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Trade Talks Between The U.S. And China Stalled

Jun 4, 2018
Originally published on June 4, 2018 9:39 pm
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Only two weeks after the U.S. and China called a truce in their fight over trade, things are really tense again, and negotiations are deadlocked. Commerce Secretary Wilbur Ross returned from a weekend of talks in China apparently with very little to show for it. NPR's Anthony Kuhn reports from Beijing.

ANTHONY KUHN, BYLINE: Secretary Ross and his team left Beijing without comment. The Chinese side issued a seemingly contradictory statement, saying that progress had been made, but nothing had been agreed to by either side. The U.S. wants China to buy more American products such as pork and natural gas in order to reduce the U.S. trade deficit with China. Tu Xinquan, a trade expert at the University of International Business and Economics in Beijing, says Beijing is running out of room to maneuver.

TU XINQUAN: (Foreign language spoken).

KUHN: "China has already made a lot of concessions on food and energy imports," he says. "Domestic opposition to more imports is already very strong." On May 19, the White House announced that China had agreed to buy more American goods. As a result, the U.S. appeared to put $50 billion in tariffs on Chinese exports on hold. But less than two weeks later, the U.S. said it would move ahead with the tariffs. On Saturday, China said that if the U.S. does that, then they can forget about China importing more U.S. stuff. Tu Xinquan said the whole thing caught China a bit off guard.

TU: (Foreign language spoken).

KUHN: "It was unexpected because a president should honor his word," he comments. "But President Trump not honoring his word is quite normal, so in that sense it was not unexpected." Another bone of contention is the case of ZTE, China's second-largest telecommunications firm. They were caught exporting products to Iran and North Korea in violation of U.S. sanctions.

Washington choked off ZTE's supply of U.S.-made microchips, bringing the company's production lines to a halt. This enraged China. President Trump has since indicated he might let ZTE off the hook. Hong Kong University of Science and Technology professor Ding Xueliang says the ZTE case is painful for China not just because it could cost thousands of jobs but because it punctures China's illusions of its own technological prowess.

DING XUELIANG: (Foreign language spoken).

KUHN: "China's industry has made progress," he says, "but it's been massively exaggerated by government propaganda." China's response has been to double down on Made in China 2025. That's a program to subsidize Chinese companies to make their own high-tech products so that nobody else can cut off their supply. Those are precisely the products that the Trump administration intends to hit with tariffs. Ding Xueliang says that Made in China 2025 sounds futuristic, but it's really just old hat.

DING: (Foreign language spoken).

KUHN: "Every leader since the founding of the People's Republic has preached self-sufficiency in key technologies," he notes. In other words, Ding says, the ZTE case should be China's Sputnik moment. It should trigger a broad rethink of China's economic policies. But unfortunately, he says, there are no signs of that happening so far. Anthony Kuhn, NPR News, Beijing.

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