China offers to reduce trade surplus with US by $200 bn: report
19 May 2018
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China may buy up to $200 billion worth of American goods to reduce its massive trade surplus with the United States as the world's two largest economies started a round of high-level trade talks, says a media report.
The compromise follows intense pressure from the Trump administration and the threat of a looming trade war with the US proposing 25-per cent tariffs on up to $150 billion worth of Chinese goods and China targeting $50 billion in American exports.The two countries have not yet implemented their tariff increases in the hope of reaching a negotiated settlement.
A high-level Chinese delegation led by Vice Premier Liu He is reported to have concluded trade negotiations with the US in Washington.
Liu also called on US President Donald Trump at the White House on Thursday.
"Chinese negotiators are preparing to offer the administration a deal to buy up to $200 billion worth of American goods, which would allow Trump to claim victory in his campaign to reduce the trade deficit with China and rebalance America's trade relationship with its biggest economic rival, according to people briefed on the deliberations," The New York Times reported.
The Chinese offer to buy American goods worth $200 billion, however, remains a promise that is most likely to remain illusory, the report quoted economists as saying. Besides the structural hurdles in China to buying more American goods, the United States would need to produce huge amounts of goods to meet Chinese demand, which could again pose structural hurdles in the US, it added.
Chinese foreign ministry spokesman Lu Kang, however, said in Beijing that the "rumours are false" and the "consultations are indeed still in progress and the talks are constructive."
Lu also said the decision to drop the sorghum probe should not be "over-interpreted."
The White House said the US officials conveyed the President's clear goal for a fair-trading relationship with China.
The US delegation is led by Treasury Secretary Steven Mnuchin. It also includes Commerce Secretary Wilbur Ross and US Trade Representatives Robert Lighthizer.
"The United States officials and the Chinese delegation also participated in a meeting with President Donald J Trump at the White House. The two sides agreed to continue the discussions on Friday," the White House said.
Under the deal being discussed, China would pledge to buy substantially more American goods, including agricultural products like soybeans, as well as semi-conductors and natural gas, according to The New York Times.
"That could theoretically reduce its trade surplus with the United States, which hit $372.5 billion last year, by up to $200 billion, though the real number would most likely be lower," it said.
In return, China is asking the US to set aside tariffs and investment restrictions it has threatened against Chinese companies, the report said.
The US Congress, meanwhile, is looking set to advance a bill that would give the US greater power to block deals between American and Chinese companies that could risk national security, The Wall Street Journal said.
The US, the world's largest economy, has a trade deficit of almost $500 billion with the world's second largest economy China.
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