China Fires Back After Kudlow Accuses Xi of Stalling Trade Talks

(Bloomberg) -- China accused American officials of making false accusations as it fired back against a claim Xi Jinping is blocking talks with the U.S. over the trade war between both nations.

The rebuke from China’s foreign ministry highlights the deepening impasse between the world’s two biggest economies over allegations of unfair trade.

"In front of the whole world some U.S. officials are turning facts on their head and making false accusations," Chinese foreign ministry spokeswoman Hua Chunying said at a regular briefing. "This is beyond the imagination of most people and is shocking.”

China Fires Back After Kudlow Accuses Xi of Stalling Trade Talks

Hua made the remarks after President Donald Trump’s top economic adviser blamed Chinese President Xi for holding back talks.

“As far as we know, President Xi at the moment does not wish to make a deal,” White House National Economic Council Director Larry Kudlow said at the CNBC Institutional Investor Delivering Alpha conference in New York on Wednesday. “I do not think President Xi, at the moment, has any intention of following through on the discussions we made.”

The trade negotiations between the U.S. and China aimed at defusing tensions have stalled, said Kudlow. Throughout it all, Trump has maintained a good relationship with Xi and they are working together to thwart North Korea’s nuclear threat, said Kudlow.

But big differences remain over trade, he said. “Xi is holding the game up,” he said. Xi’s top economic adviser, Liu He, appears willing to move forward on a deal, said Kudlow. Liu was involved in three rounds of negotiations over trade with U.S. officials in May and June.

China hasn’t “responded at all, not one basis point, to our request to do something about the theft of intellectual property and the forced divestiture of our technology,” said Kudlow.

Trump earlier this month imposed 25 percent tariffs on $34 billion of Chinese goods, with another $16 billion to follow soon. The administration has also released a list of 10 percent tariffs on an additional $200 billion of Chinese goods, which could take effect as early as next month. China retaliated on the first wave of tariffs by slapping duties on the same dollar amount of U.S. imports, and Beijing has said it’ll fight against any further U.S. actions.

Trump authorized the tariffs after an investigation he ordered by the U.S. Trade Representative’s office found that China was violating intellectual property rules and forcing American companies operating in China to hand over their technology secrets to gain access to the market. Chinese Commerce Ministry spokesman Gao Feng last week called those accusations “groundless” and said that the U.S. trade penalties contravene rules at the World Trade Organization.

‘Totally Preposterous’

Kudlow’s latest comments were “totally preposterous,” said Li Yong, a senior fellow at the government-affiliated China Association of International Trade in Beijing.

“The U.S. started the trade tensions and they imposed tariffs first, then they put all the blame on China,” he said. “The purpose of this is to sensationalize the matter and stir up public attention. This is meaningless.”

Treasury Secretary Steven Mnuchin has no bilateral meetings scheduled with Chinese officials during the Group of 20 meetings in Argentina later this week. Mnuchin has about a dozen one-on-one discussions and pull-asides scheduled with counterparts at the G-20, though he sees no need to meet with Chinese officials, according to a senior Treasury official on Tuesday.

Mnuchin said last week that China must commit to deepening structural reforms to its economy before the U.S. would agree to negotiate over trade.

"Some US officials said China is to blame for the collapse of trade talks, which totally goes against the truth," Gao Feng, spokesman at the Ministry of Commerce said at a separate briefing on Thursday in Beijing. "Looking back at the entire process, it is the U.S. who behaved capriciously and hasn’t honored its words, closing the door for bilateral negotiations."

To contact Bloomberg News staff for this story: Sarah McGregor in Washington at smcgregor5@bloomberg.net;Jeanna Smialek in New York at jsmialek1@bloomberg.net;Enda Curran in Hong Kong at ecurran8@bloomberg.net;Peter Martin in Beijing at pmartin138@bloomberg.net

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With assistance from Editorial Board