Officials of the world’s two largest economies are to hold talks in Washington this week in a continuing attempt to avert a possible all-out trade war.
One the eve of the visit by a top Chinese official, U.S. Commerce Secretary Wilbur Ross said “the gap remains wide” between Washington and Beijing, but he hopeful for a fair deal to avert a worsening of economic ties.
Ross, speaking at the National Press Club on Monday, said, however, that the United States would be able to withstand such a clash better than China.
“They would run out of targets for tariffs much sooner than we would,” Ross asserted.
Chinese Vice Premier Liu He, who is President Xi Jinping’s top economic adviser, arrives Tuesday for talks with U.S. officials scheduled to continue throughout the week. Liu will be joined by officials from several Chinese ministries and the Peoples' Bank of China, which implements the government's monetary policy.
U.S. President Donald Trump said Sunday on Twitter he is working with Xi to throw a lifeline to one Chinese company about which U.S. intelligence and law enforcement officials have long expressed cybersecurity concerns.
On Monday, he tweeted about trade negotiations with China, saying, “ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies. This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.”
ZTE, a publicly traded company based in Shenzhen, makes cellular phones and other devices that could be used to spy on Americans, according to U.S. officials.
The Commerce Department last month announced American companies would be prohibited for seven years from exporting critical microchips and other components to ZTE to punish it for violating a sanctions settlement over illegal shipments to Iran and North Korea.
The ZTE issue is “part of the complex relationship between the United States and China,” White House Principal Deputy Press Secretary Raj Shah told reporters at Monday’s press briefing.
Concerns about U.S. sanctions on the company have “been brought up at a number of levels” during recent bilateral talks, Shah said. “It’s a significant issue of China. And in a bilateral relationship there are gives and takes.”
Trump declared on Twitter he wanted to see ZTE, China's second-largest telecommunications equipment maker, “get back into business fast” after the U.S. ruling. Trump in the tweet said he had ordered the Commerce Department “to get it done!”
Ross was asked by a reporter at the press club event about Trump’s directive.
“ZTE did do some inappropriate things. They’ve admitted to that.” responded Ross. “The question is: Are there alternative remedies to the one that we had originally put forward? And that’s the area we will be exploring very, very promptly.”
Chinese Foreign Ministry spokesman Lu Kang on Monday said that Beijing “greatly appreciates the positive U.S. position on the ZTE issue.”
A 2012 U.S. congressional report stated that ZTE was engaged in “collaborative research with military and civilian universities, including satellite navigation, data link jamming techniques, training of active duty PLA personnel, and as a regular exhibitor and presenter at PLA sponsored defense industry expositions.”
Douglas Jacobson, an attorney who represents suppliers who do business with ZTE, told VOA that Trump's order is stunning and bound to make U.S. law enforcement officials unhappy by going over their heads.
“This has caught all of those in the exports and sanctions world certainly by surprise and with some degree of shock and awe,” said the attorney who established the Jacobson Burton Kelly law firm specializing in international trade. “This is unprecedented that the president of the United States would intervene in what really is a law enforcement case.”
Jacobson adds he believes Trump may be willing to make a concession on China in exchange for China's help with North Korea.
A number of U.S. lawmakers on both sides of the aisle are expressing strong concern about the president's action.
Senator Marco Rubio, one of Trump's former rivals for the Republican presidential nomination in 2016, said on Twitter the “problem with ZTE isn't jobs & trade, it's national security & espionage. Any telecomm firm in #China can be forced to act as tool of Chinese espionage without any court order or any other review process. We are crazy to allow them to operate in U.S. without tighter restrictions.”
Senate Democratic leader Charles Schumer parodied Trump’s “Make America Great Again” political slogan, saying, “One of the few areas where the president and I agreed, and I was vocally supportive, was his approach towards China. But even here he is backing off, and his policy is now designed to achieve one goal: make China great again.”
Ira Mellman contributed to this story.