Trump Tweet on China Trade Understates U.S. Demand -- 2nd Update
By Lingling Wei
BEIJING -- President Donald Trump tweeted Wednesday that Washington had asked Beijing for a plan to cut the U.S. trade deficit with China by $1 billion -- less than 0.3% of the countries' annual trade gap or around one day's worth of the trade imbalance.
He was off by $99 billion.
According to people familiar with the matter, Trump administration officials requested a $100 billion reduction in the U.S.-China trade deficit when meeting with President Xi Jinping's top economic deputy last week.
According to the people, Liu He, the main architect of China's economic policy, said in his Washington meetings that narrowing the vast bilateral trade deficit was in China's interest as China seeks to shift away from an export-led growth model. It is unclear how feasible the deficit-reduction goal is for Beijing and what kind of plan it could offer.
Cornell University economist Eswar Prasad, who was briefed by Chinese officials about the Liu visit, said they told him the U.S. was pressing for a reduction in the bilateral trade deficit by about one-third.
The tweet came at a time of rising global trade tensions, with the relationship between the world's two largest economies at the center. Having set new solar-panel tariffs in January, mainly aimed at China, Mr. Trump now plans to impose stiff tariffs on all steel and aluminum imports to the U.S. The plan has stoked fears of a global trade spat and has drawn broad opposition from U.S. trading partners as well as U.S. lawmakers.
The impact of the proposed U.S. tariffs on Chinese steel and aluminum makers is ultimately expected to be small. What could come in the coming months likely will be more damaging to China. The Trump administration is weighing broad trade and investment penalties against Beijing as it completes a probe into allegations of Chinese theft and expropriation of American intellectual property.
The wording of Mr. Trump's tweet was: "China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States."
The tweet continued: "Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!"
Mr. Trump followed his tweet on the trade gap with one that said: "The U.S. is acting swiftly on Intellectual Property theft. We cannot allow this to happen as it has for many years!"
U.S. technology companies have been preparing for administration actions, which they fear could come in weeks.
Chinese officials have been cautious in their responses to Mr. Trump's ramped-up trade offensive.
"In the event of a trade war, China will make proper and necessary responses," China's Foreign Minister Wang Yi said at a Thursday news conference, on the sidelines of China's annual legislative session.
Write to Lingling Wei at email@example.com
(END) Dow Jones Newswires
March 08, 2018 08:51 ET (13:51 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.