November 14, 2018 / 11:15 PM / 6 months ago

EXCLUSIVE-China sends written response to U.S. trade reform demands -U.S. govt sources

* U.S. tariffs on Chinese goods set to increase Jan 1

* Trump, Xi due to meet at G20 in Argentina

* Chinese response reiterates earlier commitments- source (Adds quotes and analysis)

By Jeff Mason and David Shepardson

WASHINGTON, Nov 14 (Reuters) - China has delivered a written response to U.S. demands for wide-ranging trade reforms, three U.S. government sources said on Wednesday, a move that could trigger negotiations to bring an end to a withering trade war between the world’s top economies.

U.S. President Donald Trump has imposed tariffs on $250 billion of Chinese imports to force concessions from Beijing on the list of demands that would change the terms of trade between the two countries. China has responded with import tariffs on U.S. goods.

Trump is expected to meet Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina at the end of November and in early December.

The U.S. president has repeatedly railed against Beijing over intellectual property theft, industrial subsidies, Chinese entry barriers to American businesses and the U.S. trade deficit with China.

Three U.S. government sources told Reuters on Wednesday that China had sent a response to U.S. demands on those and other issues.

The sources gave no further details on the content of the response. It was unclear if the response contained concessions that would satisfy Trump’s demands for change.

A U.S. team led by Treasury Under Secretary David Malpass discussed trade issues with a Chinese team via videoconference on Tuesday, a U.S. Treasury spokesperson said on Wednesday.

The United States had said it would not start formal negotiations on trade until it saw concrete proposals from China to address its concerns.

The two sides have been far apart during their months-long tariff dispute, and one person briefed on China’s response said it reiterated commitments Xi has made in recent speeches, and demanded that the United States lift tariffs, including those set by the Section 232 investigation into steel and aluminum imports.

“They are not close to a favorable deal on trade. Not in the same universe,” the Washington-based source said.


Earlier this month, after a phone conversation with Xi, Trump said he thought the United States would make a deal with China on trade but stood ready to levy more tariffs on Chinese goods if no progress is made.

The tariff rate on $200 billion in Chinese goods is set to increase to 25 percent from 10 percent on Jan. 1. Trump has also threatened to impose tariffs on all remaining Chinese imports, about $267 billion worth, if Beijing fails to address U.S. demands.

Future trade talks could hinge on whether or not tariffs rise on Jan. 1.

U.S.-China Business Council President Craig Allen told Reuters last week that he thought it was likely China would withdraw from any process set at the G20 if the Trump administration went forward with raising the tariff rate.

The two countries resumed talks after the call between the two leaders, ending a three month hiatus that saw relations deteriorate as the U.S. accused China of interfering in U.S. domestic politics and seeking to undermine Trump.

U.S. Vice President Mike Pence on Tuesday said Beijing needed to change its behavior to avoid a new cold war with the United States.

In comments made before the Chinese response, Wu Baiyi, the director of the Institute of American Studies at the state-run Chinese Academy of Social Sciences, said that a Jan. 1 tariff increase would imperil efforts to reverse trade tensions.

“This is one of the major goals that they [Chinese officials] are working hard on – to prevent those tariffs from coming into force early next year. But it will depend on both sides.”

Additional reporting by Steve Holland and David Lawder in WASHINGTON and Michael Martina in BEIJING; Writing by Simon Webb; Editing by Tim Ahmann, Cynthia Osterman & Shri Navaratnam

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