The latest round of trade talks between the United States and China in Beijing made “positive and concrete” progress, China said as a weekend round of talks concluded between U.S. Commerce Secretary Wilbur Ross and Chinese Vice Premier Liu He on June 3.
While the details of the latest agreement have yet to be ironed out, China warned that any progress made so far would be nullified if the United States implements any trade sanctions, according to a statement released on Xinhua, China’s state media.
The latest agreement follows an earlier appeasement on May 31, when China said it would cancel certain restrictions on foreign investments in sectors China deems strategically important.
In recent weeks, there has been a series of edicts, then reversals, followed by reversals of reversals from the Trump administration regarding its stance on China and whether it will impose punitive tariffs on Chinese goods. Each statement was met with either retaliatory or conciliatory remarks from Beijing.
The weekend concluded—for now—a tense several months of jockeying for position by both sides.
How Did We Get Here?
In 2017, President Donald Trump showed relative restraint and improved relations with his counterpart Xi Jinping. However, in January of this year, the United States fired the first shot and announced major trade tariffs.
The United States levied a 30-percent tariff on solar panels, most of which are manufactured in China, after two U.S. solar panel manufacturers petitioned the U.S. International Trade Commission to investigate dumping practices—or selling products below cost—from foreign companies.
In March, the United States announced new tariffs of 25 percent on imported steel and 10 percent on imported aluminum. The trade action was again focused on China, the world’s biggest steel exporter.
That led to a tumultuous April, when several tit-for-tat tariffs were threatened involving a swath of industries in both countries, including fruits, nuts, pork, wine, machinery, medical supplies, cars, and chemicals.
The trade skirmish further escalated when the United States banned ZTE Corp., one of China’s biggest telecommunications companies, from purchasing U.S. components for seven years due to several concerns ranging from security to violating U.S. sanctions. The sanctions forced ZTE to suspend its shares from trading in April and was on the verge of going out of business.
All of this paved the way for the bilateral talks that took place in Beijing in May.
What Does America Want?
The United States has several unresolved issues with China, some longstanding, that Trump and his cabinet are looking to address.
Some of these date back decades, and over the years have sapped American competitiveness and innovation.
The first is a trade imbalance—the United States currently purchases more than four times as much from China as China does from the United States. While China has increased purchases of U.S. agricultural products in recent years, the gap is still widening.
Lack of access to domestic Chinese markets is another major concern. While China continues to seek market access abroad, it keeps several major industries off limits to foreign investors.
The third issue—and possibly the thorniest—is the intellectual property theft that Chinese firms have benefited from, often condoned and conducted by the Chinese communist regime directly. “The cost of China’s intellectual property theft costs United States innovators billions of dollars a year, and China accounts for 87 percent of counterfeit goods seized coming into the United States,” a May 29 White House announcement said.
This issue is one that even the president’s staunchest critics agree with: China’s bid to dominate the high-tech industries using unscrupulous means must be checked.
But this area is also the most sensitive and impacts America’s future as well as China’s. Through its “Made in China 2025” program, Beijing has issued directives to move the country up the manufacturing value chain and become a global leader in advanced sciences such as robotics, semiconductors, and artificial intelligence.
Those ambitions are fine, but China is seeking superiority using often illegal means. In its effort, China has essentially put its entire country behind the drive, granting subsidies to state-owned companies and putting the full power of a nation against independent and disparate individual foreign companies.
It’s bypassing R&D by stealing intellectual property using Chinese spies, hackers, and forced technology sharing with Chinese joint-venture partners. A 200-page report produced by the Office of the U.S. Trade Representative detailed a number of complaints from U.S. companies—mostly done anonymously for fear of retaliation.