US disappointed by slow China reform, Trump official says


SINGAPORE • The US has been disappointed this year at China’s lack of progress in pursuing market oriented reforms, said a senior administration official, ratcheting up the pressure on the world’s second largest economy ahead of US President Donald Trump’s visit there next month.

While China made progress in previous decades toward market pricing and reducing the number of state-owned enterprises, the US is concerned now with subsidies, excess capacity and its industrial policy, said the official, who asked not to be identified in order to discuss sensitive policy issues.

A meeting earlier this year between President Xi Jinping and Trump in Mar-a-Lago was very good but the US had hoped for more follow-through on reform, the official said. The Comprehensive Economic Dialogue between the two economies a few months later failed to yield desired results, the person said.

The official’s comments follow days after Secretary of State Rex Tillerson noted in an interview growing US impatience with China on issues from North Korea to trade. Trump is due to visit Beijing on Nov 8 as part of his first trip to Asia, where he’ll also attend a meeting of leaders from the Asia-Pacific Economic Cooperation, or APEC, in Vietnam.

Xi’s address to the Communist Party last week demonstrated that the leader is clearly in a strengthened position, so that gives him ample room for building a stronger, more market-oriented economy, the US official said.

The official spoke amid talks in Hoi An, Vietnam, where finance ministers and delegates from the 21 member APEC were meeting ahead of the leaders’ summit in early November. While trade — a hot- button issue between the US and China — wasn’t included in the final joint statement, it was discussed at length among the delegates.

Criticism of China’s practices remained a central part of the Trump administration’s policies on trade, which have emphasised “fair” over “free” trade as the president pushes for renegotiation of existing pacts in the name of “America First”.

From the US’ perspective, trade isn’t growth-oriented enough, the official said. Trade should be market oriented, and free and fair, rather than through gaining an advantage by creating subsidies and industrial policy, or by increasing debt through non-transparent loans, the person said.

Amid China’s massive long-term push to finance infrastructure projects throughout the region and beyond in the Belt and Road Initiative, the US official noted that those, too, should allow more free market practices. While the China-led Asia Infrastructure Investment Bank has made progress on that front, many of the projects with Chinese involvement have meant state-owned entities play a major role, with less transparency, the official said.