U.S. Wrangles China for Firm Commitments as Trade Talks Continue

The administration has been searching for concrete, commercially based criteria for performance outcomes — not just superficial legal changes that leave no impact on the ground. For example, even though China has changed laws to allow foreign companies greater access to its markets, a variety of regulatory barriers and licensing requirements continue to prevent foreign companies from operating freely, said Scott Kennedy, a China scholar at the Center for Strategic and International Studies.

“Even if they could agree to some sort of standards on structural reforms, having them come to agreement on what enforcement would look like, that’s even further of a stretch,” Mr. Kennedy said of the talks.

Both countries have also floated measures that could undermine years of efforts aimed at making China’s economy more market oriented. The offers include large state-directed purchases of technological goods, natural gas and soybeans, as well as closer management of China’s currency. Those measures would violate Chinese promises to the World Trade Organization and the International Monetary Fund.

But that may matter little to Mr. Trump, who has been largely focused on narrowing the trade gap between the two countries by getting China to buy more American products. The United States’ trade deficit with China is likely to increase in 2019, said Derek Scissors, a resident scholar at the American Enterprise Institute, increasing pressure on Mr. Trump to reach a deal that involves more American products flowing East.

“It’s coming from, how do we close the bilateral goods deficit really fast,” Mr. Scissors said. “We need large, quick purchases from the Chinese so the president isn’t ripped to pieces for violating the metric he ran on in 2016.”

China’s recent offers have included buying $200 billion of American semiconductors over the next six years, in addition to purchases of soybeans and natural gas. The eye-popping figure would help to reduce the $382 billion trade deficit in goods that the United States ran up with China last year, a metric that Mr. Trump often sees as evidence of a failed economic relationship.

In return for buying more American products, the Chinese have asked Mr. Trump not to follow through on his threat to increase tariffs to 25 percent from 10 percent — and to hopefully remove the tariffs entirely. They have also pushed the United States to remove restrictions on exports of high-tech products to China as well as constraints on Chinese investments in the United States.

Article source: https://www.nytimes.com/2019/02/21/business/economy/china-us-trade-talks.html?partner=rss&emc=rss