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Factbox: Commercial, trade issues between China, United States
November 8, 2017 / 2:04 PM / 16 days ago

Factbox: Commercial, trade issues between China, United States

(Reuters) - China is the United States’ largest trading partner, but the relationship has long been plagued by accusations of unfair practices and a large U.S. trade in goods deficit that last year reached $347 billion.

U.S. President Donald Trump and China's President Xi Jinping leave after an opera performance at the Forbidden City in Beijing, China, November 8, 2017. REUTERS/Jonathan Ernst

Here are the most pressing commercial issues between the world’s two-biggest economies as Trump visits Beijing this week.

U.S. IP INVESTIGATION

Trump’s Trade Representative Robert Lighthizer has launched a “Section 301” investigation into China’s alleged theft of U.S. intellectual property.

Rarely used in recent decades, the probe looks at claims China ignores patent and copyright protections, and forces U.S. companies to turn over technology or enter into joint ventures with Chinese partners. Any conclusion is likely months away, and would be challenged at the World Trade Organization by Beijing.

MARKET ECONOMY STATUS

Despite pledges to open up after China joined the WTO in 2001, Xi has consolidated government control over the economy. The United States uses standards for non-market economies to determine anti-dumping duties against Chinese companies, given the extent of the government’s control over price and output decisions.

The designation deeply angers Beijing, which argues that Washington is using an expired clause in China’s 2001 WTO accession deal in assessing whether China is dumping goods on the international market.

DISCRIMINATORY TECH POLICIES

New national security and cyber security regulations require companies to store crucial data within China and pass security reviews, which foreign tech firms say could put business secrets at risk.

U.S. companies also complain they face discriminatory Chinese industrial plans, such as the “Made in China 2025” initiative, which offers government backing to domestic companies in sectors the Chinese government deems strategic.

MARKET BARRIERS

Foreign companies are prohibited from investment and majority ownership in strategic sectors, including the automotive, securities, healthcare services, insurance and cloud computing industries. Chinese firms, however, can operate freely in these sectors in the United States.

China promised this year it would allow U.S. payment card companies to run fully-owned units in China, but they still face pressure to form local joint ventures.

Lawmakers in Congress aim to introduce legislation broadening the review powers of the Committee on Foreign Investment in the United States (CFIUS), unnerved by Chinese efforts to acquire sensitive U.S. technology. Beijing complains CFIUS reviews are protectionist.

BILATERAL INVESTMENT TREATY

Talks on a bilateral investment treaty have sputtered. Washington wants China to cut a “negative list” of sectors where U.S. investment is prohibited, from financial services to telecommunications.

SOYBEANS AND AGRICULTURAL PRODUCTS

Chinese commodity importers are expected to sign deals to buy more U.S. soybeans and other agricultural products, building on an agreement in May.

China is also expected to buy more U.S. beef, barley and dairy products, including cheese.

It would be the third such bilateral deal for agricultural products this year. China is the world’s top importer of soybeans and dropped a 14-year ban U.S. beef imports earlier this year.

GAS AND OIL

U.S. gas exporters and traders are expected to sign a slew of deals during Trump’s visit, as they seek to grab a bigger chunk of the lucrative, growing business of selling the clean fuel to China. The world’s third-largest gas buyer is shifting away from dirty coal.

Reporting by Michael Martina, Josephine Mason, Elias Glenn and Benjamin Kang Lim

Our Standards:The Thomson Reuters Trust Principles.
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