US-China reach trade talk ‘stalemate’ despite expiry of phase-one deal as Beijing, Washington remain silent

  • Talks between Vice-Premier Liu He and US Trade Representative Katherine Tai and US Treasury Secretary Janet Yellen have yet to happen
  • China’s two-year commitment to buy an additional US$200 billion of American goods and services expired last week, with indications are that it has fallen around 40 per cent short

China and the United States have reached a “stalemate” in the process to resume trade talks despite the expiry of their phase-one trade deal last week, with no clear indication from either Beijing or Washington of when the silence will be broken.

A long-awaited new round of talks between China’s chief trade negotiator, Vice-Premier Liu He, and US Trade Representative Katherine Tai and US Treasury Secretary Janet Yellen has yet to happen.

Liu last met Tai and Yellen via separate video calls in October before the high-profile talk between Xi Jinping and US counterpart Joe Biden in mid-November.

“Now [China and the US] are in a stalemate, since everyone is clear that the atmosphere for negotiations has not formed yet,” said Huo Jianguo, the former head of a think tank under China’s Ministry of Commerce.

“If [China] is more proactive, there might be some changes, since the negotiations are actually more beneficial to us.”

The talks also may have been delayed due to technical reasons as the US is adjusting its tariff codes, a trade source with knowledge of the matter who did not want to be named due to the sensitivity of the situation told the Post.

The US is overhauling its Harmonised Tariff Schedule to align with World Customs Organisation changes, which took effect on January 1.

The changes to its tariff provisions, product descriptions and revised legal notes are intended to address advances in technology and environmental considerations, as well as health and safety considerations.

China’s two-year commitment to buy an additional US$200 billion of American goods and services above 2017 levels expired at the end of December, and while it will take time for the final figures to be confirmed, indications are that it has fallen around 40 per cent short.

According to calculations by the Peterson Institute for International Economics, China’s imports of covered goods reached 62 per cent as of the end of November, while US export figures put the figure at 60 per cent.

China’s trade surplus with the US dropped to US$36.95 billion in November from US$40.75 billion in October, according to China customs data.

China’s commerce ministry said at the end of December that Beijing had “worked hard” to overcome “multiple adverse impacts” including the coronavirus, the global economic recession and supply chain issues since the deal was signed in January 2020.

It also called on the US to “create a good atmosphere and conditions for the two sides to expand trade cooperation”.

Amid the absence of senior-level trade talks, tensions between the world’s two largest economies have escalated since the virtual summit between Xi and Biden, resulting in the reintroduction of Trump-era tit-for-tat sanctions.

“The commercial and trade policies have been constrained by security and diplomatic issues,” said Lu Xiang, a US-China expert at the Chinese Academy of Social Sciences.

“From the observer’s point of view, there is not much that can be expected.”

Since November, the Biden administration has placed dozens of Chinese firms – including quantum computing and semiconductor companies, the world’s top commercial drone maker DJI Technology and China’s Academy of Military Medical Sciences – on its trade and investment blacklists.

The White House cited military ties or alleged involvement in the surveillance of Muslims in Xinjiang.

However, there are some positive indicators after Yellen said in December that cutting some tariffs on Chinese goods could ease American inflation pressure.

China also announced last month continued exemptions for 124 types of US goods from additional tariffs until June.

“If the US is willing, the two sides might talk about a more systematic agreement, but the US does not seem to have formed a systematic trade policy toward China yet,” Lu added.

Author: Orange Wang, SCMP

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