U.S., China's Top Trade Officials Make First Contact Since Truce

U.S., China’s Top Trade Officials Make First Contact Since Truce

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The U.S. stance on Hong Kong’s protests, arms sales to Taiwan, and Huawei Technologies Co.’s fate are among issues in play alongside trade as the U.S. and China resume talks.

The U.S. agreed to tone down criticism of Chinese rule in Hong Kong recently in order to restart trade talks, according to a Financial Times report on Wednesday. That concession to President Xi Jinping contrasts with the continued restrictions on Huawei, which Commerce Secretary Wilbur Ross said on Tuesday is still on the ‘entity list’ limiting its access to U.S. goods and services.

The phone call between the two sides Tuesday was the first confirmed contact since Xi and President Donald Trump met last month and agreed to resume talks. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke on the phone with their Chinese counterparts Chinese Vice Premier Liu He and Commerce Minister Zhong Shan, according to an emailed statement from a U.S. government official who declined to be named in line with policy.

Both sides will continue these talks as appropriate, the official said, without offering more details on the next steps. China’s Ministry of Commerce confirmed the conversation in a brief statement Wednesday morning, saying the two sides “exchanged opinions on implementing the consensus reached in Osaka” by Presidents Xi and Trump.

The announcement of the talks came after China criticized the U.S. and its officials this week for agreeing to sell arms to Taiwan, which China regards as part of its territory, and for meeting with a Hong Kong newspaper publisher who’s an outspoken critic of Chinese rule.

White House economic adviser Larry Kudlow characterized the phone discussion as “constructive,” and said officials are planning more meetings but that no details have been confirmed. “Hopefully we can pick up where we left off but I don’t know that,” he told reporters Tuesday.

The U.S. officials will continue to speak with their Chinese counterparts on trade issues and perhaps make a trip there “shortly,” Kellyanne Conway, counselor to President Trump, told reporters in Washington.

Trump and Xi agreed to a tentative pause in their trade war after meeting at the Group-of-20 leaders’ summit in Japan on June 29, and they directed their negotiators to find a path forward on a deal. The leaders didn’t outline a time-frame for negotiations or a deadline to finalize a trade deal.

Tentative Cease-fire

The talks broke down in May after the U.S. accused China of reneging on draft commitments, while the two sides remain at odds over significant aspects of a deal.

Under the tentative cease-fire, Trump agreed to postpone new tariffs on about $300 billion of Chinese imports, though he left in place the existing 25% duty on about $260 billion of Chinese products. The U.S. president also said he would allow U.S. companies to resume supplying some of their products to Huawei, but added that the Chinese telecommunications-gear-making giant would remain on a Commerce Department trade blacklist over national security concerns.

Earlier Tuesday, Kudlow said at an event in Washington that the U.S. government would ease restrictions on Huawei by relaxing the licensing requirements from Commerce. He added that Xi had agreed with Trump to scale up purchases of American products, including soybeans and wheat, along with possibly energy as part of a “good-faith” move to show how open China is to resolving trade differences.

(An earlier version of this story corrected Kellyanne Conway’s title.)

–With assistance from Reade Pickert, Alyza Sebenius and Yinan Zhao.

To contact the reporters on this story: Jenny Leonard in Washington at jleonard67@bloomberg.net;James Mayger in Beijing at jmayger@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Jeffrey Black, Sharon Chen

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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