Hopeful: US Treasury Secretary Steven Mnuchin is leading the negotiations with the Chinese in Beijing. Picture: REUTERS
Hopeful: US Treasury Secretary Steven Mnuchin is leading the negotiations with the Chinese in Beijing. Picture: REUTERS

Washington/Beijing — Top Trump administration officials are asking China to cut tariffs on imported cars, allow foreign majority ownership of financial services firms and buy more US-made semiconductors in negotiations to avert tariffs on a host of Chinese goods and a trade war.

A person familiar with the discussions said these were among the asks from Treasury Secretary Steven Mnuchin and US trade representative Robert Lighthizer in talks with Beijing.

The Wall Street Journal first reported the demands from US officials, saying they came in a letter sent to Beijing last week.

White House trade adviser Peter Navarro confirmed that President Donald Trump had asked Mnuchin and Lighthizer to try to resolve their trade differences. "We’re hopeful there that China will work with us to basically address some of these practices," Navarro told CNBC.

US stocks surged on Monday on the news that the two sides were talking, after a massive rout last week when Trump announced plans to impose tariffs on up to $60bn of Chinese imports over alleged misappropriation of US intellectual property. The Dow Jones industrial average posted its third biggest point gain, rising 669.4 points, or 2.8%, to close at 24,202.6, while the broader S&P 500 rose 2.7% after a 6% drop last week.


Foreign ministry spokeswoman Hua Chunying said China’s door was always open to talks, but that this needed to happen on the basis of equality and mutual respect with a "win-win" outcome.

Premier Li Keqiang said on Monday that China and the US should maintain negotiations and repeated pledges to ease access for American businesses to China’s markets.

Li said at a conference that included global CEOs that China would treat foreign and domestic firms equally, would not force foreign firms to transfer technology and would strengthen intellectual property rights.

Despite a steady stream of fierce rhetoric from Chinese state media lambasting the US for being a "bully" and warning of retaliation, Chinese and US officials are negotiating behind the scenes. In an interview aired on Sunday, Mnuchin told Fox News that he was pursuing an agreement with the Chinese "for them to open up their markets, reduce their tariffs, stop forced technology transfer. These are all the things we want to do".

"We are proceeding with these tariffs, we’re not putting them on hold unless we have an acceptable agreement that the president signs off on," he said.

China has offered to buy more US semiconductors by diverting some purchases from South Korea and Taiwan, the Financial Times reported, citing people briefed on the negotiations. China imported $11bn of semiconductors — comprising chips, diodes and transistors — from the US in 2017. Chinese officials were also working to finalise rules by May — instead of the end of June — to allow foreign financial groups to take majority stakes in Chinese securities firms, the Times said.

"I anticipate that for political reasons it would be logical for China to respond, because countries do," Blackstone group CE Stephen Schwarzman told Reuters on Monday on the sidelines of the Beijing conference.

"That’s why I view this more as a skirmish, and I think the interests of both countries are served by resolving some of these matters." China called on World Trade Organisation members on Monday to unite to oppose Trump’s proposed tariffs, saying they should "lock this beast back into the cage of WTO rules".

On Friday, China responded to the US tariffs on steel and aluminium by declaring plans to levy additional duties on up to $3bn of US imports, including fruit, nuts and wine. China could also inflict pain on US multinationals that rely on it for a substantial — and growing — portion of their total revenues, said Alex Wolf, senior emerging markets economist at Aberdeen Standard Investments.