U.S. must push China for change but act to protect economic interests -USTR Tai By Reuters

WASHINGTON (Reuters) -The United States will vigorously defend U.S. economic interests and values against the negative impacts of China’s economic policies as Beijing doubles down on its state-centered economic system, U.S. Trade Representative Katherine Tai said Wednesday.

Tai told the House Ways and Means Committee that Washington’s talks with Beijing about its unmet purchase commitments under a Phase 1 trade deal and broader non-market policies had been “unduly difficult” and new tools were needed.

“Going forward, our strategy will expand beyond only pressing China for change and needs to include vigorously defending our values and economic interests from the negative impacts of China’s economic policies and practices,” she said.

She said Washington “cannot stop pushing China for change,” but could no longer wait for China to change its policies, noting that tariffs on $300 billion to $400 billion in Chinese imports has not incentivized Beijing to make fundamental changes.

China only met about 60% of its Phase 1 deal commitments to increase U.S. purchases by $200 billion during 2020 and 2021 compared with 2017 levels and improve protections for U.S. intellectual property and grant more Chinese market access to U.S. financial services and agricultural biotechnology.

In addition to “continuing to create pressure for China to change,” Tai said the United States needed to take more steps on its side, including passing legislation in Congress to promote investments in innovation, semiconductors and the return of manufacturing supply chains to U.S. shores.

“That is the plan that we need to pursue going forward,” she said, echoing comments to Reuters last week.