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China to Insist US Lifts Huawei Ban as Part of Trade Truce



OSAKA, Japan-Chinese President Xi Jinping plans to present President Trump with a set of terms should meet before Beijing is ready to settle a market-rattling trade confrontation, raising questions about whether the two leaders will agree to resuming talks

Among the preconditions, said Chinese officials with knowledge of the plan, Beijing is insisting that the US remove its ban on the sale of US technology to Chinese telecommunications giant Huawei Technologies Co. Beijing also wants the U.S. to lift all punitive tariffs and drop efforts to get China to buy even more US exports than Beijing said it would be when the two leaders met last in December

The U.S. chief trade negotiator, Robert Lighthizer, and his Chinese counterpart, Liu He, talked by telephone this week on how to get the talks back on track and expect to meet in person in advance of the presidents' Saturday lunch meeting after a Group of 20 summit in Osaka, said people familiar with the discussions. It is far from clear what the two will manage-and whether their bosses will approve their work

Despite his preconditions, Mr. Xi is not expected to take a confrontational tone with Mr. Trump, according to the Chinese officials. Rather, they say, he will sketch out what he envisions as an optimal bilateral relationship, which includes China's help on security issues in the US, especially Iran and North Korea.

For their part, U.S. officials say they are going into the meeting looking to see if their Chinese counterparts are willing to pick up the negotiations from where they broke off. According to U.S. and Chinese officials, the two nations were close to a trade deal in April when, in the US view, China reneged on provisions. It is up to Beijing, U.S. Pat.

"So we went in and we thought we had a deal, and we went in and then they said, 'You know, we will not give you certain things that we agreed on, "" President Trump told Fox Business Network on Wednesday. Unless China gets the talks back on track, Mr. Trump said, he was ready to go ahead with what he called "Phase 2" -assessing levies on the remaining $ 300 billion in Chinese imports not currently hit with tariffs. He said he could start with 1

0% tariffs on items such as consumer mainstays as clothing, mobile phones and laptop computers.

Trump has used the last $ 200 billion of goods-starting at 10% to put pressure on Beijing without significantly disrupting the US economy, and then shifting to 25% when he felt China was backsliding.

Some corporate lobbyists are hoping that talks produce a plan to finish negotiations by a specific deadline. That way, the two sides will be under pressure to deliver – and President Trump would presumably refrain from moving ahead with tariffs during that time period

The Chinese leader is not expected to make big concessions at his meeting with Mr. Trump. That is because he is facing increased political pressure on the home front to stand firm against Washington, which is seen among elite Chinese political circles as unfairly accusing China of a range of misdeeds, violating intellectual property protection, improperly subsidizing state-owned enterprises and spying on US

"The Chinese side hopes to set a tone for the relationship going forward," said a person briefed on China's plans in Beijing. . All eyes will be on the world's two most powerful leaders, but can they solve their disputes? Photo: Getty Images
    

Mr. Xi is expected to find a tough audience in Mr. Trump, who continues to raise tariffs and counts on his hard-nosed stance on China to be a political plus during his re-election bid. "The incentives not to make a deal are getting stronger," said Michael Pillsbury of the Hudson Institute China, who consults the White House. With a deal "either Xi or Trump would suffer criticism. That would not have happened six months ago, "said Mr. Pillsbury

A trade cease-fire, if reached, could give the two sides momentum and a possible path to rapprochement on a number of other tense fronts, from disputes over China's expansive hold on South China Sea to the United States. campaign against Chinese technology firms over security concerns, which in recent days has expanded to include more Chinese companies in addition to Huawei, the world's largest telecommunication gear

U.S. negotiators have tried to keep the Huawei issue separate from the trade talks, though Mr. Trump has several times talked about packaging Huawei in a trade deal. A Chinese Commerce Ministry spokesman, at a regular briefing in Beijing on Thursday, urged the US "It immediately rescinds the suppression and sanction measures against Huawei and other Chinese enterprises."

As part of a deal, Beijing is seeking the removal of all additional tariffs imposed by the U.S. since early last year – 25% levies on $ 250 billion in Chinese imports. Beijing also has said U.S. demands for Chinese purchases of American goods should be "reasonable" – meaning, according to Chinese officials, they must be based on domestic Chinese demand, but that requiring China to divert purchases it now make from other countries

Some Chinese government advisers have said that US negotiators raised the purchasing target to an additional $ 300 billion a year in exports from current levels. In discussions last December, the discussed figure was $ 200 billion. Even hitting that $ 200 billion figure would be unlikely. It would require more than doubling of U.S. exports to China, which was $ 120.1 billion in 2018 and $ 129.8 billion in 2017 before the trade battle began.

Chinese officials have also repeatedly said the text of any agreement should be "balanced" – meaning the US should make some concessions to China as well. China has not publicized its demands. In the past, Beijing has asked for more high-tech exports from the U.S. and an easier way for Chinese to get visas and business approvals in the U.S.

In recent weeks, President Xi has been seeking to increase Beijing's bargaining position with Washington. Last week, Mr. Xi met with North Korean leader Kim Jong Un in Pyongyang, becoming the first Chinese leader to visit the reclusive state in 14 years.

By strengthening China's ties with North Korea, especially at a time of deadlocked talks between Pyongyang and Washington, Mr. Xi was sending a message to Mr. Trump that China could still help the US ease the tensions in the Korean Peninsula. Some U.S. officials said they believe Mr. Xi is playing a positive role

The mood and agenda of the Osaka G-20 meeting contrasts sharply with the last time the leaders met at a Buenos Aires G-20 in December. Then, the two sides met for a leisurely dinner. Chinese officials saw China's economy as shaky, and Mr. Xi was keen for a deal to shore up business confidence.

Soon after, Canada was arrested and senior executive of Huawei at the U.S. Iran has begun to rationalize moves to slow down the flow of technology to Huawei and portray it as an espionage threat.

More nationalistic voices in the Communist Party and in public gathered volumes in the accusing Washington of trying to use the trade fight to stop China's rise and undermine the state-led economic model that has delivered strong growth for decades

Mr. Trump faces his critics too – and many Democratic presidential candidates willing to pummel him if he accepts what is seen as a weak deal with China after hitting the US consumers with higher bills through tariffs. At Wednesday night's Democratic primary debate, four of 10 candidates picked China as the biggest threat faced by the United States

Write to Lingling Wei at lingling.wei@wsj.com and Bob Davis at bob.davis@wsj.com


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