published May 17, 2018, 7:02:04 PM, by Saleha Mohsin
(Bloomberg) —

China has offered President Donald Trump a $200 billion reduction in its annual trade surplus with the U.S. by increasing imports of American products and other steps, said a Trump administration official.

China made the offer during talks in Washington this week as Chinese Vice Premier Liu He visited to try to resolve a trade dispute, the official said, speaking on condition of anonymity. Liu met with Trump Thursday afternoon at the White House.

The official didn’t describe the U.S. response.

A $200 billion reduction in the U.S. trade gap with China by 2020 was on a list of demands the Trump administration made earlier this month. The U.S. merchandise trade deficit with China hit a record $375 billion last year.

But the Trump administration also made a series of additional demands, including a halt to subsidies and other government support for the country’s Made in China 2025 plan that targets global domination in strategic industries from robotics to new-energy vehicles.

Reuters reported China’s trade deficit reduction offer earlier.

The Trump administration has threatened to impose tariffs on as much as $150 billion of Chinese imports to the U.S. as tensions over trade have escalated.

Trump expressed doubt before his meeting with Liu that China and the U.S. would come to an agreement to avoid a damaging trade war.

President Has Doubts

“Will that be successful? I tend to doubt it,” Trump said during a press briefing on Thursday with NATO Secretary-General Jens Stoltenberg. “The reason I doubt it is because China’s become very spoiled.”

Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney, said the Chinese proposal is “a positive sign that a full on trade war may be averted.”

“By making a significant offer to the U.S. it indicates that China is taking the negotiations very seriously,” Oliver said. “Much will depend on the details and time period and later in terms of the implementation.”

The U.S. and China were expected to exchange new trade proposals during the Washington talks, Trump economic adviser Larry Kudlow said earlier Thursday. Treasury Secretary Steven Mnuchin is leading the talks with Liu, along with Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer, according to the White House.

Mnuchin led a delegation to Beijing earlier this month for negotiations, but they ended in discord.

Kudlow said the U.S. focus is on China opening market access to American companies by lowering their trading barriers and addressing U.S. concerns over the theft of intellectual property.

“American ownership of its own companies in China must be permitted,” Kudlow said. “We are going to have serious talks dealing with a difficult trade situation that needs to be fixed.”

Trump also said on Thursday that his decision to order a review of U.S. penalties on China’s ZTE Corp. came directly at the request of Chinese President Xi Jinping. “The president of China, President Xi, asked me to look at it. I said I would look at it,” Trump said, adding “But anything we do with ZTE is always — it’s just a small component of the overall deal.

In a surprise move, Trump on Sunday said that the U.S. was considering ways to help get ZTE ‘’back in business fast,” fueling speculation of a softening of his get-tough position on China. The Commerce Department blocked ZTE’s access to U.S. suppliers last month, saying the company had violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.

–With assistance from Justin Sink and Kevin Hamlin.To contact the reporter on this story: Saleha Mohsin in Washington at smohsin2@bloomberg.net To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net Mike Dorning, John Harney
COPYRIGHT
© 2018 Bloomberg L.P