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US-China Trade Talks

Senior US and Chinese officials are meeting in Washington in an attempt to settle their ongoing trade war.

➢ There are lot of issues to address like tariffs on specific products, Intellectual Property (IP) theft, global supply chains etc.

➢ Since trade negotiations between them broke down in May 2019, both countries have added tariffs on each other’s goods.

➢ This is compounded by broken good faith promises, and by trading public insults.

➢ The trade war has hardened into a political and ideological battle that runs far deeper than tariffs and could take years to resolve.

Issue of Tariff

➢ The Trump administration has rolled out stiff tariffs on Chinese imports since 2018, believing it gives White House officials leverage in talks.

➢ Chinese officials want these wiped out before they agree to any deal.

➢ The US has put 25% tariffs on some $250 billion of Chinese products, and China has retaliated with tariffs on $110 billion of US imports.

➢ The US is scheduled to raise existing tariffs to 30% in October 2019 and tax another $156 billion in products in December.

➢ Both sides made some concessions ahead of this week’s talks by suspending some planned tariffs, in a sign of goodwill.

Blacklists and bans

➢ Beijing is smarting from Trump’s decision to blacklist Huawei, the telecommunications equipment maker, which effectively banned US firms from doing business with the company.

➢ It has prompted many non-US-based companies to cut their own ties to the firm.

➢ China wants the US to lift those restrictions but the US is lobbying other countries to reduce dealings with Huawei.

➢ Legislation in the US Congress would prevent Chinese rail company CRRC and drone-maker DJI from bidding on US contracts that involve federal money.

➢ China has said it would draft its own list of foreign companies that it deems had harmed Chinese companies.

➢ China has indicated it may strike back through limiting rare earth supplies to the United States.

➢ Rare earth, are minerals important to manufacturers of high-tech consumer goods and China is the dominant supplier.

➢ Trump has called on US companies to pull manufacturing facilities out of China.

Intellectual property (IP) and technology transfer

➢ Before the talks broke down in May 2019, US officials had said the two sides made progress on IP protection and that China made proposals on a range of issues that went further than Beijing had gone before.

➢ They also added that China for the first time discussed forced technology transfer as a widespread problem.

➢ US companies complain they are pressured to hand over their competitive secrets as a condition for doing business in China.

➢ US officials also cited progress on cyber theft, services, currency, agriculture, and non-tariff barriers to trade.

➢ After the deal fell apart, China had backtracked on commitments on digital trade issues, including the US access to cloud computing services in China.

➢ China isn’t willing to negotiate on the fundamental way that it manages the country’s economy, including support for state-owned enterprises and subsidies.

Outcome

➢ China is determined to upgrade its industrial base in 10 strategic sectors by 2025, including aerospace, robotics, semiconductors, artificial intelligence, and new-energy vehicles.

➢ One of the biggest US complaints is that China has used coercion and outright theft to systematically obtain American IP and trade secrets and advance its standing in many high-technology industries.

➢ China’s subsidies to state enterprises have led to a build-up in Chinese industries like steel that has depressed global prices and hurt producers in the US and elsewhere.

➢ US officials argue that makes it hard for US companies to compete on a market-driven basis.

➢ Chinese officials generally view the US actions as a broad effort to thwart the Asian country’s rise in the global economy.

➢ They previously denied China required or coerced technology transfers, saying that any such actions are commercial transactions between American and Chinese firms.

➢ The Trump administration has aggressively stepped up prosecutions of IP cases and scaled back visas for Chinese students and researchers.

➢ US lawmakers are writing bills that limit visas, banning students with ties to the Chinese military.
Chinese authorities reject such accusations.

➢ In June 2019, Beijing warned students and academics about risks in the US, pointing to limits on the duration of visas and visa refusals.

➢ It warned companies operating in the US they could face harassment from US law enforcement, gun
violence, robberies, and thefts.

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