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Trade War

Team Trump seeks to roll back 'Made in China 2025'

Trade delegation heads to Beijing with eye to future industrial supremacy

Trump's delegation to China this week includes (left to right) Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross.   © Reuters

WASHINGTON -- With top American trade officials traveling to China this week, the U.S. is elevating pressure on Beijing not only to address the massive trading imbalance between their nations but also to reconsider its push to promote high-tech industries at home.

A delegation including Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross visits China on Thursday and Friday. They are expected to meet with Chinese officials including Vice Premier Liu He, President Xi Jinping's top economic adviser.

Beijing initially was reluctant to hold the talks, but agreed in hopes of preventing an escalation of trade tensions following a series of aggressive tariffs announced by U.S. President Donald Trump, diplomatic sources said.

China has presented the Trump administration with plans to boost aircraft, semiconductor and natural gas imports in response to American demands that the country reduce its trade surplus with the U.S. by $100 billion, according to the sources. Beijing is working to open its automotive and financial sectors further as well.

But trade frictions between the U.S. and China go even deeper. Washington's greatest concern involves "Made in China 2025," a senior White House official said, referring to Xi's plan for building up 10 key areas of China's manufacturing sector. They include industrial robots and semiconductors, an area in which China seeks to challenge the likes of Intel and Samsung.

"China increasingly threatens to dominate the industries of the future: artificial intelligence, autonomous vehicles, blockchain systems, robotics, high-tech ship manufacturing and more," White House trade adviser Peter Navarro wrote in the Wall Street Journal last month. "Death by China" author Navarro, who thinks the country's rise in high-tech manufacturing could lead to a military clash, was an influential voice behind the tariffs in response to alleged Chinese intellectual property abuses.

Navarro will accompany Mnuchin and the others to China this week. The U.S. wants Beijing to scrap the Made in China 2025 plan, a diplomatic source said.

With midterm elections looming in November, the Trump administration is eager to show progress on trade with China, a constant refrain during his run for the White House. But while Beijing is expected to offer ways to reduce the trade imbalance, it likely will refuse to reconsider its industrial self-sufficiency initiative.

Trade problems with China also loom over the summit expected soon between Trump and North Korean leader Kim Jong Un, given that Chinese cooperation remains crucial to denuclearization of the Korean Peninsula. Some American officials think Beijing could link the North Korea nuclear issue to trade.

As the U.S. gears up for talks with China, negotiations over American metals tariffs enacted in March go into overtime.

On Monday, just before a reprieve from new U.S. levies on steel and aluminum expired, the White House said it reached "agreements in principle" with Argentina, Australia and Brazil, while extending negotiations with Canada, Mexico and the European Union until the end of May.

Trump had given a reprieve to seven countries and regions until the end of April to negotiate the 25% tariff on steel and 10% levy on aluminum. South Korea was granted a permanent exemption after agreeing to cap steel exports to the U.S. at roughly 70% of its annual average.

The Trump administration said it will continue seeking import quotas and other concessions in future negotiations. The European Commission responded in a statement Tuesday that it "will not negotiate under threat."

Still, both the U.S. and the EU stand to gain from the delay. Washington is counting on Europe to pressure China regarding the latter's intellectual property practices. And the EU, alongside Japan, intends to take part in a World Trade Organization dispute resolution process involving the allegations of theft of U.S. intellectual property by China. Some American officials had warned against completely alienating the EU while also negotiating with Beijing on trade.

The EU has hinted at the possibility of a new trade deal with the U.S. if Washington first grants the bloc a permanent exemption from the steel and aluminum tariffs.

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