China offers Trump US$200b package to slash US trade deficit, say officials

Chinese Vice Premier Liu He during a news conference at the Great Hall of the People in Beijing March 20, 2018. — Reuters pic
Chinese Vice Premier Liu He during a news conference at the Great Hall of the People in Beijing March 20, 2018. — Reuters pic

WASHINGTON, May 18 — China has offered US President Donald Trump a package of proposed purchases of American goods and other measures aimed at reducing the US trade deficit with China by some US$200 billion (RM792 billion) a year, US officials familiar with the proposal said.

The offer came during the first of two days of US-China trade talks in Washington aimed at resolving tariff threats between the world's two largest economies, but it was not immediately clear how the total value was determined.

One of the sources said US aircraft maker Boeing Co would be a major beneficiary of the Chinese offer if Trump were to accept it. Boeing is the largest US exporter and already sells about a quarter of its commercial aircraft to Chinese customers.

Another person familiar with the talks said the package may include some elimination of Chinese tariffs already in place on about US$4 billion worth of US farm products including fruit, nuts, pork, wine and sorghum.

The top-line number would match a request presented to Chinese officials two weeks ago by the Trump administration. But getting to a US$200 billion reduction of the US China trade deficit on a sustainable basis would require a massive change in the composition of US-China trade, as the US goods deficit was US$375 billion last year.

The United States' two biggest exports to China were aircraft at US$16 billion last year, and soybeans, at US$12 billion.

Trump met with the leader of the Chinese delegation, Vice Premier Liu He yesterday, but the White House did not make any statement following the meeting.

Earlier yesterday, Trump criticised China as being “very spoiled” on trade with the United States, but said he was aiming for an overall deal with China.

Speaking to reporters at the White House, Trump said China had “ripped off” the United States for too long and that he told Chinese President Xi Jinping that “we just can't do that anymore.”

ZTE 'small component' of deal

Trump also said that possible modifications to crushing restrictions that have paralysed Chinese telecommunications equipment maker ZTE Corp could be part of a trade deal. He said on Twitter on Sunday that he had ordered the US Commerce Department to put ZTE back in business.

He said that Xi had asked him to look into the matter and he agreed to do so, adding that ZTE bought a lot of components from US companies.

“Anything we do with ZTE, it’s just a small component of the overall deal. I can only tell you this: We’re going to come out fine with China. Hopefully, China will be happy, I think we’ll be happy,” Trump said.

Trump has threatened to impose up to US$150 billion in punitive tariffs to combat what he says is Beijing's misappropriation of US technology through joint venture requirements and other policies. Beijing has threatened equal retaliation, including tariffs on some of its largest US imports, including aircraft, soybeans and autos.

At trade talks in Beijing two weeks ago, both sides presented lengthy lists of demands, agreeing only to keep talking.

In addition to a major cut in the trade deficit, the Trump team sought an end to joint venture requirements that it says coerce technology transfers from American companies and an end to subsidies for advanced technology industries under the “Made in China” 2025 programme.

China demanded that Trump relax the restrictions on ZTE and end restrictions on Chinese investments in the United States and sales of high-technology goods to China. — Reuters

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