China purchases could undercut Donald Trump's larger trade goal

At the heart of President Trump’s negotiations with China is a troubling contradiction: The United States wants to use the trade talks to encourage the country to adopt a more market-oriented economy. But a key element of a prospective deal may end up reinforcing the economic power of the Chinese state.

Negotiators are still working out deal terms, but any agreement seems certain to involve China’s promise to purchase hundreds of billions of dollars of American goods. For Mr. Trump, this is an essential element that will help reduce the United States’ record trade deficit with China and bolster farmers and other constituencies hurt by his trade war.

But those purchases will be ordered by the Chinese state, and most will be carried out by state-controlled Chinese businesses, further cementing Beijing’s role in managing its economy and potentially making United States industries even more beholden to the Chinese.

“It seems like those types of really simplistic purchasing commitment type of arrangements would actually reinforce state ownership rather than discourage it,” said Rufus Yerxa, the head of the National Foreign Trade Council, which represents the United States’ largest exporters.

After months of talks, the two sides are inching closer to an agreement. Robert Lighthizer, Mr. Trump’s top trade negotiator, and Steven Mnuchin, the Treasury secretary, discussed the remaining sticking points with their Chinese counterparts on Thursday evening and Friday in Beijing. Mr. Mnuchin, in a tweet on Friday, said the talks had been “constructive.”

Both sides are trying to iron out an agreement by this week, to coincide with a visit to Washington by Liu He, the Chinese special envoy charged with negotiating the deal. People with knowledge of the talks in both China and the United States say the goal is to have an agreement by the end of that meeting, with a signing ceremony between Mr. Trump and President Xi Jinping of China potentially later this month.

On Sunday evening, China’s finance ministry issued two statements saying that Beijing would continue to suspend tariffs it imposed last year on American cars and car parts in retaliation for Mr. Trump’s tariffs on $250 billion worth of Chinese imports. Those tariffs, which were suspended while the two sides tried to reach an agreement, were supposed to resume at the end of March, but China said it would extend the suspension indefinitely as a gesture of good will.

The finance ministry said “we hope that the U.S. and China will work together to step up consultations and make practical efforts toward the goal of ending trade friction.”

Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, said there was no question the United States and China were “in the endgame with regard to a deal.” But he said “there are still sticking points that have to be addressed.”

Those include how an agreement will be monitored and enforced, and how many of Mr. Trump’s tariffs come off and when, Mr. Brilliant said. “These factors are complicating the fact that the agreement is 90 percent done at this point,” he said.

While the two sides are closer to an agreement than at any point in the past, it remains unclear how successful the Trump administration will be in achieving its key goals. The president’s trade war was initiated in large part to try to reorient the Chinese economy and force it to become more open to American companies and investment. Using punishing tariffs as leverage, the Trump administration has pressed China to roll back its heavy hand in the economy, including asking Beijing to curtail subsidies to state-owned firms and to end its practice of forcing foreign companies doing business in China to transfer their technology to Chinese competitors.

China has not readily committed to these goals, in part because such commitments are seen as infringing on China’s sovereignty and undercutting the power of the Chinese state. What the Chinese have agreed to most readily is purchasing American goods, especially commodities that can fuel their economy. While the final list could be different, the United States and China have discussed the purchase of products including corn, soybeans, sorghum, natural gas, oil, coal, chemicals, semiconductors and airplanes, according to people with knowledge of the talks.

© 2019 The New York Times News Service