“If you look at what’s happening with trade in China, it hasn’t been fair for many, many years.” When President Trump rails against China, he says things like, “Our country is being taken advantage of,” or, “We lost years ago by presidents and others allowing this to happen.” He’s probably referring to the past four decades, when China has grown faster than any major economy in history and gone from a poor, developing country to an economic powerhouse that is challenging America’s spot at the top of the international food chain. “Its emergence as a global power was so sharp and so extreme, faster than the world can handle, in some ways faster than China can handle.” The U.S. and other Western nations kick-started much of China’s rise by opening up trade. What they haven’t figured out is how to get this fundamentally different economic system to play by free market rules. A pivotal moment came in 2001 after 15 years of negotiations. China joined the World Trade Organization, which sets the rules for free and fair trade between member countries. “All of the countries that were in the club at the time put enormous demands on China for what they needed to do.” The Chinese committed to sharply lower tariffs and reduced some of the government’s role in how business gets done. But they argued then, as they still do now, that China is a developing country and so should be held to less stringent free trade standards. The hope was that these first steps would lead to even more sweeping changes. “Why did we assume that? The experience of communism was through the lens of the Soviet Union and its satellite states, which was ultimately not a success. And so the presumption was, China’s going to want to become like us, more market oriented.” “After China joined the W.T.O. in 2001, you saw this enormous surge of Chinese exports to everywhere in the world, and to the United States in particular.” “They were kind of an elephant hiding behind mice with respect to other countries in global trade negotiations at the time.” The U.S. and other countries complained that China was not opening its markets enough, and keeping the value of its currency artificially low to make Chinese exports more attractive. “China has been making great strides using tools that are really not acceptable under the global trade system.” China has continued to operate as a centrally planned economy. The government owns, influences or subsidizes major industries, giving them an artificial competitive edge. There are heavy restrictions on foreign investment, and foreign companies are pressured to share their technologies. “China has become more market oriented, but dating back to probably 2007, 2008, I think it was recognized that China wasn’t on the path to become more like us. And so then countries began to think about, well, what do we do instead?” “Some view the rise of Asia-Pacific with suspicion and fear. America doesn’t.” Enter the Trans-Pacific Partnership, initiated by Bush, signed by Obama. “When implemented, It won’t just boost trade and support jobs in our 12 countries. It will help set stronger rules for trade across the Asia-Pacific.” Put less politely, It was also supposed to be a bulwark to China’s growing economic power. “The idea was that China would want to join this great trading pact, and so they would have this incentive to reform their economy.” “This is the one that President Trump ripped up on his third day in office.” “The first one is withdrawal of the United States from the Trans-Pacific Partnership.” “I had seen the erosion of popular and congressional support for trade for many years. But I’d never seen anything like Donald Trump.” “Our founding fathers understood trade much better than our current politicians, believe me.” Trade is generally accepted by economists as win-win for countries on the whole. But Trump says that China is winning and the U.S. is losing. “He and people in his administration argue that past approaches to dealing with China haven’t worked. It’s not actually that profitable to negotiate with them. We need to focus on this much bigger trade measure, and then we can really hit them with a very aggressive, forceful action.” “He seems intent on generating a moment of crisis.” “We put a $50 billion tariff on, then we put a $100 billion tariff on. And you know at a certain point, they run out of bullets.” But dynamics have changed. Today, China sees its economy as strong enough to withstand almost anything the U.S. can throw at it.<doc-sep>“If you look at what’s happening with trade in China, it hasn’t been fair for many, many years.” When President Trump rails against China, he says things like, “Our country is being taken advantage of,” or, “We lost years ago by presidents and others allowing this to happen.” He’s probably referring to the past four decades, when China has grown faster than any major economy in history and gone from a poor, developing country to an economic powerhouse that is challenging America’s spot at the top of the international food chain. “Its emergence as a global power was so sharp and so extreme, faster than the world can handle, in some ways faster than China can handle.” The U.S. and other Western nations kick-started much of China’s rise by opening up trade. What they haven’t figured out is how to get this fundamentally different economic system to play by free market rules. A pivotal moment came in 2001 after 15 years of negotiations. China joined the World Trade Organization, which sets the rules for free and fair trade between member countries. “All of the countries that were in the club at the time put enormous demands on China for what they needed to do.” The Chinese committed to sharply lower tariffs and reduced some of the government’s role in how business gets done. But they argued then, as they still do now, that China is a developing country and so should be held to less stringent free trade standards. The hope was that these first steps would lead to even more sweeping changes. “Why did we assume that? The experience of communism was through the lens of the Soviet Union and its satellite states, which was ultimately not a success. And so the presumption was, China’s going to want to become like us, more market oriented.” “After China joined the W.T.O. in 2001, you saw this enormous surge of Chinese exports to everywhere in the world, and to the United States in particular.” “They were kind of an elephant hiding behind mice with respect to other countries in global trade negotiations at the time.” The U.S. and other countries complained that China was not opening its markets enough, and keeping the value of its currency artificially low to make Chinese exports more attractive. “China has been making great strides using tools that are really not acceptable under the global trade system.” China has continued to operate as a centrally planned economy. The government owns, influences or subsidizes major industries, giving them an artificial competitive edge. There are heavy restrictions on foreign investment, and foreign companies are pressured to share their technologies. “China has become more market oriented, but dating back to probably 2007, 2008, I think it was recognized that China wasn’t on the path to become more like us. And so then countries began to think about, well, what do we do instead?” “Some view the rise of Asia-Pacific with suspicion and fear. America doesn’t.” Enter the Trans-Pacific Partnership, initiated by Bush, signed by Obama. “When implemented, It won’t just boost trade and support jobs in our 12 countries. It will help set stronger rules for trade across the Asia-Pacific.” Put less politely, It was also supposed to be a bulwark to China’s growing economic power. “The idea was that China would want to join this great trading pact, and so they would have this incentive to reform their economy.” “This is the one that President Trump ripped up on his third day in office.” “The first one is withdrawal of the United States from the Trans-Pacific Partnership.” “I had seen the erosion of popular and congressional support for trade for many years. But I’d never seen anything like Donald Trump.” “Our founding fathers understood trade much better than our current politicians, believe me.” Trade is generally accepted by economists as win-win for countries on the whole. But Trump says that China is winning and the U.S. is losing. “He and people in his administration argue that past approaches to dealing with China haven’t worked. It’s not actually that profitable to negotiate with them. We need to focus on this much bigger trade measure, and then we can really hit them with a very aggressive, forceful action.” “He seems intent on generating a moment of crisis.” “We put a $50 billion tariff on, then we put a $100 billion tariff on. And you know at a certain point, they run out of bullets.” But dynamics have changed. Today, China sees its economy as strong enough to withstand almost anything the U.S. can throw at it.<doc-sep>China has offered to purchase close to $70 billion worth of US goods over the next year if the Trump administration backs off proposed tariffs, according to The Wall Street Journal. The deal would include purchases of soybeans, corn, natural gas, crude oil, coal, and more. It could help alleviate some of the trade tensions between the Trump administration and China. China has floated a massive purchase of US goods, according to a new report, in an effort to curb burgeoning trade tensions with the Trump administration. According to Lingling Wei and Bob Davis at The Wall Street Journal, Chinese officials in a meeting with Commerce Secretary Wilbur Ross over the weekend offered to purchase close to $70 billion worth of US goods in the next year if the US backs off proposed tariffs on imports of Chinese products. As part of the new purchases, China would import larger amounts of US soybeans, corn, natural gas, crude oil, coal, and more, according to The Journal. The purchases of US agricultural and energy products would be designed to help alleviate some of the simmering trade tensions between the US and China and are the result of a series of back-and-forth talks between the US delegation and Chinese officials. The tensions stem from Trump's announcement in March that the US would impose tariffs on $50 billion worth of Chinese goods as punishment for what it says is Chinese companies' theft of US intellectual property. This move set off a heated tit-for-tat tariff battle, but it also brought the two countries to the negotiating table on a solution to the tension. An earlier preliminary deal between the US and Chinese delegations also featured a planned Chinese purchase of US goods, along with a US promise to delay tariffs on $50 billion worth of Chinese goods. The deal was seen as a turning point after the proposed tariffs appeared to push the US and China close to a trade war. Treasury Secretary Steven Mnuchin told CNBC after the preliminary deal that China could purchase $40 billion to $50 billion worth of US energy and up the value of agricultural imports by 35% to 40%. Given that the value of US agricultural exports to China was about $20 billion last year, Mnuchin's suggested package would be worth about $47 billion to $58 billion. China also imports about $10 billion worth of US oil and gas, so the proposed purchases would be a major increase. But the Trump administration ramped up tensions when it announced that it planned to move forward with the tariffs, pending further discussions with China. According to The Journal, China stressed that the purchases would be void if the Trump administration went forward with the tariffs — an ultimatum that did not play well with Ross and the other US officials. Buying up US goods could help to diminish the size of the US-China trade imbalance. Trump requested that China reduce the trade deficit, which totaled roughly $375 billion last year, by $200 billion. According to The Journal, Chinese officials believe the purchases could go a long way toward meeting that demand. The US is also skeptical of the deal, the report said, because the energy purchases that would be directed to China could just come from exports to other countries, something that would mitigate the overall-trade-deficit benefit, and because there is a sense that US farmers could not ramp up production fast enough.<doc-sep>
(CNN) — President Donald Trump on Tuesday tempered expectations set by his own administration that the US and China had reached a tentative agreement to resolve a bubbling trade dispute between the two countries. “There is no deal,” Trump said flatly on Tuesday, seemingly rejecting comments by his own top economic officials who suggested the US and China were on the cusp of an agreement to reduce the US’ trade deficit with China. “We’ll see what happens, but that deal I will say could be much different from the deal that finally emerges and it may be a much better deal for the United States,” Trump added. Trump’s comments came two days after Treasury Secretary Steve Mnuchin said the US and China had agreed to a “framework” for a trade deal and were “putting the trade war on hold.” Stock markets rallied the next day amid a sense that the US-China trade tensions were cooling, but Mnuchin’s comments also prompted a backlash from Trump supporters and economists who argued Trump was easing the pressure on China without having achieved significant concessions. Trump rejected the suggestion that he was softening his stance on Chinese trade abuses, insisting he would negotiate a deal that would benefit the US and noting that it was his administration that barred the Chinese firm ZTE from doing business with US firms last month. Trump appeared to suggest that Mnuchin had gotten ahead of the administration’s position, rebuking coverage of the latest US-China trade developments as “incorrectly written,” even though he said reporters were not to blame. “I’m not saying that’s the reporters’ fault, I’m saying I’m not talking about the trade deal. I don’t like to talk about deals until they’re done,” Trump said. His comments came amid bitter disagreements among the President’s trade team over the direction the US-China trade talks have taken under Mnuchin’s leadership. The disagreements burst into public view on Sunday when Mnuchin’s comments about putting tariffs “on hold” were followed up by a statement from Robert Lighthizer, the US Trade Representative, who said the US “may use all of its legal tools to protect our technology through tariffs” and other means. A source close to the process said the statement was intentionally contradictory and an effort by Lighthizer to keep Mnuchin from getting ahead of the administration’s negotiations. The source argued that Mnuchin was “freelancing” with his comments on Sunday and said Mnuchin was in danger of becoming “Rex Tillerson 2.0,” referring to the former secretary of state whom the President rebuked for getting ahead of his positions. A Mnuchin spokesman did not immediately respond to a request for comment. Trump’s comments on trade on Tuesday during an Oval Office meeting with the South Korean President also reflected the extent to which trade negotiations with China loom large amid preparations for the North Korean summit. At one point, the President abruptly transitioned from discussing US-China trade issues to airing his concerns about Chinese influence over North Korea. And he made explicitly clear that the situation with North Korea is also on his mind as he deals with China on trade issues. “We have a very powerful hand on trade. And when I’m thinking about trade – you know, I read you folks and you say, ‘Well, why does he’ – there’s a much bigger picture that I have in mind,” Trump said. “When I think of trade with China, I’m also thinking about what they’re doing to help us with peace with North Korea. That’s a very important element.” Trump suggested North Korea’s harsher tone in a series of statements last week was a result of Kim Jong Un’s most recent meeting earlier this month with Chinese President Xi Jinping “When Kim Jong Un had the meeting with President Xi in China … I think there was a little change in attitude from Kim Jong Un,” Trump said in the Oval Office. “So I don’t like that. I don’t like that from the standpoint of China.” Even as he insisted he enjoyed a “great relationship with President Xi,” and recalled “two of the great days of my life” spent in Beijing last November, Trump cast doubts on Xi’s intentions. “I think that President Xi is a world class poker player,” he said. “There was a somewhat different attitude (from North Korea) after that meeting and I’m a little surprised.” CNN’s Kevin Liptak contributed to this report.