Home | Breaking News | China proposes buying $200 billion of American goods, US officials say

China proposes buying $200 billion of American goods, US officials say

WT24 Desk

China is stepping up its efforts to avoid a trade war with the United States, according to CNN report.

Beijing has proposed boosting Chinese purchases of American goods by around $200 billion in an attempt to reduce the massive trade imbalance between the two countries, US officials said Thursday.

 The huge change, which experts say would be very difficult to achieve, is still just a proposal and no agreements have been reached yet in the trade talks between the two sides, the officials added.

The Chinese Commerce Ministry didn’t immediately respond to a request for comment.

The negotiations are aimed at finding a way out of the bitter trade clash between the world’s top two economies. Washington and Beijing have threatened in recent months to slap tariffs on tens of billions of dollars of each other’s products.

After the trade talks Thursday in Washington between top US officials and a Chinese delegation, the White House said that “the two sides agreed to continue the discussions on Friday.”

Thursday’s meetings included one in the Oval Office between President Donald Trump and Chinese Vice Premier Liu He, the top economic adviser to Chinese President Xi Jinping.

The US demands presented to the Chinese government during the first round of talks, which took place in Beijing earlier this month, included cutting the US trade deficit with China by $200 billion by the end of 2020.

It wasn’t immediately clear how China would carry out such a dramatic increase in imports from the United States. It bought $130 billion of American goods last year, according to US government figures.

Experts have said previously that China would likely struggle to significantly ramp up imports of American-made goods — and $200 billion would be a staggering increase.

“It’s unclear how exactly China gets to this number,” said Alex Wolf, an emerging markets economist at Aberdeen Standard Investments.

He pointed out that China could try to shift its purchases of industrial machinery and similar goods from countries like Germany and Japan to the United States. But that could cause disruptions to supply chains and create tensions with the affected countries. It’s also not certain the US economy could easily step in to supply the kind of machinery China needs.

American companies would need time to adjust to a huge jump in demand from China.

“They could redirect their Airbus (EADSF) purchases to Boeing (BA), but its unrealistic for Boeing to have to meet that order book, at least in the short term,” Wolf said.

It’s also unclear what the Chinese government is asking for in return.

Larry Hu, an economist at investment bank Macquarie, said the Chinese proposal was likely to be dependent on the United States removing restrictions on the export to China of certain advanced American technologies. But the US government “might not be willing to do that,” he added.

China has also been pressing the United States to lift a crippling ban on the sale of American parts to ZTE (ZTCOF), a big Chinese maker of smartphones and telecommunications equipment.

Trump said Sunday that he was working on giving ZTE “a way to get back into business, fast,” adding that he had instructed the US Commerce Department to “get it done.”

The Chinese government welcomed his comments. But Trump tweeted Wednesday that “nothing has happened with ZTE except as it pertains to the larger trade deal.”

Experts say Beijing is trying to engineer a deal focused on the trade imbalance rather than cede to US pressure over its industrial policies aimed at boosting Chinese high-tech industries.

“China wants it to just be about the trade deficit. They want it to be a numbers issue,” Wolf said.

China has signaled its not interested in changing its industrial policies, which it views as crucial for developing its economy. But US Trade Representative Robert Lighthizer has clearly linked the threat to impose heavy tariffs on at least $50 billion of Chinese products to Beijing’s ambitious plans to become a global leader in industries like robotics and electric vehicles.

In another move that appeared designed to defuse tensions, the Chinese Commerce Ministry said Friday it was dropping its investigations into US sorghum exports. Beijing had previously accused American farmers of dumping sorghum on its markets and announced last month it would start putting a huge import charge on the crop.

The ministry said Friday that the measures against US sorghum, which is typically used to feed animals, “would affect the cost of living of consumers and are not in line with the public interest.”

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