MNI: China Seen Open To Reforms With US Trade Meet In Sight

U.S. Trade Representative Katherine Tai is likely to meet her Chinese counterpart next month, policy advisors in Beijing told MNI, adding that the two may negotiate a fresh two-year trade pact but punitive tariffs on its goods would remain given Washington's hardening stance.

A schedule for the meeting could be announced late in May, said an advisor who wished to remain anonymous. Two other advisors said Hu Chunhua, another vice premier, will likely participate in the meeting. The Ministry of Commerce has denied a Wall Street Journal report that Hu is set to replace Liu He, China's chief trade negotiator thus far. Hu's inclusion in the meeting does not signal a change in China's position, which is a cancellation of tariffs for any meaningful deal, they said.

Tai recently said she expects to engage in the near term with Chinese officials and that tariff reductions will hinge on Beijing's implementation of the phase one pact. The deal, which was last discussed in August as part of a six-monthly review, ends in December.

In general, advisors view the pact's quotas as unrealistic although they expect purchase commitments will feature in any negotiations. Escalating tensions with Washington pressuring Beijing on issues ranging from human rights to the South China Sea mean China will no longer initiate any conciliatory gesture but leaders may be more amenable to further reforms in areas highlighted in the latest five-year plan to secure a pact, they said.

PRIORITIES

China has fallen short of purchase commitments for commodities as Covid-19 battered its economy and disrupted global supply chains. Still, imports from the U.S. expanded by USD30 billion in 2020 from 2017 levels and Washington should recognize the efforts involved, said Yu Miaojie, the deputy dean of the National School of Development at Peking University.

Any new trade deal is likely to be based on the current one but with some differences that reflect priorities on both sides, said Yu. China has identified intellectual property protection as a major consideration but the country remains on the USTR's watchlist for IP-related infringements. Beijing has also made substantial progress in opening up financial markets and the government has promised to further loosen restrictions.

"The general thinking in China now is that the U.S. will not be satisfied with whatever Beijing gives. It can even be said that the U.S. is not asking for something - it just wants to contain China," said Tu Xiquan, the dean at the China Institute for WTO Studies. He believes tariffs are generally headed higher as countries, including the U.S., re-shore production to ensure security, making cuts even more unlikely.