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BEIJING – When Chinese Vice Premier Liu He, the head of the trade negotiations team with the United States, landed in Washington Mondayfor a series of critical discussions this week, what greeted him was not as well received as by a broadband.
At the time of his delegation's visit, the Ministry of Justice was unveiling allegations that Chinese telecommunications giant Huawei Technologies had stolen intellectual property in the United States – one of the United States' long-standing grievances about China's commercial and industrial practices.
Whether it's wanted or not, two new US indictments against a Chinese conglomerate covering the world cast a shadow on the blackboard a critical turn ofinterviews this week between bargaining teams led by Liu and US Trade Representative Robert E. Lighthizer.
The indictments also added a feeling in both capitals: the American-Chinese rivalry is in full swing and that an ambitious deal that would satisfy Presidents Trump and Xi Jinping may not come to fruition this week, even though the two sides agreed on a temporary truce.
negotiators this week hope to reach an agreement that could at least avoid a further 25% levy on Chinese goods worth $ 200 billion – tariffs that Trump ordered to start on March 2, in the absence of an agreement.
"I'm not saying that there will be a terrible confrontation between the two countries at the end of the negotiations, but it could be a standby volcano that becomes active every few months and adds uncertainty in trade and the global economy, "Zhang Yansheng, secretary general of the academic committee of the National Development and Reform Commission, China's powerful economic planning body, told reporters on Tuesday.
Although China has proposed significant purchases of US exports to close the trade deficit and promised to fight against the theft of intellectual property – problems highlighted by the AmericanHuawei's indictment – it has not yet come up with an acceptable mechanism for the US to hold him accountable for these promises, according to experts and representatives of professional groups who have spoken to negotiators US.
In addition, the more fundamental demands of the United States to invite China to open its market, to cut the direction of the government and to support public enterprises – a fundamental principle of the closely managed economic model of the Communist Party – remain a reality for Beijing. .
"There is still a significant gap with regard to structural and technology transfer issues," said a representative of an American professional badociation who recently met Lighthizer and spoke under the guise of anonymity to discuss a private conversation. "It does not seem that the big gap that everyone knows exists exists has been reduced in any way."
This week's discussions will be led by Lighthizer, a trade man who is deeply skeptical about China's willingness to change its business practices and privately denounced the progress made to date.
Discussions in the Eisenhower administration building, adjacent to the White House, suggest that the slowdown in the Chinese economy is hurting some US companies.
Computer chip maker Nvidia spoke of "the deterioration of the macroeconomic environment, especially in China" on Monday, while he had reduced by 500 million dollars the estimate of his turnover. for the fourth quarter.
Similarly, Caterpillar has missed its quarterly earnings target for more than 10 years after the drop in construction equipment sales in the Asia-Pacific region "due to lower demand in China".
Although there is a temporary agreement to purchase large quantities of US agricultural products from China, the question of how to enforce measures such as the protection of intellectual property remains a major concern. Lighthizer discussed the use of the threat of new tariffs to ensure compliance, an idea that the Chinese reject as creating uncertainty about future trade and investment flows, according to people familiar with the negotiations.
Meanwhile, in China, badysts and state-run media reiterated that Beijing would not budge in the face of profound changes in its economic model sought by the United States.
"There is great uncertainty" about the possibility of concluding an agreement with the United States, said Wang Yong, a professor at the Peking University School of International Studies. "Judging by the current Chinese domestic policy, it can be said that the possibility of making a very clear promise to the United States, the possibility of making a concession, is relatively small."
The United States must reduce their demands and give more time to China, said Wang Yong, a professor at the School of International Studies at Peking University. "For China, it has had its development model for so many years," he said. "Reform or adjust is not the work of a single day."
In recent weeks, Xi sent signals to the Communist Party during study sessions with executives for firmlydefend China's existing model and prepare for "political risks," said Scott Kennedy, China expert at the Center for Strategic and International Studies (CSIS).
"The Chinese have given no sign of commitment to full market liberalization, and recently the signals are only intensifying," Kennedy said. "If they are preparing to make major concessions and engage in intensive marketing, they keep the secret astonishing."
At a time when Chinese leaders are preparing the country for the prospect of a protracted struggle with the United States, the indictments against Huawei, an icon of China's technological prowess, have reinforced their rallying cry.
An indictment of 13 charges filed in New York against the company, two subsidiaries and its financial director, Meng Wanzhou, details allegations of bank and wire fraud. Another indictment in Washington State also charges Huawei's two affiliates with conspiracy to steal trade secrets and obstruction of justice.
On Monday, separately, US officials formally asked Canada to extradite Meng, who is wanted in the United States accused of defrauding banks to evade US sanctions against Iran. Beijing was outraged by the US lawsuit against Meng, daughter of Huawei founder Ren Zhengfei.
"The Chinese have clearly described this in the state media as a political game and they will try to use it in the interior of the country as another example of American political conspiracy," said Andrew Collier. from Orient Capital Research, a financial company based in Hong Kong. "But behind the scenes, their negotiators will pedal furiously, trying to get the niche out of the bargain."
[Trump team weighs surprise tariff cut in hopes of securing China trade deal]
Lester Ross, a long-time member of the US Chamber of Commerce in Beijing and head of the Wilmer Hale law firm in the city, said Chinese leaders want to complete negotiations this week. and seek an agreement at a time when its economical engine is spraying.
"The Chinese seem determined to continue on the path of trade despite the unease of the Huawei case," Ross said.
Some US officials, including Secretary of Commerce Wilbur Ross, who has pleaded for an agreement with China as soon as possible, have also downplayed the link between trade negotiations and law enforcement actions against Huawei. , in progress for years.
Trump – whose approval ratings have dropped during the partial closure of the government – is eager to reach an agreement that he can describe as a great feat, according to several people close to the discussions at the White House who were not allowed to discuss them publicly.
His administration remains divided between trade hawks, such as Lighthizer and White House advisor Peter Navarro, who are determined to force China to make fundamental changes to its regime. led by the stateeconomic model, and those, such as the Treasury Secretary, Steven Mnuchin, who wish to avoid further disruptions in global trade flows and calm roll Financial markets.
At the White House on Monday, Mnuchin said he expects "significant progress" this week. The talks will focus on US concerns over intellectual property protection, Chinese regulations governing joint ventures with foreign companies, and enforcement measures, he said.
"We expect the agreement to be applied when we have an agreement," he said. "China acknowledged that she understood that."
Still, Lighthizer's presence at the bargaining table this week This could mean that the conclusion of an agreement will not be easy. Trump told the trade representative that he had signed several agreements, including pacts with Canada, Mexico and South Korea, while the president had rejected Mnuchin and Ross's previous attempts to deal with China, Kennedy said. of CSIS.
"The Chinese may have the wrong impression that the president will change advisors by day of the week, that he has no bottom line, or that he is more concerned about the stock market than about economic problems. fundamental, "says Kennedy. "I think it's a bad reading of the landscape in Washington."
Liu Yang and Yuan Wang contributed to this report.
Read more:
Justice Ministry accuses Huawei of fraud and intensifies tensions between the United States and China
Huawei top executive may be extradited to US after arrest in Canada
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