China has offered President Donald Trump a $200 billion reduction in its annual trade surplus with the U.S. by increasing imports of American products and other steps, said a Trump administration official.
China made the offer during talks in Washington this week as Chinese Vice Premier Liu He visited to try to resolve a trade dispute, the official said, speaking on condition of anonymity. Liu met with Trump Thursday afternoon at the White House. The official didn’t describe the U.S. response.
U.S. officials conveyed the president’s goal for a fair trading relationship with China and the two sides agreed to continue the discussions on Friday, the White House said in a statement. China’s Ministry of Commerce and the State Council Information Office didn’t initially respond to requests for comment.
A $200 billion reduction in the U.S. trade gap with China by 2020 was on a list of demands the Trump administration made earlier this month as Treasury Secretary Steven Mnuchin led a delegation to Beijing. The U.S. merchandise trade deficit with China hit a record $375 billion last year.
The U.S. had earlier made additional demands, including a halt to subsidies and other government support for the Made in China 2025 plan that targets strategic industries from robotics to new-energy vehicles. China had made its own demands, including giving equal treatment to its investment, and warned U.S. companies may be excluded from measures to open its economy.
A deal to cut the deficit, if confirmed, "is good news for market sentiment," said Dariusz Kowalczyk, senior emerging-market strategist at Credit Agricole SA in Hong Kong. "That said, China would suffer pressure on GDP growth as a result and would need to boost domestic demand and debt in the economy through monetary easing and allowing more credit."
The yuan could weaken on the news given expectations for a deterioration of China’s balance of payments, while Chinese government bond yields may come under downward pressure, said Kowalczyk.
The Trump administration has threatened to impose tariffs on as much as $150 billion of Chinese imports to the U.S. as tensions over trade have escalated. Trump expressed doubt before his meeting with Liu that China and the U.S. would come to an agreement to avoid a damaging trade war.
President Has Doubts
“Will that be successful? I tend to doubt it,” Trump said during a press briefing on Thursday with NATO Secretary-General Jens Stoltenberg. “The reason I doubt it is because China’s become very spoiled.”
Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney, said the Chinese proposal is “a positive sign that a full on trade war may be averted.”
“By making a significant offer to the U.S. it indicates that China is taking the negotiations very seriously,” Oliver said. “Much will depend on the details and time period and later in terms of the implementation.”
Reuters reported China’s trade deficit reduction offer earlier.
https://www.bloomberg.com/news/arti...er-trump-200-billion-cut-in-u-s-trade-deficit
More info
https://www.reuters.com/article/us-...u-s-trade-deficit-officials-say-idUSKCN1II1XF
.......
Now right up front, I’ll start by saying the 200 billion is an eyebrow raising number. However, anything even approaching that number would be a drastic improvement. Hopefully this isn’t a super partisan thread, and we can all hope for some seriously needed improvement in the US China trade deficit.
China made the offer during talks in Washington this week as Chinese Vice Premier Liu He visited to try to resolve a trade dispute, the official said, speaking on condition of anonymity. Liu met with Trump Thursday afternoon at the White House. The official didn’t describe the U.S. response.
U.S. officials conveyed the president’s goal for a fair trading relationship with China and the two sides agreed to continue the discussions on Friday, the White House said in a statement. China’s Ministry of Commerce and the State Council Information Office didn’t initially respond to requests for comment.
A $200 billion reduction in the U.S. trade gap with China by 2020 was on a list of demands the Trump administration made earlier this month as Treasury Secretary Steven Mnuchin led a delegation to Beijing. The U.S. merchandise trade deficit with China hit a record $375 billion last year.
The U.S. had earlier made additional demands, including a halt to subsidies and other government support for the Made in China 2025 plan that targets strategic industries from robotics to new-energy vehicles. China had made its own demands, including giving equal treatment to its investment, and warned U.S. companies may be excluded from measures to open its economy.
A deal to cut the deficit, if confirmed, "is good news for market sentiment," said Dariusz Kowalczyk, senior emerging-market strategist at Credit Agricole SA in Hong Kong. "That said, China would suffer pressure on GDP growth as a result and would need to boost domestic demand and debt in the economy through monetary easing and allowing more credit."
The yuan could weaken on the news given expectations for a deterioration of China’s balance of payments, while Chinese government bond yields may come under downward pressure, said Kowalczyk.
The Trump administration has threatened to impose tariffs on as much as $150 billion of Chinese imports to the U.S. as tensions over trade have escalated. Trump expressed doubt before his meeting with Liu that China and the U.S. would come to an agreement to avoid a damaging trade war.
President Has Doubts
“Will that be successful? I tend to doubt it,” Trump said during a press briefing on Thursday with NATO Secretary-General Jens Stoltenberg. “The reason I doubt it is because China’s become very spoiled.”
Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney, said the Chinese proposal is “a positive sign that a full on trade war may be averted.”
“By making a significant offer to the U.S. it indicates that China is taking the negotiations very seriously,” Oliver said. “Much will depend on the details and time period and later in terms of the implementation.”
Reuters reported China’s trade deficit reduction offer earlier.
https://www.bloomberg.com/news/arti...er-trump-200-billion-cut-in-u-s-trade-deficit
More info
https://www.reuters.com/article/us-...u-s-trade-deficit-officials-say-idUSKCN1II1XF
.......
Now right up front, I’ll start by saying the 200 billion is an eyebrow raising number. However, anything even approaching that number would be a drastic improvement. Hopefully this isn’t a super partisan thread, and we can all hope for some seriously needed improvement in the US China trade deficit.
