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Key differences remain as Xi prepares to meet Trump

President Donald Trump and Chinese counterpart Xi Jinping. Photo: EPA

Chinese President Xi Jinping will meet with his US counterpart Donald Trump at Mar-a-lago, Florida, the US, from April 6 to 7, the official Xinhua News Agency reported on Thursday.

It will be the first summit between the two leaders, and President Xi will be the second head of state hosted by President Trump at Mar-a-lago after he assumed office in January.

The presidential meeting comes as the two countries remain divided on key economic and trade issues such as the recognition of China's market economy status and the Chinese yuan's exchange rate.

Citing official documents on the website of the US Commerce Department, the Wall Street Journal reported on Wednesday that the Trump administration is preparing a review of China's market economy status under the framework of the World Trade Organization (WTO).

The US may impose high tariffs on Chinese goods if the review, which will be announced as early as this week, defines China as a non-market economy, according to the Wall Street Journal report.

"China and others need to realize that the games are over -- continuing their unfair trade practices and operation as a nonmarket economy will have serious consequences," the US Commerce Department said in a statement.

During his presidential campaign, Trump said that China was not a market economy and vowed to impose 45 percent tariffs on goods imported from China.

Beijing has said that WTO member nations were required to start treating it as a market economy in December 2016, on the 15th anniversary of its membership in the Geneva-based organization that oversees global trade.

As a condition of joining the WTO, China agreed in 2001 that WTO member nations could treat it as a non-market economy, which was written into a clause of its WTO membership agreement which expired on December, 2016. The clause stipulated that WTO member nations had the advantage of using a third country's prices to gauge whether China was dumping its goods in their markets.

On Wednesday, former US Treasury Secretary Jack Lew said in a public speech that China did not gain trade advantage through interventions of the yuan's exchange rate.

According to the US Treasury's regulations, three criteria are required before the US could label a country currency manipulator: A significant bilateral trade surplus with the US larger than $20 billion; a material current account surplus larger than 3 percent of gross domestic product (GDP); and persistent interventions to keep its currency weak.

Lew said that China only met the first criterion.

In the US Treasury's most recent review in October last year, China met only one of the three criteria, which is a goods trade surplus of $347 billion in 2016, according to the US Census Bureau.

On April 15, the US Treasury will assess the exchange rate policies of its main trade partners to decide whether they gained unfair trade advantage by keeping their currencies weak.

Previously, President Trump declared China the "grand champions" of currency manipulation.

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