U.S. official: 'Misspoke' on China talks

A top Treasury Department official said he was incorrect in announcing that the U.S. had ended formal economic dialogue with Beijing, emphasizing that Secretary Steven Mnuchin continues to hold private discussions with China.

"I misspoke," David Malpass, Treasury's undersecretary for international affairs, told reporters in Buenos Aires, Argentina, on Sunday. "Secretary Mnuchin has high-level talks with China."

Malpass' remarks came hours after he told a conference that the Treasury Department had "discontinued" the U.S.-China Comprehensive Economic Dialogue, a long-standing forum that allows leaders of the world's top two economies to communicate.

The retraction created some confusion on Sunday, as the future of the dialogue remains in doubt. Malpass' comments suggested that President Donald Trump's administration was moving away from the formal dialogue process in favor of talks by Mnuchin, but neither Malpass nor Treasury officials would clarify the status of the talks. Malpass declined to say whether the office that conducted the talks remained open, adding that a decision on that future of the dialogues has not been decided.

The U.S.-China Comprehensive Economic Dialogue was created more than a decade ago by then-Treasury Secretary Hank Paulson, with a goal of developing a forum for leaders of the world's top two economies to communicate. It called for regular meetings, hosted in turn by each country. The Treasury Department also had an office dedicated to the strategic dialogue with the two nations, with about half a dozen career staff members.

The Treasury Department tried to dial back Malpass' early comments later Sunday, saying the "focus" for dialogue with China is instead for the talks by Mnuchin.

Treasury spokesman Tony Sayegh tweeted: "Correction: Treasury has not discontinued the US China Comprehensive Economic Dialogue. The focus is for the Secretary to hold frequent private talks with senior level officials and we look forward to them continuing."

The White House's plans to impose import tariffs on steel and aluminum earlier this month threaten to spark a trade war with the European Union and Asia that could undermine global growth. German Finance Minister Olaf Scholz pushed back against protectionism on Sunday, saying his message for Mnuchin is that free trade is "a very important resource" for the world economy.

Without specifically citing the duties, Group of 20 nations warned about unfair trade practices in the draft of a statement that finance ministers and central bankers will discuss today and Tuesday.

In his earlier comments, Malpass said the U.S. wants to work with other nations to come up with a united response to what America sees as China's foot dragging on economic changes, ranging from overhualing state-owned enterprises to curbing the ruling party's role in the economy.

"Their markets are not reciprocal in the sense that there's not an ability for other countries to work in China the way that China works in elsewhere," Malpass said earlier Sunday in a Bloomberg TV interview. He highlighted a risk for the world from China's autocratic rule.

Meetings of the first Comprehensive Economic Dialogue under Trump fell apart in July 2017. The two super-powers were unable to produce a joint statement after Commerce Secretary Wilbur Ross scolded China over its trade imbalance with the U.S. in his opening remarks. Both sides pulled out of the final news conference.

President Xi Jinping in recent weeks sent his top economic adviser, Liu He, to speak face-to-face with Mnuchin. In that meeting, Liu is said to have asked Mnuchin for a point-person to provide a list of specific demands from China, a sign that the Treasury Department's shuttering of the formal dialogue process may be hampering any efforts to improve relations.

The White House's critique of China contrasts with the more collaborative approach of both the George W. Bush and Barack Obama administrations, who courted the nation as an economic partner.

Trump repeatedly has portrayed China as a rival that wants to undermine American prosperity. The administration is considering clamping down on Chinese investments in the U.S. and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property.

Information for this article was contributed by Xiaoqing Pi, Rainer Buergin and Raymond Colitt of Bloomberg News.

A Section on 03/19/2018

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