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U.S., China Walk Narrow Path on Trade -- WSJ

19 Jul 2017 6:33 am
By Jacob M. Schlesinger 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 19, 2017).

WASHINGTON -- As the Trump administration prepares for its first formal economic talks with China here Wednesday, Chinese officials highlighted their ability to quell trade tensions with the new American president, while some U.S. business groups expressed concern their government might not push Beijing hard enough.

After Donald Trump's November election, "many kept their fingers crossed, worrying that China-U.S. trade relations would enter a stormy...winter and even run the risk of a trade war," Chinese Vice Premier Wang Yang told a luncheon of business executives here Tuesday.

But Mr. Trump has since dropped his threats to impose drastic penalties against Chinese imports -- an across-the-board tariff, or a formal charge of currency manipulation -- and has so far focused on small market-opening agreements, instead.

Both sides will likely discuss Wednesday a new list of specific sectors where they can announce new China market access for U.S. firms. The first round in the new "U.S.-China Comprehensive Dialogue," will be led by Mr. Wang and two top Trump economic aides: Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin.

"Our economic teams have built mutual trust...featuring mutual respect and win-win cooperation," Mr. Wang said.

U.S. business groups, which had originally braced for the hostilities Mr. Wang referred to, are now growing worried the Trump administration may not press China hard enough for broad reforms they consider necessary to pry China's economy open.

"Much more needs to be done," Thomas Donohue, president of the U.S. Chamber of Commerce, said at the outset of the luncheon hosted by his organization.

In advance of this week's talks, the group submitted a report to Trump officials praising them for "a good start," but adding "additional near-term outcomes need to be more far-reaching in scope and benefit."

Many executives say they're prodding the administration to craft a broader, strategic approach to addressing Chinese structural barriers, rather than the "transactional" case-by-case tack taken so far, which, they say, may benefit specific companies without addressing deeper concerns U.S. companies have with opaque Chinese regulations and industrial policies.

Business groups have also expressed disappointment in the limited gains from a handful of market-opening measures in agriculture and finance announced in May as an early down payment in the new "economic dialogue."

Mr. Trump's tone on China changed markedly as he hosted Chinese President Xi Jinping at his Mar-a-Lago resort in Florida in April. At the time, Mr. Trump noted the friendship he struck up with his counterpart, and suggested that he would cut China some slack on trade issues in exchange for Mr. Xi's cooperation reining in North Korea's nuclear program.

Mr. Trump has since expressed disappointment in Beijing's handling of Pyongyang, and has threatened to impose tariffs on steel imports to fight China's massive overcapacity in that sector. But his aides continue to signal a desire to work harmoniously with their Chinese counterparts, avoiding confrontation.

"Even though we may occasionally disagree on individual items, we have fundamental shared objectives," Mr. Ross told the luncheon Tuesday, saying, "our working relationship is better today than it has been in many decades."

A Treasury Department spokesman said that the "general tracks" of the Wednesday meetings will be trade and investment, macroeconomic policy, the financial sector, and global economic developments, while the main focus will be "the bilateral trade relationship."

People familiar with agenda say it will include talks on Chinese steel overcapacity, subsidies for agriculture and electric batteries, regulations governing the auto industry and government control of private-sector data.

Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com

(END) Dow Jones Newswires

July 19, 2017 02:33 ET (06:33 GMT)

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