U.S. business seeks action, not trade war, in Xi-Trump summit

Procter & Gamble Hygiene and Health Care

04/04/2017 12:18

* U.S. business community supports targeted trade actions on 
China 
    * Steel prices, access to China market at issue 
    * Doubts remain over whether Trump has a coordinated China 
policy 
    * Industry not expecting deals, but watching tone of summit 
    * China tops list of countries with trade surpluses with 
U.S. 
 
    By Michael Martina and Diane Bartz 
    BEIJING/WASHINGTON, April 4 (Reuters) - Although worried 
about the prospect of a trade war, American businesses operating 
in China nonetheless want President Donald Trump to wring some 
concessions on market access from China's leader Xi Jingping 
when the two meet this week. 
    Trump warned in a tweet last week the meetings at his 
Mar-a-Lago resort on Thursday and Friday will be "very 
difficult" and "American companies must be prepared to look at 
other alternatives."  
    Trump has said he wants U.S. companies to stop investing in 
China and instead create jobs at home. He has also accused China 
of manipulating its currency to boost exports. 
    Critics within U.S. industry have accused China of unfair 
government subsidies to its companies, and of flooding the U.S. 
market with cheap products from steel to solar panels, while 
restricting foreign investment over vast swathes of the world's 
second-biggest economy.  
    But they also worry Trump's policies on China are not 
entirely clear, with his trade team still not in place, and may 
be subject to a 'grand bargain' involving other issues such as 
North Korea. 
    Trump is set to enter the meeting without several key 
advisors, including his pick for trade negotiator, Robert 
Lighthizer who has yet to be confirmed by Congress. His nominee 
as ambassador to China, Iowa Governor Terry Branstad, has also 
yet to be confirmed, while several posts in the U.S. State 
Department that formulate Asia policy remain unfilled. 
    "With this in mind, it is hard to imagine that there will be 
much in the way of concrete accomplishments at this summit, or 
even that there has been any significant interagency discussion 
on strategy leading up to it," said Randal Phillips, Mintz 
Group's Beijing-based managing partner for Asia and the former 
chief CIA representative in China. 
        
    'ACTIONS, NOT WORDS' 
    Some of the largest U.S. companies have contributed to the 
billions of dollars of foreign direct investment that have 
poured into China over the past two decades, creating hundreds 
of thousands of jobs. They include tech companies like Apple, 
which makes much of its iPhone in China, automakers such as 
General Motors and Ford, heavy machinery firms like Caterpillar, 
retailers like Starbucks and makers of shaving foam and 
detergent, like Procter & Gamble. 
    U.S. steel producers want Trump to press Xi on Chinese steel 
prices, according to a source who has been in discussions with 
the administration in advance of the summit. 
    U.S. automakers complain about a disparity in tariffs: The 
United States has a 2.5 percent tariff on auto imports, China's 
is 25 percent.  
    But the stakes are perhaps highest for American technology 
firms, who worry that China's new cyber-security law, which 
takes effect in June, sets potentially discriminatory standards 
for multinationals. 
    The Information Technology & Innovation Foundation (ITIF), a 
think-tank whose board includes representatives from Apple, IBM 
Google and other tech heavyweights, has urged the Trump 
administration to pressure China to "stop rigging markets". It 
warned that possible retaliation from Beijing was not a reason 
for inaction. urn:newsml:reuters.com:*:nL3N1GT2ZS 
    Trump has staked out various positions on China as president 
in his tweets, phone calls and statements. 
    In a phone call with Xi after taking office, Trump gave 
ground on one of Beijing's most sensitive issues - the status of 
Taiwan - after earlier suggesting he might not stick to 
Washington's long-held "one China" policy. 
    Trump signed two executive orders on trade on Friday, one to 
improve import tariff collection and another to study the causes 
of the U.S. trade deficit. Trump said at the White House signing 
ceremony he and Xi were "going to get down to some serious 
business" and vowed that "the theft of American prosperity" by 
foreign countries would end. 
    Chinese Vice Foreign Minister Zheng Zeguang said on Friday  
the U.S.-China trade imbalance was mostly the result of 
differences in the two countries' economic structures and noted  
China had a trade deficit in services. 
    China tops the list of countries who have trade surpluses 
with the United States, with a $347 billion surplus last year. 
     
    TRADE WARS 
    Some in the U.S. business community worry about tit-for-tat 
retaliation in trade disputes with China. 
    Jacob Parker, vice president of China operations at the 
U.S.-China Business Council, said the two presidents need to 
take "positive actions that would lead to a more durable 
relationship, not retaliatory actions that would lead to a trade 
war". 
    The list of commercial issues between the two countries was 
so long, it would be impossible to make a major dent in them 
with one meeting, he said. 
    China is the largest export market for U.S. soybean 
producers, accounting for 62 percent of U.S. soy exports in 2016 
with a value of over $14 billion, leading some experts to 
suggest the sector could be particularly vulnerable to 
retaliation. 
    Steve Censky, chief executive of the American Soybean 
Association, told Reuters he hopes Trump will take a "prudent" 
approach to the trade relationship and address any issues in a 
"workman-like manner", recognising that both countries have a 
lot to lose if the relationship suffers. 
    William Zarit, chairman of the American Chamber of Commerce 
in China met senior Trump administration officials in February, 
and said "it was clear they were very familiar with the issues 
facing American companies in China, perhaps more so than 
previous administrations". 
    But several corporate lobbyists, representing a range of 
companies expressed concern Trump's lack of attention to detail 
could prove counterproductive when it comes to the intricacies 
of the massive trade and investment relationship. 
    "It's not yet clear whether ... this is a White House that 
wants to fundamentally reset the terms of the relationship or 
tinker at the edges and declare a public relations win," said a 
China expert at a Washington business lobby who asked not to be 
named. 
 
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GRAPHIC: U.S. trade balance with China     http://tmsnrt.rs/2fuSPiB 
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 (Reporting by Michael Martina in Beijing; Diane Bartz, David 
Shepardson and Joel Schectman in Washington; Nichola Groom in 
Los Angeles; and Mark Weinraub in Chicago; Editing by Bill 
Tarrant) 
 ((michael.martina@thomsonreuters.com; +86 10 6627-1219; Reuters 
Messaging: michael.martina.reuters.com@reuters.net)) 
 
Keywords: USA CHINA/BUSINESS