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Trade war

China scrapped 30% of draft trade deal, sources say

Pages went from 150 to 105 after Chinese leadership objected to 'unequal treaty'

A rift has opened between Chinese President Xi Jinping and U.S. President Donald Trump over parts of a draft trade deal that Washington considers to be crucial.   © Reuters

TOKYO -- The U.S.-China trade talks broke down after the Chinese government returned to Washington a significantly reduced version of the U.S. draft, angering President Donald Trump, Nikkei has learned.

Sources say the original 150-page document, compiled through five months of painstaking negotiations, was cut up and reduced to 105 pages.

The editing was revealed in early May and led the U.S. to raise import tariffs on $200 billion of Chinese goods. China has retaliated with tariff hikes on $60 billion of American products.

According to sources familiar with U.S.-China relations, Chinese leadership deemed legally binding parts of the draft text to be tantamount to "an unequal treaty." All of the sections judged "unequal" were deleted or revised.

The shuttle diplomacy between U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He had culminated in a 150-page draft that consisted of seven chapters, covering intellectual property, forced technology transfers, non-tariff barriers, agriculture, services, purchases and enforcement.

The U.S. attaches importance to legal measures it says China needs to take to bring about structural reforms in the way its economy operates. From Washington's point of view, Beijing moved unexpectedly, deleting the most sensitive, as well as the most crucial, elements of the agreement.

In this sense, the collapse of the negotiations, which sent shock waves around the world, was predetermined by China's scrapping as much as 30% of the original draft text, sources say.

Trump tweeted his intention to raise tariffs on May 5.

More coming in tomorrow's China up close column.

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