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Trade negotiations with China Open in Washington, as obstacles are scared



Treasury Secretary Steven Mnuchin, who met with Liu on Wednesday, said one day earlier that the Huawei case was being handled on a separate track from the trade negotiations. However, given China's heated response to the arrest and accusation, it is difficult to imagine that Chinese officials will not raise the issue.

"I find it very difficult to keep them separate," says Weijian Shan, a private equity investor based in Hong Kong and the author of "Out of the Gobi", a memoir depicting China's modern history. "To the extent that China feels this is a major problem with America, they will bring it up."

For now, both parties are eager to find areas of agreement, including on the purchase of several American goods. China has demonstrated a willingness to address Mr Trump's concerns over the US bilateral trade deficit with large purchases of goods and services, such as chicken, soybeans and tractors. It's the easy part. It is harder to persuade China to revise its economic policies.

The Trump administration has pushed China to cut subsidies from state-owned companies, opening up markets significantly to foreign investment, and completing its slow practice of forcing US companies to transfer trade secrets as a condition for doing business there. China has made a number of moves in the last month, suggesting it is willing to accept some of these changes, but there is division into the Trump administration about whether they are merely symbolic – and empty – gestures.

"None of China's domestic reforms since December has really addressed the structural issues in the relationship," said Nick Marro, an analyst in Asia and China at the Economist Intelligence Unit. "Progress in increasing US imports or tackling China's currency issues doesn't really mean what the USTR is really looking at, which is fundamental to US business market access issues."

One of the biggest issues pertaining to trade negotiations is whether the US can really enforce any agreement adopted by Beijing.

Mr. Trump has used tariffs as a stick to get Beijing to the negotiating table. But if the tariffs are raised as part of a trade agreement, there is no guarantee that China will live up to any obligations. US officials who say China has broken promises in the past have discussed mechanisms such as "snapback" charges that would be reinstated if China did not go through. Another option is "carousel" tariffs that would hit different parts of Chinese products to prevent its economy from becoming immune to the pain of duty.


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