US-China trade talks end with a long list of demands from US; China State Media sees positive development

Trade talks between the United States and China, led by US Treasury Secretary Steven Mnuchin and Chinese Vice-Premier Liu He on Friday, May 5, 2018, resulted in not many tangible achievements other than both the nations agreed upon having more dialogue in the future over US-China trade war.

A list of dramatic concessions demanded by the US at the meeting that would possibly challenge the core elements of China’s economic system and its ambitions for future development is even anticipated by the trade analysts to have no solution to the trade war between the two large economies.

In addition to demanding state subsidies halt from China for industries under its ‘Made in China 2025’ plan, the United States has even asked China to solve US's trade deficit by at least US$200 billion by the end of 2020. It also called on Beijing not to take retaliatory trade measures against Washington.

“The US is too demanding. The difference is too much. The problems cannot be solved by China over a short-run nor could they be solved merely by China without coordination from the US,” a trade policy adviser to the Chinese government said after the talks.

Moreover, the US will finalise its punitive tariff list of US$50 billion worth of Chinese products later this month, while the Treasury Department is planning to introduce proposals on May 21 to restrict Chinese investment in the US and US investments in China.

Wei Jianguo, Chinese former vice commerce minister, was of the opinion at the end of the meeting that it is beyond the Chinese government’s reach to engineer such a rapid reduction in the deficit. He also said the U.S. side might not understand the Chinese government and think it has unlimited power to make any decision.”

Chinese state media, however, has concluded a positive note out of the trade talks, claiming that the two days of talks emerged with an agreement to establish a mechanism to keep the dialogue open.

A Chinese daily in English language has reported that the biggest achievement was "the constructive agreement between Beijing and Washington to keep discussing contentious trade issues, instead of continuing the two-way barrage of tariffs, which pretty much brought the two countries to the brink of a trade war".

While speaking at the University of International Business and Economics in Beijing, a trade professor Tu Xinquan made a comment that the purpose of this trade talks for both nations was to state their respective positions clearly. He said both countries needed time to consider each other’s demands “one by one”.

UBS Group chief China economist Wang Tao said in a note: “In the next couple of months, we expect continued negotiations are likely to result in a scaleback of the current proposal on tariffs as China quickens its implementation of some announced opening and reform measures. As a result, we expect any direct impact on exports and economic growth from higher tariffs will be limited.”