China says trade envoys preparing to go to Washington

Reporting from BEIJING —  Chinese envoys are preparing to travel to the United States for trade talks, a government spokesman said Monday, suggesting talks on ending a bruising tariff war will go ahead despite President Trump’s surprise threat to raise import taxes.

Beijing is “trying to get more information” following Trump’s announcement he might impose 25% tariffs on more Chinese imports, said the foreign ministry spokesman, Geng Shuang.

Trump’s announcement Sunday on Twitter caused financial markets to plunge. It prompted suggestions Beijing might pull out of talks planned for this week to avoid looking weak in the face of American pressure.

Asked whether the top Chinese envoy, Vice Premier Liu He, would visit Washington as planned, Geng said, “a Chinese team is preparing to travel to the United States for trade talks.”

Geng declined to give further details when asked who might go or whether the talks would start Wednesday as scheduled. He referred other questions to the Commerce Ministry, which did not respond to requests for comment.

The lack of details suggested Beijing is wrestling with the conflict between wanting to end a fight that has battered Chinese exporters and its reluctance to appear to be giving in to Washington.

“We hope the United States will join efforts with China and we can meet each other halfway so we make a mutually beneficial agreement on the basis of win-win and mutual respect,” Geng said.

The two governments have raised tariffs on tens of billions of dollars of each other’s goods in their dispute over U.S. complaints about Chinese technology ambitions.

That has disrupted trade in goods including soybeans and medical equipment.

Trump turned up the heat Sunday by saying he would raise import taxes on $200 billion in Chinese products to 25% from 10% as of Friday. Washington already is charging 25% duty on an additional $50 billion of Chinese imports, while Beijing has imposed penalties on $110 billion of American goods.

Trump continued his pressure on China on Monday morning, tweeting: “The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!”

During Asian trading, China’s main stock index plunged 5.6% and Hong Kong lost 2.9%, while Japanese markets were closed for a holiday.

Market benchmarks in France and Germany fell 2%. On Wall Street, futures for the benchmark Standard & Poor’s 500 index and the Dow Jones industrial average were down almost 2%.

Trump pushed back deadlines in January and March to raise tariffs in a bid to buy more time for negotiations. But on Sunday, Trump said on Twitter a deal with Beijing was coming “too slowly, as they attempt to renegotiate. No!”

Trump also threatened to slap tariffs on an additional $325 billion in imports from China, covering everything it ships annually to the United States.

Trump hiked tariffs on Chinese imports on July 6 in response to complaints Beijing steals or pressures foreign companies to hand over technology.

Washington and other trading partners also want Beijing to scale back plans for government-led creation of Chinese global competitors in robotics and other technology. They say those violate the communist government’s market-opening commitments.

Both sides say they are making progress but no details have been released.

Beijing’s negotiators have agreed to narrow the politically sensitive Chinese trade surplus with the United States by purchasing more soybeans, natural gas and other goods.

They have offered to change industrial strategies but have ruled out discarding them outright.

Another sticking point is U.S. insistence on an enforcement mechanism with penalties in the event Beijing fails to stick to any commitments it makes.

Economists suggested Trump may want to step up pressure because China’s economy is improving, reducing the urgency for Beijing to strike a deal.

The latest quarter’s growth held steady despite a slump in exports to the United States. That suggested official efforts to reverse a downturn were gaining traction.

“China may have appeared less willing to offer additional concessions,” said Citigroup economists in a report.

Trump’s threat makes going ahead with talks “very difficult politically” for President Xi Jinping’s government, said Jake Parker, vice president of the U.S.-China Business Council. He said the Chinese public might “view this as a capitulation” if Beijing reached an agreement before Trump’s Friday deadline.

If Trump carries out his threat, American companies in China “would be very concerned” about official retaliation, said Parker.

A Chinese decision to pull out of talks could have global repercussions, causing turmoil in financial markets and dragging on economic growth, economists said.

“The risk of an all-out U.S.-China trade war has increased significantly,” Tao Wang and Ning Zhang of UBS said in a report.