July 17, 2017 3:46 am JST

US may press China on steel as trade deadline passes

Both sides to discuss trade imbalance in upcoming economic talks

ISSAKU HARADA and TSUYOSHI NAGASAWA, Nikkei staff writers

President Donald Trump meets with Chinese President Xi Jinping at the G-20 summit on July 8 in Hamburg, Germany. © AP

BEIJING/WASHINGTON -- The U.S. and China appear headed toward a heated confrontation over steel dumping and other trade issues as they cross a 100-day deadline set for Sunday.

Chinese President Xi Jinping and his U.S. counterpart Donald Trump first agreed in early April to create an action plan by mid-July that would address trade imbalances. Both sides are set to hold their first Comprehensive Economic Dialogue this Wednesday.

The two got the ball rolling in May when China formally agreed to allow imports of U.S. beef, previously banned due to concerns about mad cow disease. In return, Washington pledged to cooperate with Beijing's Belt and Road infrastructure-building initiative.  

"The agreements changed the view that the U.S. and China are starting a trade war," said a senior official in China's Commerce Ministry.

Back then, the two nations were on relatively friendly terms since the White House planned to soften its economic stance on China if Beijing would cooperate in resolving the North Korean problem.

Then Pyongyang engaged in a series of missile tests that culminated with an intercontinental ballistic missile that experts fear can reach the continental U.S. Despite that development, Beijing still favors dialogue with Kim Jong Un's regime above harsher sanctions, such as cutting off Chinese petroleum exports.

Trump's patience is seemingly wearing thin. "We've asked [Xi] for some assistance with respect to North Korea," the president said during his visit to France Thursday. "Probably, he could do a little bit more."

With the brief honeymoon over, Washington is readying a much tougher stance, according to a source close to U.S.-China diplomatic channels. And Chinese steel dumping will be brought front and center.

Back in May, both sides agreed to make an effort on the issue, electing to hammer out a concrete plan of action at a later date. China exported nearly 1.2 million tons of steel to America last year. That sum is a third of the peak, but Washington suspects China of pumping in more steel through third-party nations.

Trump is looking at raising tariffs and imposing volume sales caps, which would likely be met with a furious pushback from Beijing during negotiations.

China is expected to highlight how it has cut excess steel production capacity at a faster-than-expected pace. But the one-party state has not disclosed which blast furnaces it shut down, fueling suspicion that authorities merely scrapped already-dormant furnaces. China also produces excess aluminum.

At the talks, the U.S. and China will likely agree to hash out a road map on trade within the next year. That would buy time for the Chinese leadership, which is facing a shake-up in the twice-a-decade Communist Party congress slated for the fall.

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