Trump to Wade Into China Trade Talks as U.S. Targets Huawei

(Bloomberg) -- Sign up for our new China newsletter, a weekly dispatch coming soon on where China stands now and where it's going next.

The Trump administration will press China to prove it can keep promises in talks this week aimed at ending the trade war, Treasury Secretary Steven Mnuchin said, as the U.S. ratcheted up legal pressure on one of the biggest examples of Chinese technological might.

In a sign of the importance the White House is placing on the talks, President Donald Trump is expected to meet China's top trade negotiator, according to Mnuchin at a briefing Monday in Washington. The round of talks Wednesday and Thursday will cover U.S. demands for structural changes to China's economy and Beijing's pledge to buy more American goods.

Chinese Vice Premier Liu He, the nation's top trade negotiator, had already arrived in Washington by Monday local time, the state Xinhua News Agency reported Tuesday. PBOC governor Yi Gang and Vice Finance Minister Liao Min are among the delegation members, Xinhua said.

But before the meetings even start, any expectation for big progress was complicated by growing tension between the two countries over Huawei Technologies Co. U.S. prosecutors on Monday filed criminal charges against the company, accusing it of stealing trade secrets and committing bank fraud.

The Huawei case and the U.S.'s demands in the trade talks, taking place on different tracks, strike at the same objective: ensuring China plays by global trade rules and abides by laws as it emerges as a technology power.

U.S. Commerce Secretary Wilbur Ross, speaking about the Huawei indictments, said Monday that the trade talks and legal case are separate matters.

One of the key issues at the trade negotiations will be enforcement of China's agreements, Mnuchin told reporters during a White House briefing Monday. “We expect when we get a deal, that that deal will be enforced,” he said. “The details of how we do that are very complicated.”

Meeting Agenda

Chinese policies on intellectual property and forced technology transfers will also be important topics at the table, he said. Trump is expected to meet with Chinese Vice Premier Liu He, a top adviser of President Xi Jinping, Mnuchin said.

The U.S. delegation will be led by U.S. Trade Representative Robert Lighthizer, the White House said. The U.S. group will also include Mnuchin, Secretary of Commerce Wilbur Ross, Assistant to the President for Economic Policy Larry Kudlow, and Assistant to the President for Trade and Manufacturing Policy Peter Navarro.

Trump and Xi have given their officials until March 1 to reach a lasting truce to a trade war that has hurt the world's largest economies. The two sides will discuss “structural changes” to China's economic system, as well as Chinese pledges to buy more U.S. goods and services, according to the White House.

“We have another 30 days after this,” Mnuchin said. “My expectation is that we will make significant progress.”

The negotiation comes at a tense time for U.S.-China relations. In a 13-count indictment in Brooklyn, New York, the U.S. government alleged Huawei, two affiliated companies and its chief financial officer of fraud and conspiracy in connection with deals in Iran. A 10-count indictment in Washington state accused the company of stealing trade secrets from T-Mobile USA Inc. and offering bonuses to employees who succeeded in getting technology from rivals.

The Trump administration hasn't succeeded in convincing the Chinese that charges against Huawei and trade negotiations are unrelated, said Matt Gold, a former Deputy Assistant U.S. Trade Representative. The tactic could backfire, he said in an interview with Bloomberg TV.

"President Trump has made a big mistake by allowing the Chinese to draw the conclusion that the two are related," Gold said. "It makes it more difficult for us to negotiate trade when the Chinese feel we are enforcing our export laws to gain leverage for a trade negotiation."

Huawei has been the target of a broad U.S. crackdown over allegations it has stolen trade secrets, violated sanctions against Iran and sold equipment that could be used by China's Communist Party for spying.

--With assistance from Patricia Hurtado, Jennifer Epstein, Jenny Leonard and Selina Wang.

To contact the reporter on this story: Andrew Mayeda in Washington at amayeda@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Jeffrey Black

©2019 Bloomberg L.P.