China cancels trade talks with US as tariff threats escalate

China will not send vice-premier Liu He to Washington next week

WASHINGTON: China has cancelled upcoming trade talks with the United States and will not send vice-premier Liu He to Washington next week, the Wall Street Journal reported, citing sources.

The Wall Street Journal said a mid-level delegation was due to travel to Washington ahead of Liu's visit, but the trip has now been abandoned.

Earlier this week, China added $60 billion of US products to its import tariff list as it retaliated against US duties on $200 billion of Chinese goods set to go into effect from September 24.

A US official had said earlier that despite its protestations, China was well aware of US demands that it halt what Washington considers unfair trade practices. US President Donald Trump has made clear his resolve on the issue, the official said, and the two sides remain in touch.



"We have been very clear in all of these meetings about what is... required," the official said. "I am still optimistic that there is a positive way forward, and the president wants us to continue to engage to try to achieve a positive way forward."

The official's comments came ahead of a report by the Wall Street Journal that China had cancelled mid-level trade talks with the United States, as well as a proposed visit to Washington by vice premier Liu He originally scheduled for next week.

Earlier this week, China added $60 billion of US products to its import tariff list as it hit back at US duties on $200 billion of Chinese goods that go into effect from September 24. The escalating trade dispute has spooked financial markets.

Speaking to reporters at the White House on condition of anonymity, the official made clear the administration's ultimate goal was not to separate the interlinked US and Chinese economies, but he said companies could choose to alter their supply chains if Beijing did not change course.

"Our goal here is not to cleave off the Chinese market from the US market, I don't think that's good for long-term growth," he said. "In the short term there is of course a risk that if China continues on the path it is, that some companies as a result of this may start...to move supply chains."

The official also said he hoped Canada would agree to join a US-Mexico trade deal by the end of the month, while saying he thought US lawmakers would support a bilateral deal with Mexico if that did not happen.



US and Canadian officials have been engaged in talks to modernise the North American Free Trade Agreement, a 1994 deal that underpins $1.2 trillion in trade between the United States, Canada and Mexico.

The official dismissed concerns separate deals with Canada and Mexico would have a negative impact on supply chains.

"I think it's overblown to say that if we have separate deals with these two, that there still can't be a really high degree of integration," he said.