Source:qz.com

US and China begin negotiations aimed at avoiding a trade war

May 4, 2018

Led by the Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, the US delegation will be staying in Beijing until Friday, trying to iron out the kinks in the relations between the two countries caused by the mutual accusations and tariffs threats that could put a serious hamper in both economies.

US President Donald Trump is optimistic about the outcome and has tweeted on Wednesday: “Our great financial team is in China trying to negotiate a level playing field on trade!”

Unfortunately, not everyone agrees with Mr. Trump.

Michael Camunez, CEO of consultancy Monarch Global Strategies, is somewhat skeptic about a deal being made. “I don’t expect any grand bargains being struck,” he said. Camunez remarked that the US delegations don’t feel unified and that their platform is unclear. These are the weaknesses Chinese are sure to exploit.

There are several aspects of the trade deal Mr. Trump has promised to address in his campaign. The most glaring one is a huge trade deficit, reaching a staggering $375 billion last year. Even a Chinese promise of increasing its US imports by $50 billion would be considered a win for the Trump team, but the trouble is that there simply aren’t that many goods manufactured in the USA Chinese want to buy. Those that they do want, like high-tech electronics, are denied to them, due to security concerns.

Another objection Mr. Trump often used in his campaign against China is the theft of intellectual property. He was adamant that China must take steps to reduce and eventually stop this practice.

Source:scmp.com

Finally, there is the question of increased access to the Chinese market. This is the point that Chinese are most likely to agree with and allow foreign companies greater access to its market by changing regulations. There are already steps being taken in that direction, with an act allowing foreigners to own and control Chinese financial institutions, but the amount of the red tape included is so big that so far only one company has managed to meet the requirements.

It remains to be seen how Mr. Trump will react if negotiations fail and his tariffs package is put into action.

Source: money.cnn.com

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