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U.S., China eye higher-level talks after discussing tech transfer

FILE PHOTO: Chinese and U.S. flags are set up for a signing ceremony during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee/File Photo

By Chris Prentice and Yawen Chen

WASHINGTON/BEIJING (Reuters) - U.S. and Chinese officials are working on arrangements for higher-level trade talks after mid-level officials this week discussed U.S. demands on issues that would require structural change in China to address such as intellectual property theft, forced technology transfers and other non-tariff barriers.

People familiar with the three days of talks in Beijing said hopes are mounting that the top Chinese negotiator, Vice Premier Liu He, will visit Washington this month to meet with his negotiating counterparts, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

Talks at that level are viewed as important for making the key decisions to reach a deal to ease a festering trade war between the world's two largest economies, which has roiled financial markets and disrupted trade flows for hundreds of billions of dollars worth of goods.

President Donald Trump said on Thursday the United States was having "tremendous success" in its trade negotiations with China, though concrete details of progress have been scarce.

The Beijing negotiations were "a stepping stone" toward higher-level talks, Myron Brilliant, the U.S. Chamber of Commerce business lobbying group's head of international affairs, told reporters on Thursday.

"The idea is that Liu He will probably come to Washington. But the date is not set, in my understanding," said Brilliant, who is in regular contact with Trump administration officials.

"There is some question about whether it will happen before the Chinese New Year or right after," Brilliant said, adding that talks before the Feb. 5 lunar new year would still allow for a final round of negotiations that will likely be needed before a March 2 deadline.

A spokeswoman for the U.S. Trade Representative's office (USTR), the lead U.S. agency in the negotiations, did not immediately respond to queries about plans for more talks.

More than halfway through a 90-day truce in the U.S.-China trade war agreed by U.S. President Donald Trump and Chinese President Xi Jinping, there have been few concrete details of any progress made.

Trump has vowed to increase tariffs on $200 billion worth of Chinese imports on March 2 if China fails to take steps to protect U.S. intellectual property, end policies that force American companies to turn over technology to Chinese partner, allow more market access for U.S. businesses and reduce other non-tariff barriers to American products.

China's commerce ministry said on Thursday that additional consultations with the United States were being arranged after the Beijing talks addressed structural issues and helped establish a foundation to resolve U.S. and Chinese concerns.

Commerce ministry spokesman Gao Feng told reporters the two sides were "serious" and "honest."

Asked about China's stance on issues such as forced technology transfers, intellectual property rights, non-tariff barriers and cyber attacks, and whether China was confident it could reach agreement with the United States, Gao said these issues were "an important part" of the Beijing talks.

"There has been progress in these areas," he said without elaborating.

China has repeatedly played down complaints about intellectual property abuses, and has rejected accusations that foreign companies face forced technology transfers.


"CORDIAL STANDOFF"

Discussions on those issues were an extensive part of the talks, said people in Washington familiar with the discussions.

Chinese officials listened "politely" to U.S. grievances, they said, but responded by saying that the Americans had some issues wrong and misunderstood others, but that some other issues could be addressed.

"It was a cordial standoff," said one person familiar with the structural discussions. China has said it will not give ground on issues that it perceives as core.

On Wednesday, the U.S. Trade Representative's office said officials from the two sides discussed "ways to achieve fairness, reciprocity and balance in trade relations," and focused on China's pledge to buy a substantial amount of agricultural, energy, manufactured, and other products and services from the United States."

The U.S. trade agency said the talks also focused on ways to ensure enforcement and verification of Chinese follow-through on any commitments it makes to the United States.


STEPS TAKEN

U.S. and Chinese officials made more progress on straightforward issues such as working out the details of Chinese pledges to buy a "substantial amount" of U.S. agricultural, energy and manufactured goods and services, sources said.

Since the Trump-Xi meeting in Argentina, China has resumed purchases of U.S. soybeans. Buying had slumped after China imposed a 25 percent import duty on U.S. shipments of the oilseed on July 6 in response to U.S. tariffs.

China has also cut tariffs on U.S. cars, dialed back on an industrial development plan known as "Made in China 2025" and told its state refiners to buy more U.S. oil.

Earlier this week, China approved five genetically modified crops for import, the first in about 18 months, which could boost its overseas grains purchases and ease U.S. pressure to open its markets to more farm goods.

Big spending on commodities and goods would send a positive signal on China's intent to work with the United States but would do nothing to resolve the U.S. demands that require difficult structural change from China.


(Reporting by Chris Prentice, David Lawder and Alexandra Alper in Washington; Yawen Chen and Martin Pollard in Beijing and John Ruwitch and Josh Horwitz in Shanghai; writing by David Lawder and Ryan Woo; editing by Paul Tait, Shri Navaratnam and Jonathan Oatis)