China denies offered package to slash US trade gap by $200 billion

China denied on Friday that it had offered a package to slash the US trade deficit by up to $200 billion, hours after it dropped an anti-dumping probe into US sorghum imports in a conciliatory gesture as top negotiators meet in Washington.

US officials had said on Thursday that China was proposing trade concessions and increased purchases of American goods aimed at cutting the US trade deficit with China by up to $200 billion a year. “This rumour is not true. This I can confirm to you,” Chinese foreign ministry spokesman Lu Kang said. “As I understand, the relevant consultations are ongoing and they are constructive,” he said, adding that he could not elaborate on the specifics of the negotiations.

Chinese Vice Premier Liu He is in Washington this week for talks with US officials led by US Treasury Secretary Steven Mnuchin aimed at heading off a trade war between the world's two biggest economies. Earlier on Friday, China announced that it was ending its sorghum investigation, which had effectively halted a trade worth roughly $1.1 billion last year and roiled global grain markets and spurred worries about rising costs domestically.

The US is China's dominant source of imported sorghum, a product grown in states such as Texas and Kansas that lean towards Trump's Republican party, whose Congressional majorities are under threat in mid-term elections in November.

 The US goods deficit was $375 billion last year. One US source said earlier that US aircraft maker Boeing would be a major beneficiary of the Chinese offer to narrow the trade gap if Trump were to accept it. Boeing is the largest US exporter and already sells about a quarter of its commercial aircraft to Chinese customers. Another person familiar with the talks had said the package may include some elimination of Chinese tariffs already in place on about $4 billion worth of US farm products including fruit, nuts, pork, wine — and sorghum. A White House statement described the meetings as part of “ongoing trade discussions” and said Trump met the Chinese delegation led by Liu and the US team led by Mnuchin.

  

“The United States officials conveyed the president's clear goal for a fair trading relationship with China," the White House said. That top-line number in the reported Chinese offer would largely match a request presented to Chinese officials by Trump administration officials in Beijing two weeks ago.

The two biggest US exports to China were aircraft at $16 billion last year, and soybeans, at $12 billion.

Trump has threatened to impose tariffs on up to $150 billion of Chinese goods to combat what he says is Beijing's misappropriation of US technology through joint venture requirements. Beijing has threatened equal retaliation, including tariffs on some of its largest US imports, including aircraft, soybeans and autos.