US-China deal includes key structural issues

US announced that any pact would cover the exchange rate for China’s currency in a bid to prevent Beijing from simply devaluing the yuan. (AFP pic)

WASHINGTON: Washington and Beijing are on the verge of a “historic” trade agreement, which will address key structural issues like China’s subsidies to major industries, a top White House economic official said Thursday.

President Donald Trump and Chinese leader Xi Jinping have touted progress in recent negotiations aimed at ending the year-long trade war that has imposed punishing tariffs on a large portion of the trade between the economic powers and is expected to meet next month at Trump’s Florida resort.

US officials have focused on what they say are unfair trade practices by Beijing, including theft of US technology, as well as the industrial strategy called Made in China 2025 that aims to achieve Chinese dominance key technology sectors.

Larry Kudlow, head of the National Economic Council, said on CNBC the coming trade agreement would include a “de-emphasis” of that plan and “a significant reduction of Chinese subsidies to those target industries.”

“I think we’re heading toward a remarkable historic deal,” Kudlow said, adding that the final details remained to be agreed but were expected to be finalized at “a meeting in late March down at Mar-a-Lago.”

“We have never covered so much ground. It’s a question now of waiting for the other side to come back and sign on the dotted line,” he said.

US officials previously announced that any pact would cover the exchange rate for China’s currency in a bid to prevent Beijing from simply devaluing the yuan to get around any tariffs.

Kudlow said the draft documents prohibited currency manipulation and would oblige China “to report any interventions in the market.”

“We have a mechanism with respect to enforcement which is I think unparalleled, to be honest.”