China offers to reduce US trade deficit

China has proposed a package of purchases of American goods and other initiatives which could reduce the US trade deficit with China by around $200 billion a year,

In a move aimed at resolving the escalating trade war between the Us and China, China has proposed a package of purchases of American goods and other initiatives which could reduce the US trade deficit with China by around $200 billion a year, said media reports.

China made the offer to US President Donald Trump during the first of two days of US-China trade talks in Washington,

Though how China arrived at the value was not clear, the move is being seen as aimed at resolving tariff tiffs between the world's two largest economies.

According to media reports, if the offer is accepted by the US, Boeing Co, the US aircraft manufacturer, could be a major beneficiary. Boeing, the largest US exporter, sells about a quarter of its commercial aircraft to Chinese customers.

Reports added that the offer package may include some removal of Chinese tariffs on US farm products including fruit, nuts, pork, wine and sorghum, worth around around $4 billion.

However, reports say that for such a reduction worth around $200 billion in the US-China trade deficit to be sustainable, it would require a major change in the composition of US-China trade. 

Last year, the US goods deficit was $375 billion. Aircraft at $16 billion and soybeans, at $12 billion were the two largest exports of the US to China last year.

Notably, though the US President met the leader of the Chinese delegation, Vice Premier Liu He on Thursday, there has been no statement to the effect from the White House.

Earlier, Trump had called China "very spoiled" on trade with the United States and had added he was trying for an overall deal with China.

Trump had said that China had "ripped off" the United States for too long. He added that he had informed Chinese President Xi Jinping that the US “can't do that anymore."

Further, the US President said that there could be some modifications to the tough restrictions that have paralysed Chinese telecommunications equipment maker ZTE Corp and this could be part of a trade deal. Trump said that President Xi had asked him to look into the matter and he had ordered the US Commerce Department to put ZTE back in business.

It is worth mentioning here that Trump has threatened to impose up to $150 billion in punitive tariffs to counter what he calls Beijing's misappropriation of US technology through joint venture requirements and other policies. 

Beijing had followed up with similar announcements threatening retaliation, including tariffs on some of its largest US imports, including aircraft, soybeans and autos.

 

(Source: Business Standard, media reports)


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