Mnuchin: Trade war with China is ‘on hold’

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Mnuchin and White House economic adviser Larry Kudlow are free-trade supporters regarded as more conciliatory toward Beijing than Lighthizer and White House trade adviser Peter Navarro, the administration's fiercest China hawk.

Another proposal would require the director of national intelligence to consider the security implications of any changes to the ZTE ban, while a third would require reports on quid pro quo offers between the USA and Chinese governments over any possible plan.

In the course of the talks, Larry Kudlow, Trump's economic adviser, indicated to journalists that China had agreed to United States demands that the trade deficit be reduced by $200 billion. China is promising to increase its imports of USA agriculture and energy products.

Commenting on the matter, The Washington Post pointed out that while China had agreed to boost purchases, it had not specified the amount.

The statement's language on intellectual property and investment flows, which promised continued high-level engagement, also suggested "there remains a huge gulf between the two sides", said Prasad, now a professor of trade policy at Cornell University.

"Both sides want to reach some kind of deal".

Some US$200 billion in annual two-way trade has been at stake since Lighthizer's department, under orders from Trump, published a list of Chinese imports last month that would be subject to sharply higher import tariffs after a period of review ends on Tuesday. This follows an investigation into Chinese trade practices in the area of technology.

"We are not out of the danger zone yet", said Nick Marro, a China analyst with the Economist Intelligence Unit.

The president's misgivings open the prospect that a trade war Treasury Secretary Steven Mnuchin had declared "on hold" is at risk of resuming.

The Trump administration previously announced China had offered a package to reduce the US-China trade deficit by $200 billion, but China denied agreeing to that and the Saturday statement said only that Beijing would "substantially reduce" the imbalance.

However, there was somewhat different emphasis from Kudlow.

"We were never supportive of tariffs, so any actions that can be taken to stop those from being implemented are positive from our view", Parker told Reuters. "Tariffs are part of any negotiation, and tariffs have to be part of any enforcement".

Prospects for United States energy exports to China got a boost in November, when China National Petroleum Corporation and U.S. natural gas producer Cheniere Energy reached an agreement on shipments of liquefied natural gas (LNG).

The U.S. and China may have avoided a potential trade war.

Instead, ZTE would be forced to make.

The ban amounted to a death sentence for ZTE, which relies heavily on US parts, and the company announced that it was halting operations.

Still, the talks, which began Thursday and ended Saturday with the issuance of a joint statement, may have helped to ease tensions at least slightly between the world's two biggest economic powers.

"Benefits are huge for our business, especially Infiniti", said a Yokohama-based executive at Nissan Motor Co Ltd (7201.T) referring to the Japanese firm's premium auto brand.

Republican Senator Marco Rubio dismissed the reported commitment of China to help increase United States exports.

For Beijing, this will be a crucial sticking point, while "Made in China 2025" will be simply non-negotiable. "If we don't wake up and start treating this as a national security issue, China is going to win again".

Mr Mnuchin told Fox News on Sunday that China would buy more U.S. goods "to substantially reduce the trade deficit". Sales to China could merely mean not selling to other countries, the New York Times reported.

Trump has also found himself under attack for retreating from penalties his administration announced against a large Chinese telecommunications company, ZTE, for violating United States sanctions against Iran and North Korea.

"China must continue to be strong & tight on the Border of North Korea until a deal is made", he tweeted.

According to Sputnik political observer Dmitry Kosyrev, both parties have won in the short run, judging from market indices: The Dow Jones industrial average and Nasdaq rose 1.2 and 0.5 percent, respectively, while a new stock market boom has kicked off in China amid the Sino-American trade truce. "But trade has been a total one-way street".

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