The US and China yesterday agreed to restart trade talks, with Washington pledging not to impose new tariffs on Chinese exports “for the time being” – signalling a pause in trade hostilities between the world’s two largest economies.
Commenting on a long-running dispute over Chinese telecommunications giant Huawei, US President Donald Trump said companies in his country would be able to sell components to the world’s biggest telecoms equipment manufacturer in instances where there was no national security problem.
The truce offered relief from a nearly yearlong trade standoff, in which the countries have slapped tariffs on billions of dollars worth of each other’s imports, disrupting global supply lines, roiling markets and causing a lag in global economic growth.
“We are right back on track and we will see what happens,” Trump said after an 80-minute meeting with China’s President Xi Jinping on the sidelines of a two-day summit in Osaka, Japan, attended by leaders of the Group of 20 (G20) major economies.
Trump said that, while he would not lift existing import tariffs, he would refrain from slapping new levies on an additional $300 billion (R4.2 trillion) worth of Chinese goods – which, in effect, would have extended tariffs to everything that China exports to the US.
“We are holding back on tariffs and they are going to buy farm products,” he said at a news conference, without giving any details about China’s future agricultural product purchases.
“If we make a deal, it will be a very historic event.”
Trump gave no timeline for what he called a complex deal, but said he was not in a rush: “I want to get it right.”
Regarding Huawei, Trump said the US commerce department would meet in the next few days to decide whether to remove it from a list of firms banned from buying components and technology from US companies without government approval.
China welcomed the step.
“If the US does what it says, then of course we welcome it,” said Wang Xiaolong, the Chinese foreign ministry’s envoy for G20 affairs.
US microchip makers also applauded the move.
“We are encouraged that the talks are restarting and additional tariffs are on hold,” said John Neuffer, president of the US’s Semiconductor Industry Association. “We look forward to getting more details about the president’s remarks on Huawei.”
Huawei has come under increasing scrutiny for more than a year as the US alleged that “back doors” in its routers, switches and other equipment could allow China to spy on US communications.
While the company has denied that its products pose a security threat, the US has pressured its allies to shun Huawei. This comes as the company develops its fifth-generation wireless networks.
The US has also suggested it could be a factor in a trade deal.
The problems at Huawei have filtered across to the broader chip industry, with chip giant Broadcom warning of a widespread slowdown in demand and cutting its revenue forecast.
In a statement on the two-way talks, China’s foreign ministry quoted Xi as telling Trump that he hoped the US would treat Chinese companies fairly.
“China is sincere about continuing negotiations with the US ... but negotiations should be equal and show mutual respect,” the foreign ministry quoted Xi as saying.
Trump had threatened to extend existing tariffs to almost all Chinese imports into the US if the meeting didn’t lead to progress on wide-ranging US demands for economic reforms.
Financial markets will most likely breathe a sigh of relief after the news of the resumption in US-China trade talks.
Jacob Parker, vice-president of China operations at the US-China Business Council, said: “Returning to negotiations is good news for the business community and breathes some much-needed certainty into a slowly deteriorating relationship.
“Now comes the hard work of finding consensus on the most difficult issues in the relationship. But with a commitment from the top, we are hopeful that this will put the two sides on a sustained path to a resolution,” he said.
Some, however, have warned that the pause might not last.
Economic research consultancy Capital Economics said: “Even if a truce happens this weekend, a subsequent breakdown of talks, followed by further escalation, still seems likely.”
The US says China has been stealing its intellectual property for years, that it forces US firms to share trade secrets as a condition for doing business in China and that it subsidises state-owned enterprises to dominate industries. China has said that the US is making unreasonable demands and must also make concessions.
Talks collapsed last month after Washington accused Beijing of reneging on reform pledges. Trump raised tariffs to 25% from 10% on $200 billion worth of Chinese goods. China retaliated with levies on US imports.
The US-China feud had cast a pall over the G20 gathering, with leaders pointing out the threat to global growth.
In their communique, leaders warned of growing risks to the world economy, but they stopped short of denouncing protectionism, calling instead for a free, fair trade environment after talks, which some G20 members described as difficult. – Reuters