The United States and China have agreed to cooperate on reducing the trade deficit in the first round of economic talks under the Trump administration, Washington said at the conclusion of the meeting Wednesday which produced no major breakthroughs.
Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin had opened the talks between the world’s top two economies with tough demands for a more “fair, equitable and reciprocal” relationship, with more access for American-made goods and services.
The US side blamed the unbalanced relationship — marked by a trade deficit with China of $309 billion last year — on Beijing’s policies that impede access to their market. China says Washington’s own rules restricting US high-tech exports are partially to blame.
But Ross and Mnuchin took a more measured tone in a statement following the conclusion of the talks with the Chinese delegation, led by Vice Premier Wang Yang.
“China acknowledged our shared objective to reduce the trade deficit which both sides will work cooperatively to achieve,” the two officials said in a joint statement.
“The principles of balance, fairness, and reciprocity on matters of trade will continue to guide the American position so we can give American workers and businesses an opportunity to compete on a level playing field.”
In his remarks at the one-day meeting’s opening ceremony, Ross had insisted change was necessary given the more than 200 percent surge in Chinese exports to the United States in the last 15 years.
“If this were just the natural product of free market forces, we could understand it, but it’s not,” Ross said.
“So it is time to rebalance our trade and investment relationship in a more fair, equitable and reciprocal manner.”
The tough talk seemed like a return to Trump’s message during his campaign, when he attacked Beijing for unfair trade practices. However, a meeting with Chinese President Xi Jinping at his Florida resort in April had prompted a change of rhetoric and the launch of a 100-day economic cooperation plan.
That led to specific but narrow achievements, including opening the Chinese market to US beef exports, and pledges to remove barriers to US credit card transactions, credit ratings, and other financial services, including bond underwriting.
– ‘Fundamental asymmetry’ –
The discussion mechanism is a continuation of regular talks undertaken by the previous two administrations, which the Trump administration has rebranded as the US-China Comprehensive Economic Dialogue (CED).
Ross said China accounts for half of the US goods trade deficit and Mnuchin said Beijing must address “the imbalances caused by the Chinese intervention in its economy.”
Mnuchin said the talks with Wang would focus on concrete steps to provide greater access and a “level playing field” for US companies in the world’s second largest market.
Improving US-China trade in turn “will create prosperity for our two countries and the world,” he said.
But China experts were skeptical the talks would make headway in the near term, and cautioned the US goals may be over-ambitious.
– Dialogue over confrontation –
David Dollar, a former US Treasury emissary to China, said, “It takes two sides to make an imbalance.”
Although China “has various distortions that keep consumption low, and savings high,” to reduce the trade deficit the United States will have to “save more through reduced fiscal deficit” and stronger incentives for private savings.
Wang seemed to hint at the US to not press too hard, noting the importance of the two countries “having dialogue, not confrontation.”
“We don’t need to defeat each other in handling differences,” he cautioned, stressing that “confrontation will immediately damage the interests of both” countries.
However, in a speech to a business group the day before the talks, Wang said US policies were partly to blame for the high trade deficit.
He said “there is huge market potential to tap for US exports of advanced technologies, key equipment and critical parts to China. Unfortunately, American businesses have not had their fair share of the ‘cake’ due to outdated US regulations on export control.”
US rules restrict export of certain high-tech goods to China and other countries when there is a potential for military uses.