President Donald Trump will meet Chinese President Xi Jinping next week, but the meeting may be a little challenging for both sides.
Trump tweeted Thursday evening that he predicts the meeting will be “difficult,” adding, “We can no longer have massive trade deficits and job losses,” a clear reference to America’s $347 billion trade deficit with China and the millions of jobs the president believes have been lost to trade with China over the years.
…and job losses. American companies must be prepared to look at other alternatives.
— Donald J. Trump (@realDonaldTrump) March 30, 2017
Beijing is trying to play it cool and promote a positive image of the U.S.-China bilateral relationship.
“The trade relations between China and the US have brought seeable and tangible benefits to both countries,” Vice Foreign Minister Zheng Zeguang told reporters Friday. “Chinese companies’ investment in the US is growing rapidly and creating job opportunities there, which can help address the trade deficit.”
Zheng further commented that China is not pursuing trade surpluses or seeking unfair trade advantages through the devaluation of its currency.
He encouraged Washington to relax technology export restrictions and strive to create a “good environment” for Chinese investments in the U.S.
“Xi and Trump have had many phone conversations and communications, and have reached consensus on the development of Sino-U.S. relations,” Zheng added. “Both sides believe that the two nations can be cooperative partners and seek mutual benefits based on the principles of being non-confrontational and non-conflict, and address sensitive issues in a constructive manner.”
The upcoming meeting may be a little bit bumpy though.
Trump is expected to sign two executive orders Friday to identify the root causes of the huge U.S. trade deficit, look into countries that are engaging in questionable trade practices, and strengthen America’s ability to punish countries that give their industries and businesses an unfair competitive advantage in international markets through unacceptable subsidies.
Despite official statements to the contrary, China is expected to be a target of the new efforts.
Furthermore, the Office of the U.S. Trade Representative (USTR), an office directed by the White House, released a report Friday that is highly critical of China’s business practices, such as industrial overcapacity, forced technology transfers, and unjustified bans on certain American products, reports Reuters.
Beijing pours state funds into its steel and aluminum industries, causing over-production. China then floods overseas markets with the excess, significantly weakening the ability of foreign companies to compete.
“While China has begun to take steps to address steel excess capacity, these steps have been inadequate to date and even fewer efforts have been taken by China in aluminium and other sectors,” USTR reports.
The report also accused China of using regulations to ensure the protection of Chinese companies and force foreign companies to transfer technology to China.
“China also reportedly conditions foreign investment approvals on technology transfer to Chinese entities, mandates adverse licensing terms on foreign IP licensors, uses anti-monopoly laws to extract technology on unreasonable terms and subsidizes acquisition of foreign high technology firms to bring technology to the Chinese parent companies,” the USTR report explains.
Outside of trade, other issues which could derail the meeting range from the South China Sea to Taiwan to the Korean peninsula.
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