US trade representative Robert Lighthizer. Picture: REUTERS
US trade representative Robert Lighthizer. Picture: REUTERS

Washington — The US and China’s top trade negotiators are set to meet on Thursday for the first time since late July to try to find a way out of a 15-month trade war as new irritants between the world’s two largest economies threaten hopes for progress.

Chinese vice-premier Liu He, US trade representative Robert Lighthizer and treasury secretary Steven Mnuchin will seek to narrow differences enough to avoid a scheduled October 15 tariff rate increase on $250bn worth of Chinese goods.

But the atmosphere surrounding the talks was soured by the US commerce department’s decision on Monday to blacklist 28 Chinese public security bureaus, technology and surveillance firms, citing human rights violations of Muslim minority groups in China’s Xinjiang province. A day later, the US state department imposed visa restrictions on Chinese officials related to the Xinjiang issue.

If negotiations break down again, by December 15 nearly all Chinese goods imports into the US — more than $500bn — could be subject to punitive tariffs in the dispute that erupted during President Donald Trump’s time in office.

Commerce secretary Wilbur Ross said in Sydney on Thursday that the tariffs are working, forcing Beijing to pay attention to US concerns about its trade practices. “We do not love tariffs, in fact we would prefer not to use them, but after years of discussions and no action, tariffs are finally forcing China to pay attention to our concerns,” Ross said in remarks prepared for delivery on an official visit to Australia.

Though some media reports suggest both sides are considering an “interim” deal that would suspend planned further US tariffs in exchange for additional purchases of American farm products, Trump has repeatedly dismissed this idea, insisting that he wants a “big deal” with Beijing that addresses core intellectual property issues.

Speaking to reporters in Washington on Wednesday, Trump said: “If we can make a deal, we’re going to make a deal, there’s a really good chance.”

He added: “In my opinion China wants to make a deal more than I do.” 

The two sides have been at loggerheads over US demands that China improve protections of American intellectual property, end cybertheft and the forced transfer of technology to Chinese firms, curb industrial subsidies and increase US companies’ access to largely closed Chinese markets.

Lowered expectations

But Chinese officials, surprised and upset by the US blacklisting of Chinese companies, including video surveillance gear maker Hikvision, along with the suspension of US visas for some Chinese officials, told Reuters that Beijing had lowered expectations for significant progress from the talks.

“I’ve never seen China respond with concessions to someone throwing down the gauntlet in this manner,” said Scott Kennedy, a China trade expert at the Center for Strategic and International Studies in Washington. “It suggests to me that the US may have determined that progress was impossible so everyone is just going through the motions.”

Other flashpoints that have cropped up in recent days include China’s swift action to cut corporate ties to the National Basketball Association (NBA) over a team official’s tweet in support of Hong Kong pro-democracy protesters.

But in a possible easing of tensions, The New York Times reported that the Trump administration will soon issue licences allowing some US companies to sell non-sensitive goods to China’s top telecom equipment maker, Huawei Technologies.

The report cited unnamed people familiar with the matter. A commerce department spokesperson said the agency has been given no such direction. Huawei since May has been on the same trade blacklist as Hikvision, because the US says the company can spy on customers — an allegation Huawei denies.

Reuters