A week ahead of the G20 World Leaders summit, the trade dispute between the United States and China shows no signs of abating.
After the two countries failed to reach an agreement over trade at the Asia-Pacific Economic Cooperation meeting in Papua New Guinea last weekend – breaking a 25-year tradition – the US government released a report Tuesday accusing China of continuing a state-backed campaign of intellectual property and technology theft.
“China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months,” according to Trade Representative Robert Lighthizer's report.
It also cited an October 2018 report by experts from the US Naval War College and Tel Aviv University that found that China Telecom may be engaging in a "malicious" campaign to "hijack Internet traffic and direct it through Mainland Chinese servers for possible collection and analysis.”
Lighthizer's report represent a possible source of new acrimony ahead of the meeting in Buenos Aires aimed at defusing the dispute companies worry will chill global economic growth.
Asked about the report, a Chinese foreign ministry spokesman, Geng Shuang, said US-Chinese trade relations were "mutually beneficial" and it was "natural to have trade frictions."
"The key is to engage in dialogue and consultation on the issue based on mutual respect, equality and good faith," Geng said at a regular briefing.
Top White House economic adviser Larry Kudlow said Tuesday he expects a direct confrontation between President Donald Trump and his Chinese counterpart Xi Jinping at the upcoming meeting in Buenos Aires, Argentina.
The lack of progress though is in contrast with Trump's statements showing optimism that an agreement could be reached.
Last Friday, the President described a list of 142 concessions offered by the Chinese as "not acceptable," though he also expressed optimism that he could reach a deal with China before January 1, when a new round of tariffs kicks in raising duties to 25 percent on a wide array of consumer goods.
Trump is now pressing Beijing to roll back industry plans that its trading partners say violate market-opening obligations, including "Made in China 2025," which calls for state-led creation of Chinese champions in robotics and other fields.
US Vice President Mike Pence, who traveled to Asia, told reporters that the president still has hope that a deal can be struck. "President Trump believes that a [trade] deal is possible but we also believe we’re in a very strong position," he said, according to the Journal.
American and Chinese officials have been talking in preparation for the Trump-Xi meeting and news reports say Bejiing has sent written proposals but no details have been released.
Pence warned that Trump wasn't in a rush to end the trade war he started earlier this year and was willing to "more than double" the tariffs it has already placed on US$250 billion in Chinese goods.
The United States "will not change course until China changes its ways," Pence said in his speech.
The two countries have embarked upon a full-scale trade war in the past few months, and recent event show China is willing to cast diplomacy aside in favor of a more aggressive posture as it challenges the United States’ dominance in the region.
Beijing has tried without success to recruit France, Germany, Japan and other governments as allies against Trump. They dislike his tactics but echo US complaints.
The European Union filed a challenge in the World Trade Organization in June to Chinese policies it said improperly limit the ability of foreign companies to control and profit from their technology. The Geneva-based trade organization will task a panel of three experts to determine whether China’s policies violate WTO terms. A decision could be rendered as soon as next year.
China is, along with the United States and Russia, regarded as a leading power in military cyber spying.
During a visit to the United States in 2015, Xi agreed with former President Barack Obama to refrain from using military resources to steal commercial secrets, but officials have accused China of reneging on that agreement.
An indictment unsealed last month charges a Chinese intelligence officer with trying to steal technology from US and European aerospace companies.
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