Chinese negotiators are preparing to offer the United States a mammoth package of promises to buy more American goods, in a bid to pare down the trade deficit between the two countries and to defuse President Trump’s aggressive moves against China’s trade practices.

The package, which officials said could approach the $200 billion in trade concessions that the administration requested from the Chinese government earlier this month, would allow Mr. Trump to claim a major victory in his campaign to rebalance America’s trade relationship with its biggest economic rival.

But economists said any Chinese promises would be largely illusory, given the structural hurdles in China to buying more American exports. And critics say it could impair Mr. Trump’s more ambitious agenda to punish China for pressuring American companies to hand over valuable technology.

The negotiations with Beijing come at a critical moment for Mr. Trump, four weeks before he is to meet the leader of North Korea, Kim Jong-un, for talks about giving up his nuclear arsenal. Twice in the last month, Mr. Kim has traveled to China to confer with President Xi Jinping. Some administration officials said they believed China was using its influence over North Korea as leverage to push Mr. Trump for a trade deal.

China’s chief negotiator, Liu He, a top economic adviser to Mr. Xi, is meeting on Thursday with the Treasury secretary, Steven Mnuchin; the United States trade representative, Robert Lighthizer; Wilbur L. Ross, the commerce secretary; and other officials.

The Chinese offer comes in response to a request by a high-level American trade delegation to Beijing in early May that China reduces the trade deficit, which hit $375.2 billion last year, by $200 billion. The trade deficit is the gap between what America exports to China and what it imports from that country. China is expected to pledge to reduce that gap by purchasing substantially more American agricultural products, including soybeans, as well as semiconductors and natural gas.

Chinese officials are likely to resurface past promises to Mr. Trump and previous American presidents, including opening up sectors of the economy that can receive foreign investment, like banking and insurance.

In return, China plans to press the administration to lift sanctions on the telecommunications giant ZTE and to relax export controls that prevent American companies from selling sensitive technology to China.

Economists say that having the Chinese purchase $200 billion more in American goods per year — an amount equivalent to more than half of the annual American trade deficit with China — simply is not practical.

“The short answer is these are unrealistic numbers,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

Even if the Chinese stopped buying other foreign products, like Airbus airplanes from the European Union or soybeans from Brazil, and purchased solely American products, it would add up to only a small fraction of the $200 billion total. “It would even be a stretch to get it to $50 billion,” Mr. Bown said.

That is because the United States economy is already running near its full productive capacity, meaning it would not be able to produce enough new goods to meet Chinese demands, especially in the short term.

In that scenario, the United States would probably stop selling airplanes, soybeans and other major exports to other countries and sell them to China instead — shrinking the United States trade deficit with China but leaving the United States trade deficit with the entire world unchanged.

Contribution Magdalena A K Muir

Source: 

https://www.nytimes.com/2018/05/17/us/politics/china-trade-trump-concessions.htm