The United States and China are “miles and miles” from resolving trade issues but there is a fair chance the two countries will get a deal, U.S. Commerce Secretary Wilbur Ross said on Thursday.
A 30-member Chinese delegation plans to come to Washington next week for talks, he said, as the world’s two largest economies try to meet a March 1 deadline to resolve their trade disputes, but Ross tried to tamp down expectations for the high-level talks.
“There is a very large group coming. There’s been a lot of anticipatory work done but we’re miles and miles from getting a resolution and frankly that shouldn’t be too surprising,” Ross said in an interview with CNBC.
“Trade is very complicated, there’s lots and lots of issues – not just how many soybeans and how much LNG.”
More important, he said, were the structural reforms that Washington believes are needed in the Chinese economy, as well as enforcement mechanisms for failure to adhere to whatever is agreed to.
Ross said the two sides were unlikely to resolve all their disputes in next week’s talks, but added, “I think there’s a fair chance we do get to a deal.”
Ross’ comments fed lingering stock market anxieties about damaging economic fallout from the U.S.-China trade fight, helping to keep the Dow Jones Industrial Average in negative territory and limit gains in other indexes.
U.S. Treasury Secretary Steven Mnuchin was somewhat more upbeat on Thursday, saying that the United States and China were “making a lot of progress” in the talks, but he did not elaborate on areas where that progress could be seen.
High-level talks in Washington scheduled for next week will include discussions about China’s currency practices, Mnuchin said. He has criticized the yuan’s weakness in the past, but in recent days, positive sentiment towards the talks has lifted the yuan’s value against the dollar.
If a deal cannot be reached by March 2 to increase China’s protection of U.S. intellectual property, curb industrial subsidies and open Chinese markets to U.S. companies, President Donald Trump has vowed to increase tariffs to 25 per cent from 10 per cent on $200 billion worth of Chinese imports.
China has repeatedly played down complaints about intellectual property abuses, and has rejected accusations that foreign companies face forced technology transfers as a price of doing business in China. Beijing has offered instead to significantly increases purchases of U.S. soybeans, energy and other products to shrink the $375 billion annual U.S. trade deficit with China.
Mnuchin, U.S. Trade Representative Robert Lighthizer and other top Trump administration officials are scheduled to meet with Chinese Vice Premier Liu on Jan. 30 and 31 in Washington.
“During the upcoming high-level negotiations, both sides will continue to hold in-depth talks on various economic and trade issues of mutual concern,” Gao Feng, spokesman at the commerce ministry, told reporters.
White House economic adviser Larry Kudlow also made positive comments about the meetings in Washington. “I think the Liu He talks will be determinative,” Kudlow told Fox News.
Kudlow told Reuters on Tuesday that Trump is “not going to back down” on U.S. demands for structural changes to Chinese IP and technology practices.
Two influential business groups this week also urged Trump to push for meaningful reforms in Beijing to address “systemic issues in the Chinese economy that result in unfair competition and nonmarket outcomes.”
The U.S. Chamber of Commerce and the American Chamber of Commerce in China said in a new report: “While reducing the trade deficit and purchases of U.S. exports may be one aspect of the negotiations, we urge the U.S. government to prioritize outcomes that address structural changes posed by China’s economic policies and practices.”
Ross stressed there was no deadline until March 1.
“So there’s quite a little bit of time between now and then to judge just where do we stand, is it worth going forward or have we reached an impasse?”