Just the Facts

Five Facts on U.S.-China Trade Talks

By Emma Petasis
January 30, 2019 | Blog

Today marks the beginning of another round of trade talks between the United States and China, as the two countries look to navigate their trade war and differing economic policies. Negotiations will be led by U.S. Trade Representative Robert Lighthizer and China’s Vice Premier Liu He. The president is set to meet with Liu on Thursday. Here are five facts on the 2019 US-China trade talks.

The U.S. will be pushing for deep structural changes in the Chinese economy.

The U.S. will be looking to eliminate subsidies towards favored industries within the Chinese economy, as well as stop regulatory help to state-owned enterprises. The U.S. argues that China’s support for its state-owned enterprises leads to a production rate U.S. companies can’t compete with in the marketplace. The U.S. will also look to directly protect American businesses. Core U.S. demands also include protecting American companies from forced transfer of technology to Chinese firms, protecting business intellectual property rights, and opening Chinese markets to foreign investment to further boost U.S. economic interests.

The case of the Huawei executive being held in Canada will not be addressed in these talks.

Surrounding the trade talks is the case of Chinese tech giant Huawei and its CFO, Meng Wanzhou. Meng was detained in Canada in late 2018, and now faces charges from the Department of Justice of wire fraud, stealing trade secrets, and obstructing justice. Huawei, one of the largest cell phone technology providers in the world also allegedly offered bonuses to any employee who stole trade secrets, the DOJ cited this week. However, Treasury Secretary Steven Mnuchin said Tuesday that the issue with Meng would not be discussed this week, as it was unrelated to U.S.-China trade. The New York Times reported: “Forced technology issues are part of trade discussions,” Mnuchin said, while emphasizing that any issues related “to violation of U.S. law or U.S. sanctions are going through a separate track, which is the Justice Department.”

The stakes are high for China.

Trump has threatened to raise tariffs from 10 percent to 25 percent on March 2 if an agreement between the two nations cannot be reached. These tariffs would affect $200 billion in goods. Trump has also floated the idea of new tariffs on remaining Chinese imports into the United States. Leading up to the talks, the president said China’s slowing economic growth puts the U.S. in a good position to negotiate. At the beginning of 2019, China’s manufacturing sector shrunk for the first time in 19 months. The Guardian reports Beijing cut bank reserve requirements for the fifth time this year, in an effort to spur growth amidst the trade war.

The two nations have been negotiating over the past few months.

According to Al Jazeera, China reached out to the U.S. before the talks. According to Secretary Mnuchin, China has made an offer to buy over $1 trillion in U.S. goods over six years. China, in its part, has already taken steps to alleviate tensions with the U.S., including reduced automobile tariffs and a draft of a foreign investment law. This draft promises to outlaw “administrative means to force the transfer of technology.” The Chinese parliament is predicted to approve the draft in March. In December 2018 China purchased 1.42 million metric tons of soybeans from the U.S. as well, as a reported “good will gesture” between the two countries.

This week is not the last opportunity for negotiations.

According to U.S. China Business Council Vice President Erin Ennis, it is unlikely that the best offers from either country will be put out this week, with a month still to go before the deadline. Ennis reported to CNBC, “Hopefully they make some good progress that will set them up to be able to get to completion at the end of the 90 days.” Trump may have the opportunity to see Chinese officials again in February if he travels to Asia to meet with Kim Jong Un for a U.S.-North Korea summit.

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