China Proposes 100-Day Plan on Trade Issues, But Offers Little Detail

By Erin Ennis

As part of the sideline meetings last week during the first meeting of Presidents Donald Trump and Xi Jinping, China proposed a 100-day agenda to reduce trade tensions between the two governments. The plan has little detail and likely represents a starting point for discussions with the Trump administration. China’s “asks” were also not included in the proposal.

 

According to USCBC sources, China’s proposal included:

  • Beef  China has proposed resuming imports of American beef, barred since 2003 over purported concerns about bovine spongiform encephalopathy (BSE) and hormones. However, Premier Li Keqiang announced in September 2016 that China would resume US beef imports, with no subsequent move to follow through on the promise.

  • Natural gas   China has proposed buying exports of US natural gas. US law currently restricts sale of the commodity to only free trade agreement partners without prior approval by the Department of Energy, so approval by the administration or a change in US law would be needed for exports to China. There are divisions within US industry on whether any exports of natural gas should be allowed, so it is unclear if the proposal would be supported by Congress or industry.

  • Infrastructure investment   China has proposed investing in US infrastructure rebuilding projects. The Trump administration has made infrastructure a top priority, but some in the United States have expressed concerns about the national security risks of Chinese investment in the sector.

  • Other investment   China has proposed increasing investment in other areas of the US economy. Depending on the types of investments and the sectors involved, new investment projects could be subject to review by the Committee on Foreign Investment in the United States. The administration has been expected to increase scrutiny of Chinese investment, so it is unclear whether a significant increase in investment could be achieved in 100 days.

  • Subnational engagement   China has proposed 70 state-provincial exchanges during the 100-day period. USCBC understands that China’s Ministry of Commerce has placed an emphasis on these types of exchanges in recent months, so it is not clear if these will be new exchanges or ones that are already planned.

  • Regular phone calls   China has proposed regular phone calls between officials to resolve trade concerns. It is unclear if the calls will be regularly scheduled or ad hoc as problems are identified.

 

On Sunday, the Financial Times reported that China also proposed lifting investment restrictions in insurance and securities. According to US-China Business Council sources, financial services liberalizations were not included in China’s proposal. However, raising allowed foreign ownership in insurance and securities has been under deliberation by the State Council, although without a clear implementation date and perhaps to be piloted first in free trade zones.

 

The 100-day end point would fall in mid-July. China has said that revisions to its Catalogue Guiding Foreign Investment—which details sectors with foreign ownership or other restrictions and could feature liberalizations in certain areas—will be released by the end of June.

 

It is anticipated that China will have its own wishlist for the 100-day plan negotiations. Relaxations to US technology export controls—which China claims to hold down US exports and contribute to the trade deficit—and ending the United States’ use of the non-market methodology in anti-dumping cases against China (the so-called “market economy” issue) would likely be among China’s requests.

 

Separately, USCBC understands that China has expressed an interest in participating in the Commerce Department’s trade deficit investigation, which was launched in March through an executive order. The study is scheduled to conclude around the end of June, per the executive order’s 90-day timeframe.

 

USCBC will continue to monitor the discussions on these issues between the two governments and on the new comprehensive dialogue structure announced at the conclusion of last week’s summit.