Trump Hits China on Trade Ahead of Xi Meeting

U.S. President Donald Trump is ratcheting up pressure on Beijing to change its trade practices ahead of his first meeting with Chinese President Xi Jinping.

The Trump administration was poised on Friday to unveil a pair of executive orders on trade, one of the strongest signs yet that Trump would make good on his campaign pledge to pressure China to alter its behaviour.

One of the orders would authorize Office of the U.S. Trade Representative to investigate all the ways America’s trading partners are exploiting or outplaying it on trade. Due within 90 days, the study would examine unbalanced trade agreements, cheating by trading partners, lax enforcement of trade rules by the United States and other matters.

Commerce Secretary Wilbur Ross, speaking in a call to reporters Thursday night, appeared to single out China as a particular focus, but also mentioned Germany, Japan and other countries as well. “Needless to say the number-one source of deficit is China, with $347 billion.” he said.

A second executive order would authorize the Department of Homeland Security, the Treasury Secretary, the Commerce Secretary and the U.S. Trade Representative to create a plan to go after countries that dump artificially cheap goods on markets — a barely veiled reference to China whose state-owned companies have flooded the world with cheap steel and aluminum.

Friday’s orders, which have yet to be released, come ahead of Xi’s visit to Trump private club in Palm Beach, Fl. next Thursday. Trade is all but certain to be a big theme of the discussions — but other matters, such as North Korea, are likely on the agenda.

“On the trade front, we have serious concerns…This isn’t a sit-around patty cake kind of conversation,” White House spokesperson Sean Spicer said Friday.

Asked about the upcoming talks between the two leaders, Ross said, “The United States is about the least protectionist of the major countries and China is one of the most protectionist. There’s an inherent clash between those two.”

Trump himself called out China on Thursday for trade imbalances and U.S. job losses just minutes before the order was announced.

On Friday, the United States Trade Representative joined in criticism of Beijing. In a new report, it found that China’s industrial policies and financial support for industries such as steel and aluminum have caused overproduction and a flood of exports distort global markets and give Chinese companies an advantage over foreign competitors.

“While China has begun to take steps to address steel excess capacity, these steps have been inadequate to date and even fewer efforts have been taken by China in aluminum and other sectors,” USTR said in the report.

The report also accused China of using a series of cybersecurity restrictions to build their own technological infrastructure. This includes denying financial or regulatory approvals to companies using foreign software, and favoring companies that do business in China.

“China also reportedly conditions foreign investment approvals on technology transfer to Chinese entities, mandates adverse licensing terms on foreign IP licensors, uses anti-monopoly laws to extract technology on unreasonable terms and subsidizes acquisition of foreign high technology firms to bring technology to the Chinese parent companies,” the report found.

On Thursday, when announcing the meeting between Xi and Trump, Chinese Foreign Ministry spokesman Lu Kang took a more diplomatic approach. He said both Washington and Beijing needed to work together “to make the cake of mutual interest bigger and not simply seek fairer distribution.”

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