiate expires on March 1. The following day, a 10 per cent tariff imposed in July on USD200 billion of Chinese imports would rise to 25 per cent.

Companies on both sides have been battered by Washington’s tariffs and retaliatory duties imposed by Beijing. The stakes are rising as global economic growth cools.

Trump hiked tariffs on Chinese goods in July over complaints Beijing steals or pressures companies to hand over technology. The dispute spread to include Chinese technology plans, cyberspying and the countries’ lopsided trade balance.

A labourer works on an aluminium wheel hub at a manufacturing facility in Qinhuangdao in northern China’s Hebei province. – AP

Chinese leaders have offered to narrow their multibillion-dollar trade surplus with the United States. But they have balked at making major changes in development plans they see as a path to prosperity and more global influence.

“China will continue resisting US demands in certain areas, such as changes to its industrial strategy and the role of the state in its economy,” said Eswar Prasad, a Cornell University economist who was head of the China division at the International Monetary Fund.

Chinese officials reject complaints that foreign companies are required to hand over technology. But business groups and foreign governments point to rules they say compel companies to share technology with state-owned local partners or disclose trade secrets.

Chinese officials also are balking at US pressure to accept a mechanism to monitor whether Beijing carries out its promises, said Kuijs.

“They feel that it is humiliating for China if another country does this,” he said.

The US delegation is led by Trade Representative Robert Lighthizer, who has said his priority is Chinese industrial policy, not the trade gap. He is accompanied by Treasury Secretary Steven Mnuchin.