Hopes are dim as U.S., China resume trade talks

TALKS RESUME — In this July 31 file photo, U.S. Trade Representative Robert Lighthizer, center, chats with Chinese Vice Premier Liu He, right, with Treasury Secretary Steven Mnuchin looking on in Shanghai. -- Associated Press

WASHINGTON (AP) — President Donald Trump and China’s Xi Jinping have plenty of reasons to call off their trade war.

Both face weakening economies that would likely further deteriorate if their conflict escalates.

Both are up against a formidable adversary that shows no inclination to yield.

Both are tangled in political turmoil — Trump with impeachment proceedings, Xi with angry protests in Hong Kong.

Both, in short, would welcome some good news.

Yet the 13th round of U.S.-China trade negotiations, set to begin today in Washington, is unlikely to prove any more successful than the previous 12 in resolving tensions that have rattled markets, threatened global growth and paralyzed business investment in the United States.

The issues that divide the world’s two biggest economies — mainly over allegations that Beijing deploys illicit tactics in a drive to acquire and develop cutting-edge technology — are likely too daunting to produce the kind of “big deal” that Trump says he wants.

At least anytime soon.

The already slim prospects for success grew dimmer Monday when the U.S. Commerce Department blacklisted a group of Chinese tech companies. The Trump administration charges that facial recognition and artificial intelligence technology developed by those companies is being used to repress China’s Muslim minority. Beijing demanded that Commerce reverse the move.

“We urge the United States to immediately correct its wrong practices, withdraw the relevant decisions and stop interfering in China’s internal affairs,” said Foreign Ministry spokesman Geng Shuang.

The Chinese Commerce Ministry warned in a separate statement that Beijing will “take all necessary measures to resolutely safeguard Chinese interests” but gave no details of possible retaliation.

The U.S. stock market tumbled Tuesday — the Dow Jones Industrial Average dropped 314 points, or 1.2 percent — partly on diminishing hopes for an end to the trade war.

“Given the current level of hostility (and) distrust between the two sides, the possibility of negotiating a durable and broad deal seems quite remote,” said Eswar Prasad, a Cornell University economist who formerly led the China division at the International Monetary Fund.

The Trump administration last year accused China of using predatory tactics in its drive to develop global competitors in advanced technologies such as quantum computing and electric cars. The administration alleges, and many China analysts agree, that these tactics include stealing sensitive technology and forcing foreign companies to hand over trade secrets.

Trump has imposed tariffs on more than $360 billion worth of Chinese goods and plans to tax an additional $160 billion of imports on Dec. 15. This would extend U.S. tariffs to just about everything China ships to the United States.

“The U.S. has made very clear to China what sort of changes they need to make,” said Stephen Vaughn, a partner at the King & Spalding law firm and former general counsel at the Office of the U.S. Trade Representative under Trump. “Our president is prepared to make a deal. But it’s got to be a deal that makes sense to us.”


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