US, China Agree to Cut Trade Deficit 05/20 10:33
The United States and China have agreed to take measures to "substantially
reduce" America's massive trade deficit with China, but the Trump
administration failed to get the Chinese to commit to a specific numerical goal.
WASHINGTON (AP) -- The United States and China have agreed to take measures
to "substantially reduce" America's massive trade deficit with China, but the
Trump administration failed to get the Chinese to commit to a specific
Still, the talks, which began Thursday and ended Saturday with the issuance
of a joint statement, may have helped to ease tensions at least slightly
between the world's two biggest economic powers. In recent months the two have
threatened to impose punitive tariffs on billions of dollars in each other's
In the statement, Beijing committed to "significantly increase" its
purchases of American goods and services, saying that the increase would "meet
the growing consumption needs of the Chinese people and the need for
high-quality economic development." The two countries also agreed on
"meaningful increases" of U.S. agriculture and energy exports and greater
efforts to increase trade in manufactured goods and services. The United States
said it would send a team to China to work out the details.
The statement, however, provided no dollar amounts on how much China might
boost its purchases of American products. Lawrence Kudlow, head of the
president's National Economic Council, had told reporters Friday that a
reduction in the trade gap of at least $200 billion by 2020 was a "good number."
Last year, the United States had a record deficit with China in merchandise
trade of $375 billion, the largest with any nation.
Saturday's statement also was silent on whether the talks had made progress
in easing a developing tit-for-tat trade war in which each nation threatened to
impose punitive tariffs.
Trade analysts said it was highly unlikely that China would ever agree to a
numerical target for cutting the trade gap between the two nations, but they
said the talks likely were more successful in de-escalating recent trade
"It is likely that this agreement, weak and vague though it is, will serve
as grounds to at least delay the imposition of tariffs," said Eswar Prasad, an
economist and trade expert at Cornell University.
"The Trump administration seems eager to engineer at minimum a temporary
peace with China to ensure a smooth runup to the Kim-Trump summit in June,"
Prasad said, referring to the June 12 meeting between President Donald Trump
and North Korea's leader.
The Washington talks, which followed a high-level meeting last month in
Beijing, were led on the Chinese side by Vice Premier Liu He and on the
American side by Treasury Secretary Steven Mnuchin. The U.S. delegation
included Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert
Trump campaigned in 2016 on a pledge to get tough on China and other U.S.
trading partners. He views the massive U.S. trade deficit with China as
evidence that Beijing is engaged in abusive trading practices and has
outmaneuvered previous U.S. administrations.
Last August, Lighthizer began an investigation into Beijing's strong-arm
tactics to challenge U.S. technological dominance. These include outright
cybertheft of U.S. companies' trade secrets and China's demands that American
corporations hand over technology in exchange for access to the Chinese markets.
Last month, the administration proposed tariffs on $50 billion of Chinese
imports to protest the forced technology transfers. Trump later ordered
Lighthizer to seek up to an additional $100 billion in Chinese products to tax.
China responded by targeting $50 billion in U.S. products, including
soybeans --- a shot at Trump supporters in America's heartland. The prospect of
an escalating trade war has shaken financial markets and alarmed business
In a separate controversy, the Commerce Department last month blocked
China's ZTE Corp. from importing American components for seven years, accusing
the telecommunications company of misleading U.S. regulators after it settled
charges last year of violating sanctions against Iran and North Korea.
The ban amounted to a death sentence for ZTE, which relies heavily on U.S.
parts, and the company announced that it was halting operations. A week ago,
Trump tweeted that he was working with Chinese President Xi Jinping to put ZTE
"back in business, fast." Media reports suggested that the U.S. was offering to
swap a ZTE rescue for an end to proposed Chinese tariffs on U.S. farm products.