Liu He faces major headwinds in trade meeting in U.S.

Sara Hsu China Plus Published: 2018-03-03 18:05:24
Share this with Close
Messenger Messenger Pinterest LinkedIn

By Sara Hsu

Top Chinese economic adviser Liu He has been in the U.S. this week to discuss trade issues with Trump administration officials. Even as Liu has been in the United States, Trump's trade policies have become more aggressive, leaving little room for negotiation. Trump has failed to make good on his promise to get a better deal on Chinese trade, in large part because his administration has rejected the use of cooperation as a political tool. Undoubtedly, Liu faces major headwinds in his trade meeting with American officials.

Liu He, member of the Political Bureau of CPC Central Committee, listens during the annual meeting of the World Economic Forum in Davos, Switzerland, Wednesday, Jan. 24, 2018.[Photo: AP/Markus Schreiber]

Liu He, member of the Political Bureau of CPC Central Committee, listens during the annual meeting of the World Economic Forum in Davos, Switzerland, Wednesday, Jan. 24, 2018.[Photo: AP/Markus Schreiber]

Much to discuss

Liu met with U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and economic advisor Gary Cohn on Thursday in an attempt to reduce trade tensions. While the outcome of the meeting has not yet been released, U.S. tariffs on steel and aluminum announced the same day must have felt like a slap in the face. The meeting might have been a bit more genial, as it was balanced between free traders Cohn and Mnuchin and China hawk Lighthizer. Robert Lighthizer has previously labeled China an 'unprecedented' trade threat.

There are a number of trade issues at stake. Not only is there the potential for a trade war, with the U.S. imposing tariffs on several types of goods in recent weeks and anticipated U.S. action against Chinese intellectual property transfers, but there are also ongoing tensions due to the ever present U.S. trade deficit with China.

Tariffs placed on washing machines and solar panels in January were followed by tariffs on steel and aluminum this week, with China as a major target. China responded to the first set of tariffs by launching an anti-subsidy investigation against imports on American sorghum. In reaction to the most recent tariffs, China has expressed 'grave concern.' American action against China for intellectual property theft is also believed to be imminent. 

The trade deficit is also a sticking point between the two countries, as President Trump continues to lambast China for this imbalance. He has justified a trade war based on this, tweeting on Friday, 'When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!' The 'certain country' Trump refers to is China. Most unfortunately, he fails to understand that a trade deficit is not necessarily a bad thing, since trade is not a zero sum game, but a mutually beneficial arrangement between two countries. As a center country, the U.S. has been able to run a trade deficit for years with no trouble.

Land of no cooperation

Despite the presence of pro-free trade officials in the Trump administration, in recent weeks, it is the trade hawks who have earned the President's support. This is evidenced by Trump's recent actions against China on trade. In addition, Trump and his team have refused to cooperate on proposed deals that would limit China’s objectionable trade practices, rejecting China’s offer to reduce its steel overcapacity in 2017, allowing the top trade official to opt out of attending a steel summit aimed at reducing overcapacity, and turning down China’s offer to treat foreign financial firms more fairly.

Trump has shown a reluctance to hold extensive talks with China. The U.S.-China Comprehensive Economic Dialogue ended in cancelled press conferences last summer after the two nations failed to reach an agreement about the U.S. trade deficit with China. Talks were stalled through the rest of the year. The United States has tentatively agreed to resume the dialogue this year, although a date hasn’t been set. It is not clear how earnestly the Trump administration will participate in this meeting.

The Trump administration’s attitude toward China has been quite negative, from the time of Trump’s campaign until the present purported trade war. The only real highlight is that Donald Trump likes and admires President Xi Jinping, and there may be hope that some negotiation can be carried out between the two heads of state.

For his part, Liu He faces major barriers to negotiating with the Trump administration. It remains to be seen whether the meeting will result in positive outcomes; if so, it would be a major triumph for Liu, who is expected to soon be named Vice Premier, and a productive result for the Trump presidency, which has shown that it can be tough on China but not necessarily cooperative with the Asian nation. Liu’s conversation with top U.S. officials will set the tone for the Comprehensive Economic Dialogue and other talks to be held this year.

(Sara Hsu, associate professor, the State University of New York at New Paltz)

Related stories

Share this story on


Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N Tzogopoulos is Senior Research Fellow at the Centre International de Formation Européenne (CIFE), Advisor on EU-China Relations as well as Lecturer at the European Institute of Nice and the Democritus University of Thrace. He is also Research Fellow at the Hellenic Foundation for European and Foreign Policy and coordinator of its Asian Studies Programme. George is the founder of, an institutional partner of CRI Greek. His first book: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism was published by IB TAURIS and his second one: The Greek Crisis in the Media: Stereotyping in the International Press by Ashgate. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades. Duncan Bartlett Duncan Bartlett is the Editor of Asian Affairs, a monthly news magazine. As well as writing regularly for China Plus he also contributes to Japanese newspapers including the Sankei and the Nikkei. He writes weekly blog called Japan Story. He has previously worked as a journalist for the BBC, the Economist and Independent Television News. Stephane Grand Stephane Grand is the principal of an international accounting and management consulting firm in Greater China. Stephane has advised hundreds of foreign investors over the last 25 years of his presence in China. He holds a Ph.D. in Chinese corporate law from La Sorbonne (Paris), a Masters degree from the Fletcher School (Boston), and an MBA from HEC (Paris). He is an active commentator of business in China.