Trade War | Economy czar heading to Washington for talks

Vice Premier Liu He (right) and US Trade Representative Robert Lighthizer in Beijing last week

China’s economy czar is heading to Washington for talks this week aimed at ending a fight over Beijing’s technology ambitions ahead of a deadline for a massive U.S. tariff hike.

The announcement yesterday via the official Xinhua News Agency follows talks last week in Beijing that U.S. Trade Representative Robert Lighthizer said “made headway” on key issues. Xinhua said Vice Premier Liu He will hold talks with Lighthizer and Treasury Secretary Steven Mnuchin.

Business groups and economists saw Friday’s surprise announcement of further talks this week as a sign they were making progress.

Both governments have expressed optimism but they have given no details of their talks. Economists say the time available for negotiations is too brief to resolve an array of irritants in U.S.-Chinese relations. They say Beijing’s goal is to persuade President Donald Trump they are making enough progress to push back threatened U.S. penalties.

Beijing hopes for “a mutually beneficial and win-win agreement that is acceptable to both sides,” said a foreign ministry spokesman, Geng Shuang.

Without an agreement, a 10 percent tariff increase imposed in July on USD200 billion of Chinese goods is due to rise to 25 percent on March 2.

Last Friday, Lighthizer told the Chinese president, Xi Jinping, the two sides “made headway on very, very important and difficult issues.”

Trump imposed the penalties over complaints Beijing steals or pressures foreign companies to hand over technology. The talks also include complaints about Beijing’s plans for government-led technology development, cyberspying and China’s trade surplus.

Beijing retaliated with higher duties on U.S. goods and told its importers to find other suppliers. That led to a 40 percent drop in Chinese imports of American goods in January.

Washington, Europe, Japan and other trading partners complain plans such as “Made in China 2025,” which calls for government -led creation of global competitors in robotics and other technologies, violate Beijing’s market-opening obligations.

China’s leaders have offered to narrow its multibillion-dollar trade surplus with the United States by purchasing more natural gas, soybeans and other exports. But they are resisting pressure to scale back industry plans they see as a path to prosperity and global influence.

Other stumbling blocks include Chinese resistance to U.S. pressure to accept an enforcement mechanism with penalties to ensure Beijing carries out whatever commitments it makes.

Trump said last week he might be willing to push back the March 2 date if the talks go well but Washington has yet to say whether the negotiations are making enough progress. Joe McDonald, Beijing, AP

Beijing abandons cybersecurity truce with US, report says

China largely abandoned a hacking truce negotiated by Barack Obama as President Donald Trump embarked on a trade war with Beijing last year, according to the cybersecurity firm Crowdstrike Inc.

A slowdown in Chinese hacking following the cybersecurity agreement Obama’s administration secured in 2015 appears to have been reversed, the firm said in a report released yesterday that reviewed cyber activity by U.S. adversaries in 2018.

“By 2017 they started coming back and throughout 2018 they were back in full force,” said Adam Meyers, vice president of intelligence at Crowdstrike. “They have been very active and we expect to see that continue.”

The report comes as the Trump administration seeks to reach a trade deal with China, including provisions on intellectual property theft, ahead of a March 1 deadline. Trump has said he may extend that deadline and hold off on increasing tariffs on Chinese imports if there’s progress in the talks.

China’s hacking targets in 2018 included telecommunications systems in the U.S. and Asia, according to Crowdstrike. Groups linked to Iran and Russia also appeared to target telecommunications, a sector that yields “the most bang for your buck” for hackers due to the large number of users that can be accessed after breaching a single network, Meyers said.

The findings align with concern in the U.S. about telecommunications security as the country transitions to the next generation of mobile networks and the Trump administration seeks to secure so-called 5G technology from foreign intelligence gathering. The administration has expressed particular concern about the spread of products made by the Chinese firm Huawei Technologies Co.

Crowdstrike said that Iran focused much of its cyber activity on Middle Eastern and North African countries while Russia engaged in intelligence collection and information operations worldwide. North Korea deployed hackers for financial gain and intelligence collection, while China targeted sectors including technology, manufacturing and hospitality, Meyers said. AP