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Fresh US-China trade talks in the making

September 13, 2018

Washington has invited Chinese officials to restart trade talks under efforts to defuse an escalating trade dispute. The offer comes as US President Donald Trump is readying new tariffs to be slapped on Chinese goods.

USA PK Larry Kudlow
Image: Getty Images/C. Somodevilla

The head of the White House Economic Council, Larry Kudlow, told US television on Wednesday that the Trump administration has sent a letter to Beijing in response to China's call for a resumption of trade talks with Washington.

"There's some discussions and information that we received that the Chinese government — the top of the Chinese government — wished to pursue talks," Kudlow told Fox Business News. "I think most of us think it's better to talk than not to talk, and I think the Chinese government is willing to talk," Kudlow said.

Read more: No breakthrough in China-US trade talks

Asked about the Trump administration's position, Kudlow added: "If they come to the table in a serious way to generate some positive results, yes, of course. That's what we've been asking for months and months."

According to a person familiar with US-Chinese trade talks, US Treasury Secretary Steven Mnuchin is pushing for talks in the coming weeks with his Chinese counterpart Vice Premier Liu He, the top economic adviser to President Xi Jinping.

China's foreign ministry and ministry of Commerce both said on Thursday that Beijing welcomed the approach, but was still co-ordinating details with the US side. Communications had been steady since Chinese negotiators travelled to Washington last month, Beijing’s foreign ministry said. 

The invitation from Washington comes amid stalled bilateral negotiations about how China should reduce its massive trade surplus with the United States.

No guarantees

Both sides have so far remained steadfast in their positions, causing the Trump administration to impose tariffs on $50 billion worth of Chinese imports earlier this year, and prompting Beijing to retaliate.

Additional US tariffs to the tune of $200 billion (€180 billion) have been prepared by Washington, with Trump saying that they could still be increased to include all of China's exports to the US.

In August, mid-level talks between the two countries ended without yielding any results. But Trump's tariffs threat has since become an election issue in rural districts and states ahead of the November midterm elections.

It is however unclear when and where the proposed meeting would take place. And Kudlow cautioned that he could "guarantee nothing" despite communication between Washington and Beijing having "picked up a notch."

Read more: Beijing's problems in the trade war with the US

Scott Kennedy, deputy director of China studies at the Center for Strategic and International Studies in Washington, said he suspected the invitation to talks would be viewed skeptically in Beijing. 

"My guess is that they won't receive an enthusiastic response from the Chinese, because the Chinese probably just don't think that the Trump administration itself necessarily wants a deal or is willing to offer anything," he told the news agency Reuters.

Tariffs hurting US businesses

The invitation comes amid a swelling chorus of opposition to tariffs from American business circles.

On Thursday, the US business American Chamber of Commerce in China (AmCham China) and AmCham Shanghai published a joint survey showing that the negative impact on American companies in China of tit-for-tat tariffs was "clear and far reaching."

More than 60 percent of the 430 US companies polled said the tariffs were already affecting their business operations, while a similar percentage said Chinese duties on US goods were having an impact on business.

Read more: Trump's tariffs: When does a trade spat become an actual trade war?

Roughly a third of firms are shifting supply chains out of China, or the US, and an equal proportion are delaying or cancelling investment decisions, the survey shows. In addition, about half of American firms are making less money, and a similar amount are reporting higher production costs. Some of their employees are paying the price, with 12 percent of firms cutting staff, the report says.

Read more:  Apple partners falter after Trump demands production shifts

Moreover, some 42 percent of US firms report their goods are becoming less attractive to Chinese buyers. AmCham China President Alan Beebe said that this could be the consequences of price increases or the psychology around how people make purchasing decisions.

"Chinese customers just see too much uncertainty around buying American and as a result they shift to alternatives," Beebe told the news agency AFP. He added though survey respondents were mostly smaller firms, and that larger corporations had "the ability to withstand the impact of the tariffs," so that it was the smaller ones that were feeling the pinch sooner.

US companies are particularly worried about the "qualitative measures" Beijing has threatened to take in response to the US tariffs. More than half of firms say they are already feeling Beijing's wrath, with 27 percent reporting increased inspections, 19 percent feeling heightened regulatory scrutiny and 23 percent witnessing slower customs clearance.

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uhe/jh (Reuters, AFP, dpa)