MNI POLICY: Unclear Goals Hurt U.S.-China Talks: He Jianxiong

Results So Far Are Failure And Compromise Is Needed

By Brooke Migdon

     WASHINGTON (MNI) - Unclear strategy and policy goals are feeding mistrust

between Chinese and American leaders negotiating a phase one trade agreement, a

former Chinese government official said Wednesday.

     "The signals have been very confusing," former IMF Executive Director for

China He Jianxiong said at a conference at the Peterson Institute for

International Economics. The current approach has "failed to yield results."

     China must state the "do-ables and un-do-ables" of an agreement to

facilitate a material compromise, he said at a conference in Washington. The

unpredictability of President Donald Trump's White House adds an additional

layer of complexity.

     China's agenda of "opening up" the economy is conditional on U.S. actions,

but the lack of guarantees the U.S. will deliver its promises brings significant

political risks for Chinese leader Xi Jinping, according to He. 

     "It may be perceived as the Chinese government yielding to U.S. pressure

and it would be difficult for officials to market those reforms," he said,

noting a rise in nationalism.

     China has resisted legislative overhaul before. Prior to the most recent

October trade talks which yielded promises of a preliminary agreement, China

returned a heavily-edited 150-page draft trade agreement to Washington in May.

The changes deleted prior commitments to alter its laws to address alleged theft

of intellectual property, forced technology transfers and currency manipulation.

     --DECOUPLING DANGER

     Recent promises to increase China's interaction with the rest of the world

has been "encouraging," according to He. China's Xi said during a speech in

Shanghai Tuesday that China would "open its doors only wider to the world."

     U.S. signals about a desire to "decouple" the two economies is a

"dangerous" phenomenon, according to He. The issue lingers even after Vice

President Mike Pence gave a speech last month saying that isn't the

administration's intent. 

     "The magnitude of the impact is not the key, but the psychological impact

arising from uncertainty," He said. "If the market or investors perceive the

government's intent as decoupling going forward, then they could be very

hesitant to send their dollars."

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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