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US, China fail to agree on trade issues at economic talks

Chinese Vice Premier Wang Yang (C), US Treasury Secretary Steven Mnuch (L) and US Commerce Secretary Wilbur Ross pose for group photos during the first China-US Comprehensive Economic Dialogue in Washington DC, the US, on July 19, 2017. Photo: Xinhua

The US and China wrapped up the contentious US-China Comprehensive Economic Dialogue in Washington on Wednesday, failing to agree on major new steps to reduce the US trade deficit with China.

The two sides had a "frank exchange" but failed to agree on most major bilateral trade and economic issues that were important to the US, a senior US official said on condition of anonymity because he was not authorized to speak publicly.

These included US demands for access to China's financial services markets, reducing excess Chinese steel capacity, reductions in auto tariffs, cutting subsidies for state-owned enterprises, ending Chinese requirements for data localization and lifting ownership caps for foreign firms in China, the official said.

In his opening remarks to the US-China Comprehensive Economic Dialogue, US Commerce Secretary Wilbur Ross criticized China's $347 billion trade surplus with the US, saying that it was not the product of market forces.

"China acknowledged our shared objective to reduce the trade deficit which both sides will work cooperatively to achieve," US Treasury Secretary Steven Mnuchin and Ross said in a brief statement, highlighting a rare point of consensus.

Mnuchin and Ross also said the US position on the China trade relationship would be guided by "the principles of balance, fairness, and reciprocity on matters of trade will continue to guide the American position so we can give American workers and businesses an opportunity to compete on a level playing field."

The contentious issue of steel tariffs was expected to be a difficult topic at the economic talks, but the two sides did not issue any statements on this.

The US blames Chinese excess capacity for a global steel glut that is hurting US producers, and has threatened to impose tariffs.

US Steel stocks were sharply higher as investors interpreted silence on the issue as an increased likelihood of US action on Chinese steel.

After the market closed, President Donald Trump told a reporter that steel tariffs "could happen", according to Reuters news agency.

The Chinese embassy in Washington cast the economic talks in a positive light, saying in a statement that both sides had acknowledged "significant progress" on the 100-day talks and would to work together to reduce the trade deficit.

"The two sides will expand areas of cooperation in services and increase trade in services; expand mutual investment, and create a more open, equitable, transparent and convenient investment environment," the embassy said.

However, US and Chinese delegations participating in the economic dialogue have both canceled news conferences scheduled for late afternoon following the conclusion of the economic talks, a US Treasury spokesman said.

The spokesman said that there was no information on the cause of the cancellations. The Chinese embassy in Washington confirmed the cancellation of the Chinese press conference, also without explanation.

Experts thought that it was unlikely that the economic talks would produce any significant agreements on the most thorny issues.

It was unclear whether the talks covered US demands for China to put more pressure on North Korea over its nuclear and missile program.

Trump has previously signaled that China might obtain improved trade terms in exchange for help on North Korea.

In an editorial on Tuesday, the state-run Global Times said, "Trump won't be able to boost US economic growth if the world economy can't maintain healthy and sustained development. In this process, China, the world's second-largest economy, plays a vital role. Finding fault with China will only trample on the US' efforts toward its economic target. It is hoped that the US can use new thinking about China and take opportunity of the CED to work for mutual benefit."

The session had been billed as a follow-up to Trump's first meeting with Chinese President Xi Jinping at his Mar-A-Lago, Florida, estate in April when Trump hailed Xi's cooperation in curbing the threat from North Korea. Trump said that this would lead to better trade terms for China.

The two leaders launched a 100-day economic plan that has produced some industry-specific announcements, including the resumption of American beef sales in China and pledged to grant limited US access to some financial services sectors.

But there have been no new initiatives since, and Trump has grown increasingly frustrated with China's lack of pressure on North Korea. His administration has threatened new sanctions on small Chinese banks and other firms doing business with Pyongyang.

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