US and China launch trade talks amid differences over economic reforms

US and Chinese negotiators start two days of high-level talks Wednesday aimed at settling a six-month trade war that has weakened both sides, shaken financial markets and clouded the outlook for the global economy.

Yet the odds seem stacked against any substantive resolution this week to the standoff between the world's two biggest economies. Perhaps the best that might be hoped for, analysts say, is for the two sides to agree to keep talking.

The differences between Beijing and Washington are vast. The United States is essentially demanding that China downsize its economic aspiration to become a supreme world leader in such fields as robotics and electric cars.

At the World Economic Forum in Switzerland last week, Alibaba's CEO, Daniel Zhang noted that China has more than one billion consumers, and he maintains that as long as conditions are right, it can be a self-sufficient market."

The two sides will meet next door to the White House in the highest-level talks since US President Donald Trump and Chinese President Xi Jinping agreed a 90-day truce in their trade war in December.

TRT World's Patrick Fok reports from Beijing.

Earlier negotiations flamed out. And this time President Trump might be inclined to drive an especially hard bargain after being forced to cave in a dispute with congressional Democrats that partially shut the federal government for 35 days.

Charges against Huawei

Moreover, a new complication injected itself into US-China relations on the eve of the talks when the Justice Department brought criminal charges Monday against the Chinese tech giant Huawei, accusing it of stealing technology secrets and violating sanctions against Iran. Beijing shot back by demanding that the Trump administration pull back from what it called an "unreasonable crackdown" on the Chinese maker of smartphones and telecom gear.

"We are anticipating no big outcomes this week," said Erin Ennis, senior vice president at the US-China Business Council.

On March 2, the Trump administration is scheduled to escalate its tariffs on $200 billion worth of Chinese imports from 10 percent to 25 percent.

The American delegation to this week's talks is led by Trade Representative Robert Lighthizer, a longtime critic of aggressive Chinese trade practices and of US policies that failed to blunt them. Heading the Chinese team is Vice Premier Liu He.

The core of the US allegations against China is that Beijing systematically steals trade secrets, forces foreign companies to hand over technology as the price of access to the Chinese market and subsidises its own tech companies.

But compelling China to reform its trade policies and treatment of foreign companies will be difficult.

The administration has imposed tariffs on $250 billion in Chinese imports; Beijing has retaliated with import taxes on $110 billion in US goods.

Trump has threatened to extend the tariffs to an additional $267 billion in Chinese goods. If he did, Trump's import taxes would cover virtually everything China ships to the United States.

US officials insist that the Huawei case is entirely separate from the trade negotiations.