China has offered US President Donald Trump a US$200 billion reduction in its annual trade surplus with the US by increasing imports of US products and other steps, a Trump administration official said.
The offer was made during talks in Washington this week as Chinese Vice Premier Liu He (劉鶴) visited to try to resolve a trade dispute, the official said, speaking on condition of anonymity.
Liu met with Trump on Thursday afternoon at the White House. The official did not describe the US response.
However, Chinese Ministry of Foreign Affairs yesterday said it is not true that the country had offered to cut its trade surplus with the US by US$200 billion, Reuters reported.
Ministry spokesman Lu Kang (陸慷) made the comment at a daily news briefing, adding that trade talks with the US were constructive and continue.
US officials conveyed the president’s goal for a fair trading relationship with China and the two sides agreed to continue the discussions yesterday, the White House said in a statement.
The Chinese State Council Information Office and the ministry did not initially respond to requests for comment.
China yesterday said that it would end its anti-dumping and anti-subsidy investigation into imports of US sorghum, citing “public interest.”
That move, coupled with steps taken over the past few days, including restarting a review of Qualcomm Inc’s application to acquire NXP Semiconductors NV, signal a conciliatory stance as talks with the US intensify.
A deal to cut the deficit, if confirmed, “is good news for market sentiment,” said Dariusz Kowalczyk, senior emerging-market strategist at Credit Agricole SA in Hong Kong. “That said, China would suffer pressure on GDP growth as a result and would need to boost domestic demand and debt in the economy through monetary easing and allowing more credit.”
A US$200 billion reduction in the US trade gap with China by 2020 was on a list of demands the Trump administration made earlier this month as US Secretary of the Treasury Steven Mnuchin led a delegation to Beijing. The US merchandise trade deficit with China hit a record US$375 billion last year.
Trump said he had doubts before his meeting with Liu that China and the US would come to an agreement to avoid a damaging trade war.
“Will that be successful? I tend to doubt it,” Trump said during a news briefing on Thursday with NATO Secretary-General Jens Stoltenberg. “The reason I doubt it is because China’s become very spoiled.”
The US and China were expected to exchange new trade proposals during the Washington talks, Trump economic adviser Larry Kudlow said on earlier Thursday.
Mnuchin is leading the talks with Liu, along with US Secretary of Commerce Wilbur Ross and US Trade Representative Robert Lighthizer, the White House said.
Victor Shih (史宗瀚), a professor at the University of California in San Diego who studies China’s politics and finance, said he finds an agreement to cut the US deficit by US$200 billion “difficult to contemplate.”
“Even with a drastic reallocation of Chinese imports of energy, raw materials and airplanes in favor of the US, the bilateral trade deficit may reduce by US$100 billion,” he said. “A US$200 billion reduction would mean a drastic reduction in Chinese exports to the US and a dramatic restructuring of the supply chain.”
The US focus is on China opening market access to US companies by lowering their trading barriers and addressing US concerns over the theft of intellectual property, Kudlow said.
“American ownership of its own companies in China must be permitted,” Kudlow said. “We are going to have serious talks dealing with a difficult trade situation that needs to be fixed.”
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