Top negotiators from China and the United States resumed a fresh round of trade talks in Beijing on Friday aiming to settle the bruising spat that has threatened the global economy.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin were greeted by Vice Premier Liu He at the Diaoyutai State Guesthouse as the three men seek to resolve the long-running trade war between the world’s top two economies.
As the US delegation left its hotel for a full day of talks, Mnuchin told reporters the officials had a “very productive” working dinner on Thursday.
“It’s a pleasure to see you again,” Mnuchin told Liu as they exchanged pleasantries before Friday’s meeting.
Officials are seeking to iron out major differences over US accusations that China has been using unfair trade practices for years by heavily subsidising its companies while snatching the technological know-how of American firms.
US President Donald Trump has said that the two sides were close to a deal, but officials have played down expectations of an imminent agreement.
In Washington, White House economic adviser Larry Kudlow said Thursday the talks were not “time-dependent” and could last weeks or even months if necessary.
The talks are “policy and enforcement dependent”, Kudlow said.
The Chinese commerce ministry said a “large amount of work” remains to be done and Liu will travel to Washington next week for another set of negotiations.
– Tariffs as ‘leverage’ –
The two sides have imposed tariffs on $360 billion in two-way trade since last year but Trump and Chinese leader Xi Jinping agreed to a truce last December in Argentina.
Trump suggested last week that some of those tariffs should stay in place after a deal is reached to ensure China keeps its end of any bargain.
“We have to see what the track record is and we’re not going to give up our leverage,” said Kudlow.
“It doesn’t necessarily mean that all the tariffs will be kept in place, some of the tariffs will be kept there,” Kudlow told Bloomberg TV.
US insistence on keeping the first tranche of 25 percent tariffs on $50 billion worth of Chinese imports could be a sticking point for a deal, analysts say.
It is hard to predict if China will accept a deal leaving some tariffs in place, said economist Cui Fan of the University of International Business and Economics in Beijing.
The truce reached by Xi and Trump in December called for “reaching a deal as soon as possible in the direction of mutually cancelling the punitive tariffs slapped on by both sides”, Cui said.
Beijing has taken steps to address some US complaints, rushing through a law this month that promises to protect foreign firms from the forced transfer of technology.
But US officials want China to show that it will enforce any law that aims to protect intellectual property rights of American companies.
Chinese state-owned companies have also stepped up purchases of American agricultural goods like soybeans.
Massive purchases of American goods are expected to be part of any deal, in order to lower the politically sensitive US trade deficit with China, which reached a record high of $419.2 billion last year.