Business Essentials for Professionals


China Pledges To Curb Market-Distorting Subsidies Without Details: Reuters

China Pledges To Curb Market-Distorting Subsidies Without Details: Reuters
Those subsidies to its domestic industries that allegedly distort the market would be stopped by China, said the second largest economy of the world according to a report published by Reuters. The report, based on information gathered from three people familiar with the U.S.-China trade talks in Beijing this week, however did not provide nay details about how that would be done.
According to the news report, bringing all subsidy programs into compliance with World Trade Organization (WTO) rules had been pledged by China. However, there was sceptic reaction to the pledge by the U.S. trade negotiators partly because disclosure of its subsidies has been refused to be revealed by China for long.
According to the report, sources have said that it would not be fully possible to judge and implement such a pledge if the outside world had no exact knowledge or information about the how industries and state-run companies are financed by the Chinese government.
One of the major challenges in bringing an end to the seven-month trade war would be to ensure that the pledges and promises made by China in some of the contentious issues are implemented in a concrete manner.
The Reuters report further claims that there has been little progress in the U.S. demands for structural reforms in the Chinese trade policies during the four days of negotiations that was recently concluded this week in Beijing. Apart from bringing an end to state subsidies, the US is also demanding that China take up measures to stop its policy of forced transfer of US technology to local Chinese companies through joint ventures in China and theft of American trade secrets and intellectual properties.
The report carried no comments from US trade negotiation team or the US government or the Commerce Ministry of China.
A meeting between Chinese president Xi Jinping and the top two U.S. negotiators, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin was held in Beijing following the end of the meeting on Friday.
The Trump administration is set to increase import tariffs on Chinese products worth $200 billion from 10 per cent to 25 per cent if the negotiations failed to yield any positive results by March 1 this year.
For U.S. Trade Representative Robert Lighthizer, one of the priority issues is curbing of state subsidies to domestic industries by the Chinese government.  If China continues with its current industrial policies, the economic future of America would be sharply diminished, Lighthizer has said earlier. Such situations would also challenge and possibly subdue dominance of the US firms in high-technology industries.
The report also quoted sources saying that China has failed in its obligations to report state subsidies ever since China joined the WTO in 2001. “What they offered to do was to actually take it seriously,” said the report quoting sources who mentioned about the recent pledges by China about adhering to the WTO requirements.
“The Chinese are looking for ways to check the box and say, ‘We are addressing your subsidy and industrial policy questions,’ without changing their system,” the reported quoted the source as saying.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc