Treasury secretary says us and china putting trade war on hold – the boston globe k gas oroville

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Warnings from Trump’s national security team and lawmakers about easing up on ZTE, which is accused of failing to punish employees who violated trade controls against Iran and North Korea, prompted US officials to take a tougher stance on the company in talks. That provoked a less cooperative stance from Chinese negotiators, who had arrived believing the Trump administration might relent. The standoff over ZTE was a significant reason more progress was not made during talks in Washington, said three people familiar with the discussions.

On Sunday, Mnuchin said the United States was not willing to revisit penalties on ZTE, which gets a large amount of its semiconductors from Qualcomm, a San Diego chip maker. He said there had been no “quid pro quo” linking a trade deal to ZTE’s fate, though President Xi Jinping of China had asked Trump to consider relief.

Mnuchin insisted the administration wasn’t “going easy” on China over ZTE or the trade talks. Trump wanted to be “very tough” on ZTE, and tariffs could be put back in place if the trade negotiations collapsed, said Mnuchin, whose department is also required to send recommendations for restrictions on Chinese investment to the White House this week.

Larry Kudlow, Trump’s top economic adviser, said on ABC’s “This Week” on Sunday that a path to ZTE’s revival exists, but that it would be arduous. “If any of the remedies are altered, they are still going to be very, very tough, including big fines, compliance measures, new management, new boards,” Kudlow said. “The question is whether there are perhaps some small changes around the edges. I think President Trump is doing this because there’s some very good feeling between him and China.” “Do not, please, do not expect ZTE to get off scot-free,” he added. “It ain’t going to happen.”

Some supporters of the administration’s tough stance on China now fear that the White House is pursuing a quicker deal that would reduce the trade deficit — a longtime goal of Trump’s — as well as forestall a trade war, but sacrifice more ambitious goals the administration had discussed for reforming the Chinese economy.

Derek Scissors, resident scholar at the conservative American Enterprise Institute, said the United States’ response to China’s “predatory behavior” has been put on hold “in exchange for things yet to occur, and Mnuchin won’t tell us what they are.”

Brad Setser, a senior fellow for international economics at the Council on Foreign Relations, added that “the most concrete commitment that seems to have emerged out of the US-China trade talks was a commitment on China’s part to buy more of the things that it likely would buy more of no matter what: agricultural products and energy.”

In a statement Sunday, Robert Lighthizer, the US trade representative who led an investigation last year into China’s infringement of US intellectual property, said that the United States had agreed on a framework to address the serious issues his investigation had identified.

“Getting China to open its market to more US exports is significant, but the far more important issues revolve around forced technology transfers, cyber theft and the protection of our innovation,” he said. He added that the United States would use “all of its legal tools to protect our technology.”