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Key Differences Between U.S.-China Remain Unresolved After End Of Trade Talks

Key Differences Between U.S.-China Remain Unresolved After End Of Trade Talks
There was little outcome except an agreement to keep talking after the two days of talks between the United States and China on trade.
Representatives from both the countries acknowledged major disagreements on some issues while they also managed to come to an agreement on some trade issues, reported China’s official Xinhua News Agency on Friday afternoon. While claiming that the two parties had agreed to hold further talks in the future, the report did not specify when those talks would be held. There was no media briefing from any side.
Continued tensions between the two largest economies of the world means that the world markets would continue to be under pressure even though no one expected a cure all solution from the talks as yet. The big question following the talks is whether the U.S. has been able to satisfy itself with enough wins to refrain President Donald Trump from imposing fresh tariffs in Chinese goods worth $150 billion imported into the U.S.
“A disagreement over trade practices that has built up over more than two decades will take much more than two days to resolve,” said Shane Oliver, the head of investment strategy at AMP Capital Investors Ltd. in Sydney. “A negotiated solution remains most likely but it will take time with a lot of posturing and near-death moments along the way.” The U.S. wanted to reduce the trade deficit that it has with China which reached a record $375 billion last year while they went into the talks.
According to media reports, the issues that the U.S. delegation focused on in the trade discussions included reduction of the trade deficit between the two countries to about $200 billion by 2020, allowing indiscriminate access to Chinese market for the U.S. companies and reduction of support for the high-tech industries by China. Additionally, it also requested china to drop two cases filed by it with the World Trade Organization and avoid any retaliation.
Sources and the media also reported that the Chinese delegation which was led by the Vice Premier Liu He, asked the U.S. to stop discriminating against Chinese companies in its national security reviews, forsake the planned and announced 25 per cent tariffs on Chinese goods and abruptly stop the 301 investigations into Chinese intellectual property abuses. Approval of China International Capital Corp’s application for a financial license and opening of the U.S. e-payment market was also sought by the Chinese trade representatives. 
Sources further said that the Chinese authorities have warned that American companies may be left out of its decision of reducing investment restrictions in case the Trump administration does not provide equal treatment to Chinese companies.
“The U.S. demand of cutting the trade gap is baseless, and can’t be done by the Chinese government,” said He Weiwen, deputy director of the Center for China and Globalization in Beijing and a former Commerce Ministry official. “It’s at least good the two sides decided to keep talking, though one can’t rule out the possibility of a trade war.”
There were however some notes of optimism sounded by both sides. They agreed a “sound and stable” trade relationship is crucial, and planned to “establish a corresponding work mechanism,” Xinhua said.
“The U.S. has gone off the deep end by asking for too much,” said Brian Jackson, China director at Medley Global Advisors LLC, which gives policy guidance to institutional investors. “They’ve asked for $200 billion off the deficit in a very short timeframe. For me that’s a deal-breaker for the Chinese. If you state such an extreme starting position, you know you can’t get somewhere reasonable.

Christopher J. Mitchell

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