REPEAT: MNI: China/US Talks Not Appropriate Now: Ex-Official

Repeats Story Initially Transmitted at 10:00 GMT Jul 11/06:00 EST Jul 11

By Iris Ouyang

     BEIJING (MNI) - Now is not an appropriate time for Beijing and Washington

to engage in trade talks given that the U.S. currently appears keen on

escalating -- rather than de-escalating -- rising tensions, a former Chinese

trade diplomat to the U.S. told MNI on Wednesday.

     "The problem does not lie in China but the U.S. if the two nations do not

end up with an agreement," He Weiwen, former Economic and Commercial Counsellor

at the Chinese Consulates General in San Francisco and New York, said in an

interview with MNI. "The U.S. has not shown its sincerity to negotiate. It only

wants to make China feel the pain with tariff action."

     On Tuesday, the Office of the United States Trade Representative announced

its checklist to make good on its threat of placing tariffs on an additional

$200 bn of Chinese imports, following the imposition of a first round of levies

on $34 bn of goods on July 6 -- to which Beijing retaliated immediately in kind.

     In announcing the new U.S. tariffs on Tuesday, U.S. Trade Representative

Robert Lighthizer commented that China's retaliation to the initial round of

levies lacked any "international legal basis or justification." 

     He Weiwen, however, who also serves as Executive Council Member on two

Ministry of Commerce (MOFCOM) advisory groups and advises the State Council,

claimed that it is Washington's unilateral 301 investigation and tariff action

that has violated WTO rules and overly focused on self-interest.

     --SECOND ROUND OF TARIFFS

     The trade expert told MNI on Wednesday that Beijing has made preparations

for a second round of tariffs, in line with a MOFCOM statement today that China

will once again react to any forthcoming U.S. tariffs in a reciprocal fashion.

     China has to adopt the strategy that "war to end a war," He said, referring

to China was forced to fight back. He added that China feels that trying to

compromise currently with the U.S. will be unfruitful, whereas standing up to

the U.S. now may help lead to cooperation in the longer term.

     Lighthizer's Tuesday statement also criticised China's industrial policy,

which he says has "resulted in the transfer and theft of intellectual property

and technology to the detriment of our economy." The U.S. has been pushing China

to change its ambitious "Made in China 2025" industrial plan, which was designed

to upgrade and develop its technology and high-end manufacturing segments to

help in switching to a high-quality growth model.

     He Weiwen told MNI that the U.S. has no right to intervene in China's

domestic policies: "China doesn't need to change its policies for the sake of

U.S. interests. Both sides should discuss what specific measures in the 'Made in

China 2025' plan are against WTO rules -- and China is willing to make

adjustments if necessary."

     But, he pointed out, such judgments should not be based on U.S. domestic

laws such as Section 301 of the Trade Act of 1974, which allows the U.S.

President to unilaterally impose trade measures.

     To counter the small expected drag on economic growth from U.S. tariffs,

China should slow deleveraging and -- more importantly -- expand its domestic

demand base, diversify its export sources and actively seek alternative trade

partners, He told MNI.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com