Talks Go Nowhere as U.S. Presents China With Extensive List of Demands

Two days of intense negotiations between senior Chinese and American officials ended on Friday as expected with no deal and no date set for further talks, bring the world’s largest economies closer to a potential trade war.

The U.S. sent a delegation, which included Treasury Secretary Steven Mnuchin and the U.S. trade representative, Robert E. Lighthizer, with an extensive list of demands which showed that the Trump administration has no intention of backing down despite Beijing’s assertive stance at the meeting. According to Eswar Prasad, an economics professor at Cornell University, “The list reads like the terms for a surrender rather than a basis for negotiation.”

According to the New York Times, the extensive list of U.S. trade demands included the following:

China must…

Cut its trade surplus by $100 billion in the 12 months starting in June, and by another $100 billion in the following 12 months.

Halt all subsidies to advanced manufacturing industries in its so-called Made in China 2025 program. The program covers 10 sectors, including aircraft manufacturing, electric cars, robotics, computer microchips and artificial intelligence.

Accept that the United States may restrict imports from the industries under Made in China 2025.

Take “immediate, verifiable steps” to halt cyberespionage into commercial networks in the United States.

Strengthen intellectual property protections.

Accept United States restrictions on Chinese investments in sensitive technologies without retaliating.

Cut its tariffs, which currently average 10 percent, to the same level as in the United States, where they average 3.5 percent for all “noncritical sectors.”

Open up its services and agricultural sectors to full American competition.

The United States also stipulated that the two sides should meet every quarter to review progress.

Although Chinese officials put up a strong front at the meeting, publicly they shined a positive light on the meeting. “The two sides agreed that a sound and stable China-U.S. trade relationship is crucial for both, and they are committed to resolving relevant economic and trade issues through dialogue and consultation,” Xinhua, the official news agency, said soon after the talks ended.

China also issued a few demands of its own. It wants the United States to relax restrictions on exports of high-tech commercial products that have military applications.

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Beijing also said it would be willing to reduce some trade barriers, but only if the United States also lowered trade barriers. The Chinese also objected to United States demands for a specific cut in the bilateral surplus. Li Gang, the vice president of the Commerce Ministry’s research and training institute, said in a separate interview last month that a $100 billion but in the surplus was “impossible.”

Without any future talks scheduled, U.S. investors may face another period of uncertainty which could lead to renewed concerns over a potential trade war and the re-emergence of volatility in the stock market.