‘Vigorous Engagement’ Sought With China to Curb Trade Abuses, Says USTR
The U.S. continues to pursue “vigorous engagement” with China to “increase the benefits” that U.S. businesses, service providers and consumers “derive from trade and economic ties” with the Chinese, said an Office of U.S. Trade Representative report Friday on global foreign trade barriers. China’s trade practices “in several specific areas,” especially forced technology transfer and the Made in China 2025 industrial program, continue to “cause particular concern” for U.S. “stakeholders,” said the USTR.
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The Trump administration’s Section 301 tariffs on $250 billion in Chinese imports “seek to address China’s forced technology transfer regime,” said the report. “This regime is one of the instruments through which China intends to meet its Made in China 2025 targets.”
In 2018, when the Section 301 tariffs and retaliatory Chinese duties took effect, the “U.S. goods trade deficit” with China increased 11.6 percent from a year earlier to $419.2 billion, said the report. U.S. goods exports to China were down 7.4 percent to $120.3 billion, it said. U.S. imports from China were up 6.7 percent to $539.5 billion, it said. Despite the 7.4 percent decline, China in 2018 was the third largest goods market for U.S. exporters behind Canada and Mexico, it said.
Made in China 2025 “seeks to build up Chinese companies in 10 targeted sectors "at the expense of, and to the detriment of, foreign industries and their technologies,” said the report. The program’s “initial goal” is to “ensure, through various means, that Chinese companies develop, extract or acquire their own technology, intellectual property and know-how and their own brands,” it said. Its ultimate goal is “to capture much larger worldwide market shares” in China’s targeted “strategic sectors,” it said.
Even if China fails to “achieve fully” all the industrial policy goals of Made in China 2025, “it is still likely to create or exacerbate market distortions and create severe excess capacity in many of the targeted sectors,” doing “long-lasting damage to U.S. interests,” said the report. China-backed companies will “increase their market share at the expense of U.S. companies operating in these sectors,” it said.
That China “seeks to protect many domestic industries through a restrictive investment regime” is a serious worry among foreign investors, said the report. The Chinese government “may condition investment approval on a requirement that a foreign enterprise transfer technology, conduct research and development in China, satisfy exporter local content requirements or make valuable, deal-specific commercial concessions,” it said.
The administration’s “sustained bilateral engagement” with China hasn’t curbed the investment restrictions, said the report. Soon after President Donald Trump visited Beijing in November 2017, China announced the relaxation of some restrictions, and “took some steps in that direction in 2018,” it said. But “many significant barriers remain,” it said.
The U.S. and Chinese teams, trying to hammer out a comprehensive trade agreement, continue “to make progress during candid and constructive discussions on the negotiations and important next steps,” said the White House Friday. The talks continue this week in Washington, it said. "Building on the substantive progress achieved," China hopes the two sides "can continue to work with concerted efforts, meet each other halfway, implement the importance consensus reached by the two presidents, and make attempts to ensure a mutually beneficial agreement,” said a Foreign Ministry spokesperson Monday.