The United States and China are resuming trade talks, raising hopes for a way out of an intensifying dispute between the world's two largest economies.
White House economic adviser Larry Kudlow told reporters Thursday that the U.S. team will be led by David Malpass, U.S. Treasury under secretary for international affairs. Earlier, China said it would send a delegation led by a deputy commerce minister.
This meeting would be the first between senior U.S. and Chinese officials since June 3 talks in Beijing ended with no settlement. The United States has already imposed taxes on $34 billion in Chinese goods, drawing Chinese retaliation. President Donald Trump is readying tariffs on $216 billion more, and Beijing has vowed to counterpunch with its own trade sanctions.
"We haven't really had a sit-down with them in quite some time at any level. So who knows? But it's got to be a good thing," said Kudlow, director of the National Economic Council.
Investors expressed relief at the prospect of a cease-fire in a trade standoff that has been escalating for months. The Dow Jones industrial average was up more than 365 points in late morning trading.
"It's better to be talking than not talking, particularly in a dispute which shows no signs of let up and where mutual trust is so low," said Wendy Cutler, a former U.S. trade negotiator who is a vice president at the Asia Society Policy Institute.
But she cautioned: "We should not expect any breakthroughs at this meeting and keep expectations low. At best, the two sides could agree on future engagement at a more senior level and start exploring possible off ramps from this escalating dispute."
Allegations against China
The United States and China are battling over China's aggressive campaign to challenge American technological dominance. The U.S. charges that China uses predatory tactics ranging from outright cybertheft to forcing foreign companies to hand over technology as the price of admission to the Chinese market.
Efforts to resolve the dispute have bogged down. In May, Treasury Secretary Steven Mnuchin had declared the trade war "on hold" after China agreed to reduce the U.S. trade deficit by buying more American energy and farm products. But Trump reversed course and announced that the U.S. would go ahead with tariffs on Chinese goods, and Beijing withdrew its offer to step up purchases of American products.
The talks scheduled for later this month sound "like a lower-level version of what we had in May. They struck a deal and one week later the president rejected it," said Philip Levy, a senior fellow at the Chicago Council on Global Affairs and a White House trade adviser in the administration of President George W. Bush. "What we've seen in China negotiations is that the president has repeatedly failed to trust his own people."
The U.S. trade deficit with China in goods and services — the gap between what the U.S. sells the Chinese and what it buys from them — came to a record $336 billion last year. Trump blames unfair Chinese trade practices for the vast trade gap.
"We're talking about two fundamentally different approaches to commerce," said trade lawyer Robert Holleyman, a partner at Crowell & Moring law firm and an Obama administration U.S. trade official involved in negotiations with China. "China has a state-planned and state-driven, heavily subsidized and substantially closed economy. The U.S. is in favor of a more open market economy. ... Can those differences be bridged? Or are they so fundamental that the tariffs and retaliatory tariffs become the norm."