Sino-US trade talks yet to resume, says Beijing

BEIJING / WASHINGTON — China said on Thursday (July 12) that it has not been in touch with the United States about restarting trade negotiations as it urged US companies operating in China to lobby their government to protect their interests.

Chinese commerce ministry spokesman Gao Feng told a media briefing that currently, there are no talks to end the impasse between the two countries.

"The precondition for negotiations is trust. From what I've learnt, both sides have not been in touch about restarting talks," he said.

"We hope US firms can do more to lobby the US government, and work hard to defend their own interests."

Earlier there were suggestions that talks between Washington and Beijing were on the cards, though no concrete steps in that direction have become evident yet.

After the US unveiled a list of Chinese imports worth US$200 billion (S$272 billion) that could face higher duties, China’s Vice-Minister of Commerce Wang Shouwen called on his US counterparts to resolve the conflict through a new round of bilateral negotiations.

While that came amid fresh threats of retaliation from Beijing, it matches a willingness from the Trump team to resume talks at a high level, according to a person familiar with the administration’s thinking.

“When we have a trade problem, we should talk about it,” Mr Wang said in an interview with Bloomberg in Geneva on Wednesday (July 11). “We should sit down and try to find a solution to this trade problem.”

Communications between senior members of the administrations of US President Donald Trump and Chinese President Xi Jinping have petered out since a third round of formal negotiations ended with scant signs of agreement in early June.

The US pushed ahead with a plan to slap 25 per cent tariffs on more than US$30 billion of Chinese shipments last week, spurring retaliation in kind from Beijing.

Trump’s latest salvo threatens to push the trade fight into new territory, with China limited in using tariffs to push back. The Chinese government has, however, vowed to respond.

How China responds is complicated by the fact it imported US$130 billion of US goods last year, less than a third of the value of US imports from China.

That means in an all-out, tit-for-tat trade war, China would not be able to match the tariffs dollar by dollar.

Further evidence of Mr Trump’s trade war with China is set to show up in Chinese economic data due over the next few days.

June trade data is due on Friday and second quarter gross-domestic product figures are scheduled for release on Monday.

"It is clearly not in China’s interests to be engaged in an escalating economic conflict with the United States which will be harmful to China’s growth," said Mr Edward Alden, a Washington DC based trade specialist at the the Council on Foreign Relations and author of ‘Failure to Adjust: How Americans Got Left Behind in the Global Economy.’

A survey by the American Chamber of Commerce in Shanghai found that most US businesses operating in China oppose the use of tariffs in retaliation for the challenges they face, from an uneven playing field to poor protection of intellectual property rights.

The tariffs initiated by Mr Trump have also drawn criticism from lawmakers in his own Republican Party, as well as from US trade groups worried about higher costs for businesses and consumers.

Washington and Beijing now have about seven weeks to strike a deal or dig in for a trade war that could upend corporate supply chains and raise prices for consumers around the world. The US tariffs on US$200 billion of Chinese goods are scheduled to take effect after Aug 30, when the Trump administration’s consultation process ends.

While there are no formal talks scheduled, dialogue continues between the two countries among lower-level bureaucrats, according to people familiar with the matter.

Even as he has slapped duties on Chinese goods, President Trump has continued to emphasise his personal friendship with Mr Xi.

Concerns about the knock-on effect of the trade war spread on Thursday, with South Korea, Asia's fourth-largest economy, warning that components and materials - "intermediate goods" - used in home appliances, computers and communications devices could be caught in the crossfire.

South Korea's trade ministry said the trade war could be "prolonged and spread," adding that it would prepare responses and scenarios to cope with the economic impact of the trade row.

Its finance minister also warned that the dispute would present "serious downward risks" to South Korea's export-reliant economy if the impact spread globally.

"While the trade conflict between the US and China has had a limited impact so far, we can't rule out the possibility of a slowdown in the Chinese economy and a contraction in world trade should conflict grow and spread into the global market," Finance Minister Kim Dong-yeon said at a government meeting.

OCBC Bank in Singapore estimated that in a scenario where US tariffs apply to US$250 billion of Chinese goods, South Korea's GDP growth could be reduced by 0.3 percentage point while Japan's growth could be cut by 0.2 percentage point.

"China's closest neighbours, namely Japan, Korea and Hong Kong, are most vulnerable to a US-Sino trade war because they export mostly intermediate goods to China," OCBC said in a note.

South Korea's central bank on Thursday downgraded its growth outlook for this year to 2.9 per cent, from 3.0 per cent, after an export boom ground to a halt in June in the face of escalating US-China trade tensions.

Major auto producing countries such as South Korea are also bracing for steep US tariffs on autos and auto parts, as Mr Trump has ordered a national security probe into the sector, which is expected to be completed this month. AGENCIES