Abu Dhabi, UAETuesday 20 October 2020

China extends US car tariffs suspension

Beijing is determined to prevent an escalation of the frictions that have hurt its economy and roiled markets

Port in Qingdao, China. Beijing has made moves to ease relations with the US ahead of meeting this week. AFP
Port in Qingdao, China. Beijing has made moves to ease relations with the US ahead of meeting this week. AFP

The Chinese government said it will extend a suspension of retaliatory tariffs on US cars and include the opioid fentanyl in a list of controlled substances, two steps that could generate a positive atmosphere for trade negotiations due to resume this week.

Beijing temporarily scrapped the 25 per cent tariff imposed on vehicles as a tit-for-tat measure on January 1, after the White House delayed a rise in tariffs on $200 billion of products that had been due that day. The Ministry of Finance announced an extension of the suspension without giving a specific end date, according to Bloomberg. Vice Premier Liu He is due to return to Washington from April 3.

Chinese officials also pledged to tighten regulation on fentanyl from next month, a promise President Xi Jinping already made to President Donald Trump at a December meeting in Argentina. The inclusion of the drug as a controlled substance in a category of non-medicinal narcotic drugs and psychotropic substances will start May 1, according to the China National Narcotics Control Commission.

The moves signal China is trying to keep momentum in trade talks going as they enter what could be the final stretch before Mr Trump and Mr Xi are presented with a text to finalise or sign. Beijing is determined to prevent an escalation of the frictions that have hurt its economy and roiled markets, even as enforcement measures remain a sticking point in negotiations.

“What matters is not whether these are big concessions or not, but that they are a quick response to the US concerns," said Gai Xinzhe, a senior analyst at Sino Ocean Capital in Beijing. “It’s not like in the past when issues raised in bilateral dialogues dragged on without solution. This is good for enhancing mutual trust in the negotiations.”

China touted “new progress” in talks after US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin visited Beijing last week. Both sides have been working line-by-line through the text of an agreement that can be put before Mr Trump and Mr Xi, sources said earlier.

The continued suspension of auto tariffs seeks to “create a good atmosphere for China-US economic and trade talks” and is a “positive response” to the US decision to delay import tax increases, the Ministry of Finance said.

The world’s second-largest economy saw some early signs of stabilisation in March as its manufacturing gauges signalled expansion. But Premier Li Keqiang stressed last week that new threats are arising from weakness in global demand and warned that short-term fluctuations in growth numbers are unavoidable.

China “exercised great restraint and did its very best” with the recent moves, compared with the US only mulling to suspend some of its tariffs, said Li Yong, a senior fellow at the China Association of International Trade in Beijing.

“Blame does not help to solve the problem. The right attitude should be to enhance cooperation and have constructive communication.”

Separately, Mr Keqiang called on New Zealand on Monday to ensure a fair investment environment, as he met Prime Minister Jacinda Ardern whose country has rejected a bid by Chinese telecom giant Huawei to build a 5G mobile network, Reuters reported.

Ms Ardern, on a one-day visit to China, said before meeting Mr Li that she hoped to have a dialogue with Beijing about New Zealand's intelligence agency's decision to reject the bid.

Ties with China have been tense under Ms Ardern's government which has openly raised concerns about Beijing's growing influence in the South Pacific.

China postponed a major tourism campaign in New Zealand days before its launch in February.

"At present, China-New Zealand ties overall are developing in a stable manner," Mr Li told Ms Ardern at the start of their meeting in Beijing's Great Hall of the people, noting New Zealand's desire for good relations.

"China also places a high importance on relations with New Zealand," he said.

"And we hope that we can aspire to the greatest common denominator regarding each others' interests and that when each sides businesses invest in each other's businesses, they can enjoy a fair, transparent, convenient environment."

Ms Ardern told Mr Li that she wanted to underline the importance her country placed on its relationship with China. In 2008, New Zealand became the first Western country to sign a free trade agreement with China.

"I reiterated to Premier Li that New Zealand welcomes all high quality foreign investment that will bring productive economic growth to our country," she said following the meeting.

"We discussed the FTA upgrade, and agreed to hold the next round of negotiations soon and to make joint efforts towards reaching an agreement as soon as possible."

China is New Zealand's largest goods export partner.

Updated: April 1, 2019 11:14 AM

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