* China says it never wanted trade friction with Washington
* U.S. Treasury updates Trump on investment restrictions
* Boeing and Caterpillar shares rise; dollar up
(Adds Treasury reports to Trump on Chinese investment curbs)
By Ben Blanchard, Michael Martina and Susan Heavey
BEIJING/WASHINGTON, May 21 (Reuters) – Washington and
Beijing both claimed victory on Monday as the world’s two
largest economies stepped back from the brink of a global trade
war and agreed to hold further talks to boost U.S. exports to
Over the weekend, the two sides pledged to keep talking
about how China could import more energy and agricultural
commodities from the United States so as to narrow the $335
billion annual U.S. goods and services trade deficit with China,
although details and a firm timeline were thin.
The biggest immediate beneficiary appeared to be China,
which won a reprieve from threatened tariffs on $50 billion of
its exports to the United States as well as a lifeline for ZTE
Corp, China’s second biggest telecom equipment maker
whose existence had been threatened by U.S. sanctions.
The United States, meanwhile, appeared to have won promises
of more imports by China, although there were no specifics.
Threatened U.S. restrictions on Chinese investments in the
United States also appeared to be put on the back burner. The
U.S. Treasury said it met a legal obligation to report progress
to President Donald Trump on the development of such
restrictions, but it declined to provide details.
Treasury Secretary Steven Mnuchin “discussed options for the
president’s consideration on the matter,” a Treasury spokeswoman
The Treasury has considered invoking the International
Emergency Economic Powers Act, used extensively after the 9/11
attacks in 2001, to limit Chinese investments in U.S. technology
Economists at Morgan Stanley estimated that exports of U.S.
agricultural products, primarily beef, and energy, mostly
liquified natural gas, could add between $60 billion and $90
billion to sales to China over a period of years. That is far
less than the $200 billion reduction in China’s trade surplus
that Trump demanded at the start of talks.
“China has agreed to buy massive amounts of ADDITIONAL
Farm/Agricultural Products – would be one of the best things to
happen to our farmers in many years!” Trump wrote on Twitter on
China’s government praised the cooling of trade tensions
with the United States, saying agreement was in both nations’
interests, while state media trumpeted what it said was
Beijing’s refusal to surrender to U.S. economic threats.
There were, however, more questions for the Trump
administration, which stands accused by critics of selling out
on plans to stop the theft of U.S. companies’ trade secrets in
exchange for a quick deal to reduce the U.S. trade deficit.
Questions also remained over the administration’s handling
of ZTE. The Chinese company was sanctioned by Washington after
it was caught illegally shipping goods to Iran and effectively
put out of business, but its fate was made a precondition of
last week’s trade talks in a conversation between Trump and
President Xi Jinping.
Trump agreed to allow ZTE to stay in business, and the
United States and China struck a deal to drop their tariff
threats while they worked on a wider trade agreement, Mnuchin
said on Sunday.
Washington had threatened to impose tariffs on $50 billion
of Chinese imports unless Beijing rectified its theft of U.S.
intellectual property. After China responded with its own
tariffs on U.S. agriculture, Trump threatened to impose duties
on an additional $100 billion of Chinese goods, a move that hit
global stock markets hard due to fears of rising protectionism.
U.S. Commerce Secretary Wilbur Ross will travel to China
next week to help finalize a trade agreement, Mnuchin said on
Monday. Most observers say a firm deal is likely to take a long
In an interview earlier on Monday with CNBC, Mnuchin
characterized the U.S. tariff plan as suspended, but warned that
“the president can always put tariffs back on.”
Speaking at a daily briefing, Chinese Foreign Ministry
spokesman Lu Kang said both countries had clearly recognized
that reaching a consensus was good for all.
“China has never hoped for any tensions between China and
the United States, in the trade or other arenas,” Lu said.
But others were quick to point out how the country had
successfully defended its interests.
Mei Xinyu, a Commerce Ministry researcher, wrote on the
WeChat account of the overseas edition of the ruling Communist
Party’s official People’s Daily that the agreement preserved
China’s right to develop its economy as it sees fit, including
moving up the value chain.
The deal also focused on China’s “positive position” to
increase imports rather than a “negative position” of getting it
to cut exports, Mei said.
The official China Daily said everyone could heave a sigh of
relief at the ratcheting down of the rhetoric, and cited China’s
chief negotiator, Vice Premier Liu He, as saying the talks had
proved to be “positive, pragmatic, constructive and productive.”
“Despite all the pressure, China didn’t ‘fold,’ as U.S.
President Donald Trump observed. Instead, it stood firm and
continually expressed its willingness to talk,” the
English-language newspaper said in an editorial.
Some in U.S. business groups who had been pushing for
tougher measures to pressure China to ease long-standing market
barriers on U.S. companies expressed disappointment.
James Zimmerman, a Beijing-based lawyer and a former
chairman of the American Chamber of Commerce in China, said the
Trump administration’s decision to walk back its threatened
trade actions was premature and a “lost opportunity” for
American companies, workers and consumers.
But Jacob Parker, vice president of China operations at the
U.S.-China Business Council, called the apparent de-escalation
in trade tensions “a great bit of progress.”
“We were never supportive of tariffs, so any actions that
can be taken to stop those from being implemented are positive
from our view,” Parker told Reuters.
Stocks with major exposure to China such as Boeing Co
and Caterpillar Inc gained on news of a softening in the
trade rhetoric of recent weeks. The dollar also gained
against a basket of currencies.
(Reporting by Ben Blanchard, Michael Martina and Susan Heavey
Additional reporting by Susan Heavey in Washington and Elias
Editing by Paul Simao and Leslie Adler)