Just hours before trade talks

Muriel Colon
August 24, 2018

Last month the USA electric vehicle maker announced plans to build a new plant in Shanghai, the first in China that will be wholly owned by a foreign company.

Beijing has denied USA allegations it systematically forces the unfair transfer of US technology and has said it adheres to World Trade Organization rules.

U.S. President Donald Trump has threatened to put duties on nearly all of the more than $500 billion in Chinese goods exported to the United States annually unless Beijing agrees to sweeping changes to its intellectual property practices, industrial subsidy programs and tariff structures, and buys more U.S. goods.

The most painful perhaps is the tariff on USA soybeans, which chokes off a key export market for American farmers, who shipped US$14 billion of the beans to China a year ago.

Trump has warned that he could tax up to $550 billion in Chinese products, exceeding the US' total imports from China during 2017. The US Trade Representative is now hearing arguments for and against imposing duties on some $200bn worth of Chinese imports.

Trump also has accused China of manipulating its currency to combat United States tariffs.

U.S. Treasury officials have been working on a revised list of American demands in the lead-up to this week's meetings, according to people familiar with the U.S. preparations.

Businesses in China are also feeling the effects of the trade war, which has weighed on the country's financial markets.

Trump started his trade war with China in March by imposing higher tariffs, after saying an investigation had found that China is using foreign ownership restrictions to require tech transfers from USA to Chinese companies, as well as conducting espionage to acquire intellectual property.

U.S. Treasury's David Malpass, undersecretary for worldwide affairs, is leading two days of talks, which began Wednesday, with China's Vice Commerce Minister Wang Shouwen and Chinese Vice Finance Minister Liao Min.

Some commentators also struck a note of caution for China in taking tit-for-tat approach.

President Donald Trump himself has played down expectations in recent days.

"We hope the United States can make concerted efforts with China and follow a rational and practical attitude to earnestly seek good results", foreign ministry spokesman Lu Kang said at a regular news briefing.

The administration has already been forced to announce a $12 billion aid programme for farmers hurt by the trade row, as U.S. agricultural products, like soybeans, were an easy target for China and others.

The day before, however, Trump told Reuters that there's "no time frame" for ending the trade dispute, and that he doesn't "anticipate much" from the trade negotiations in Washington.

"China resolutely opposes this, and will continue to take necessary countermeasures", it said in a brief statement. In response, the Chinese delegation could this week offer a private pledge not to let the currency weaken further as long as negotiations continue, said Derek Scissors, a China expert at the American Enterprise Institute in Washington.

China's list of 333 US product categories hit with duties includes coal, copper scrap, fuel, steel products, buses and medical equipment.

"By further reducing the supply of these products in the United States, the proposed tariffs threaten higher prices for USA consumers and a higher level of contaminants in American drinking water, food chain, waste water, and chemicals", said CEO Stefan Brodie at a hearing last month.

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