China, US strike deal, avert trade war

Washington/Beijing, May 20 

Averting a trade war, China and the US today struck a deal under which Beijing will “significantly increase” its purchases of American goods and services to reduce the whopping $375 billion trade deficit with Washington, but made no mention of a $200 billion target the White House had touted earlier.

After lengthy second round of talks in Washington, the two sides issued a joint statement early today vowing not to launch a trade war against each other. “There was a consensus on taking effective measures to substantially reduce the US trade deficit in goods with China,” the joint statement said.

“To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services,” it added. This will help support growth and employment in the United States.

US President Donald Trump has threatened punitive measures against Chinese goods if Beijing does not cut down the trade deficit by $100 billion in a month and $200 billion by 2020. The US says it has $375 billion trade deficit in $636 billion total trade last year. China says the trade deficit is around $200 billion. China too threatened a tit-for-tat retaliation but blinked in the end with a categorical undertaking to import more goods from the US.

The two sides agreed on meaningful increases in United States agriculture and energy exports. The US will send a team to China to work out the details, said the joint statement at the conclusion of the trade delegation level talks between the two countries. 

The US delegation included Secretary of the Treasury Steven T Mnuchin, Secretary of Commerce Wilbur L. Ross, and United States Trade Representative Robert E. Lighthizer. The Chinese delegation was led by Vice Premier Liu He, the Special Envoy of President Xi Jinping.

“Both sides agreed to continue to engage at high levels on these issues and to seek to resolve their economic and trade concerns in a proactive manner,” the statement said. 

Liu told state-run China Daily in an interview that the trade talks are “quite successful, very meaningful and very fruitful”. Asked about what will be followed up in the coming months, Liu said that the two sides will see where “we have reached the consensus”, and that they have already established some working groups, including the agricultural group, for consultations on concrete areas. “Maybe some ministers from the US government will lead the groups to Beijing and will meet our colleagues to have deeper discussions with us and try to make concrete deals,” he said.

Washington also demanded Beijing halt subsidies for industries under the “Made in China 2025” plan, and that China should not resort to retaliatory measures against the US. — PTI

Both want favourable trade conditions

• The two sides discussed expanding trade in manufactured goods and services. There was consensus on the need to create favourable conditions to increase trade in these areas. The US will also send a team to China to work out the details 
• The two nations attach great importance to the protection of intellectual property rights and agreed to strengthen cooperation. China will advance relevant amendments to its laws and regulations in this area, including the Patent Law
• The two trade delegations also agreed to encourage two-way investment and to strive to create a fair, level playing field for competition. Trump made cutting the US trade deficit with China a promise in his presidential campaign

How the spat began

• The trade spat between the top two economies of the world began last month with Trump imposing tariffs on steel and aluminium imports into US
• China retaliated by imposing additional tariffs worth about $3 billion on 128 US products. Trump, while demanding China to reduce the $375 billion by $100 billion retaliated with $50 billion tariffs on Chinese products.
• In retaliation, China announced plans to impose new tariffs of 25 per cent worth $50 billion on 106 American products including items like soybeans which could hurt American farmers. The two countries have not yet implemented their tariff increases