What’s under debate in talks
The Star Online (19/02/2019) - Beijing: US and Chinese officials wrapped up days of trade talks here with plans to resume negotiations in Washington this week as the world’s top two economies try to smooth out their thorny trade row.
US President Donald Trump said on Friday that the talks were going “extremely well”, while his advisers deep in the details warned that there was still “much work” to do.
Beijing and Washington have already imposed duties on over US$360bil (RM1.4 trillion) in two-way trade, which are weighing on their manufacturing sectors and shaking global financial markets.
Trump has said he may extend a March 1 deadline after which tariffs on US$200bil (RM815mil) worth of Chinese goods are set to more than double.
Here is a breakdown of the main sticking points:
IP theft and tech transfer
Washington contends that Beijing has encouraged theft of American intellectual property while forcing US companies to turn over trade secrets for market access.
Beijing has long denied the charges but is working to step up punishments for IP theft, fast-tracking a new foreign investment law that bans forced technology transfer.
It is also gradually increasing the scope of industries where foreign firms can operate without a Chinese joint venture partner.
It is unclear if the moves can appease Trump’s administration.
The FBI recently said it is probing Chinese economic espionage across the United States while the Justice Department is leading a name, shame and prosecute campaign against Chinese spying and theft.
US prosecutors recently ensnared Chinese tech giant Huawei with charges of trade secret theft.
Industrial policy
China’s industrial policy has raised concerns, especially a “Made in China 2025” initiative that aims to make the Asian giant a global leader in emerging technologies like artificial intelligence, through generous state support for domestic firms.
Beijing and the Chinese state media have played down the policy this past year as it roused controversy but for China, the trade tensions have only reinforced the need to increase self-sufficiency in crucial technology like semiconductors.
State subsidies
In recent years, China’s state-owned companies have strengthened their domestic dominance – flying in the face of Western demands for market reforms.
Washington hopes China will lessen the role of the state in the economy and curtail generous subsidies for industries and companies.
But economist Cui Fan of the University of International Business and Economics in Beijing cautioned that China may not give ground if the United States wants to discuss state subsidies beyond the remit of the World Trade Organisation agreement.
Trade deficit
China’s politically sensitive trade surplus with the United States last year hit a record US$323.3bil (RM1.3 trillion) as the tit-for-tat tariffs kept Chinese buyers away from US agricultural and energy commodities.
Beijing has pledged to pick up purchases of US soybeans and other goods, and dangled a massive buying spree over negotiations to nudge the White House towards a deal.
The White House on Friday emphasised talks on purchases to reduce the “large and persistent bilateral trade deficit”.
But any buying spree would have to rely heavily on the Chinese state-owned firms, which Washington is battling to sideline. — AFP