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US trade team back in Beijing as China says much still to be done

Beijing

US TRADE officials including Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer landed in Beijing on Thursday for talks aimed at nailing down a deal with China, as an official there warned that there are still many issues outstanding.

Arriving at the Westin hotel in Beijing's Chaoyang district, Mr Mnuchin said he was "pleased" to be there and looked forward to "productive" meetings. Estimates of progress in the talks have veered in recent weeks between expectations of an imminent signing to pushing any finalisation months down the line.

"There's still a lot of work to be done," China's Ministry of Commerce spokesman Gao Feng said at a press conference in Beijing on Thursday. One of the biggest sticking points is still disagreement on enforcement, with the US wanting assurances that China will deliver on any promises to change its practices around intellectual property protection.

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The two sides were due to hold a working dinner on Thursday evening with a full day of talks planned for Friday, Mr Gao said. Chinese Vice- Premier Liu He is then scheduled to travel to Washington next week.

The urgency of reaching a trade deal is being underscored by the dimming outlook for global commerce. Figures published on Monday show that trade fell 1.8 per cent in the three months through January compared with the previous period. That's the biggest drop since May 2009.

Beijing said that US and Chinese negotiators still face a "large amount of work" as they meet for fresh talks aimed at resolving a months-long trade war. While US President Donald Trump has voiced hope that he could soon hold a signing ceremony with his Chinese counterpart Xi Jinping, negotiations have dragged on, suggesting substantial differences remain.

Mr Liu, Mr Mnuchin and Mr Lighthizer have "made some progress" after holding several phone calls recently, Mr Gao said at a weekly press briefing. He said that both sites are "going all out to earnestly negotiate" following the truce struck by Mr Xi and Mr Trump in December.

Mr Lighthizer also sought to play down expectations ahead of the meeting, which is due to be followed by more talks in Washington in early April. "I'm hoping but not necessarily hopeful," he told National Public Radio earlier this week. "If there's a great deal to be gotten, we'll get it - if not, we'll find another plan." The two sides have slapped tariffs on hundreds of billions of dollars worth of goods since last year, hitting a slew of businesses.

Mr Trump suggested last week that some of those tariffs should stay in place after a deal is reached to ensure that China follows through.

Beijing has taken steps to address some US complaints. Earlier this month, China's rubber-stamp parliament rushed through a law that seeks to protect foreign firms from the forced transfer of technology.

While the US has hit out at Chinese practices, Mr Lighthizer said "the kinds of things that we're asking for are not anti-Chinese at all".

"Protection of intellectual property is not anti-Chinese. Stopping people from forcing transfer of technology is not anti-Chinese. In fact, the reformers would say it's pro-Chinese. It will help their economy, not hurt their economy," he added.

Negotiators hope to iron out remaining differences on other issues including Beijing's subsidies to state-owned firms and policies to build up Chinese companies in strategic sectors.

"In our conversations with the US government they've indicated that subsidies which create an uneven playing field between foreign and domestic companies are most definitely something that continues to be negotiated," said Jacob Parker, vice-president of the US-China Business Council. "I suspect this is one of the areas China is pushing back on, (and) it remains a core of the negotiations," Mr Parker said.

When Mr Li presented the government's 2019 policy plans earlier this month, he made no mention of its controversial "Made in China 2025" industrial policy, which had called for Chinese firms to take control of many strategic industries.

Still, analysts say Beijing's push for self-reliance and indigenous innovation will continue in practice.

Foreign tech companies have also long been locked out of China's market with many services such as Google, Facebook and Amazon blocked or facing restrictions.

Beijing has yet to give in to demands for greater market access to foreign cloud computing providers or loosen restrictions on overseas data transfer, the Financial Times reported this week.

The two sides also need to resolve when to remove the punitive tariffs on billions of dollars' worth of goods and how to enforce any deal.

"The question will be the details and enforceability," Mr Lighthizer said, outlining a mechanism for US companies facing problems in China to bring cases to the US Trade Representative for discussion with Chinese officials. "They're committed to do this, but it's going to be a question of whether they can get all the layers of government, I think, to follow through," he said. BLOOMBERG, AFP