U.S. Treasury Secretary arrives in Beijing for trade talks, China media cautious

By Ben Blanchard and Michael Martina

BEIJING (Reuters) - U.S. Treasury Secretary Steven Mnuchin arrived in Beijing on Thursday for key trade talks, with Chinese state media saying China will stand up to U.S. bullying if needed but that it was still better to hash things out around the negotiating table.

A breakthrough deal to fundamentally change China's economic policies is viewed as highly unlikely during the two-day visit, though a package of short-term Chinese measures could delay a U.S. decision to impose tariffs on around $50 billion worth of Chinese exports.

The discussions, led by Mnuchin and Chinese Vice Premier Liu He, are expected to cover a wide range of U.S. complaints about China's trade practices, from allegations of forced technology transfers to state subsidies for technology development.

"Thrilled to be here. Thank you," Mnuchin told reporters upon arriving at his hotel, when asked if he expected progress. He made no other comments.

The U.S. Embassy in Beijing said the delegation planned to leave Friday evening. They would meet the Chinese on both days, in addition to U.S. Ambassador Terry Branstad, it added.

In an editorial, the official China Daily said Beijing wanted the talks to produce "feasible solutions to put an end to the ongoing feud" and that they could go well if the U.S. delegation genuinely wants to listen as well as talk.

China "will stand up to the U.S.' bullying as necessary. And as a champion of globalisation, free trade and multilateralism, it will have strong support from the international community", the English-language paper added.

"The U.S. wants greater access to China's market, but it should not use trade actions as a battering ram to force China to open its doors. It is already in the process of opening them wider," the paper said.

In doing so, China expected Washington to reciprocate and open its market to Chinese investments and competition, it added.

"NEGOTIATIONS THE BEST WAY"

Widely-read Chinese tabloid the Global Times, published by the ruling Communist Party's People's Daily, said it hoped the talks were the start of a resolution to the dispute.

"Washington and Beijing should be clear: neither side can scare the other down. Negotiations are the best way to resolve the problem."

The first round of threatened tariffs under the U.S. government's "Section 301" intellectual property probe focused heavily on technology products benefiting from the "Made in China 2025" programme to upgrade China's domestic manufacturing base with more advanced products.

The U.S. tariffs could go into effect in June following the completion of a 60-day consultation period.

China, which denies it coerces technology transfers, has threatened retaliation in equal measure, including tariffs on U.S. soybeans and aircraft.

U.S.-based trade experts said they expected Beijing to offer Trump's team a package of policy changes that may include some previously announced moves, such as a phase-out of joint venture requirements for some sectors, autos tariff reductions and increased purchases of U.S. goods.

Trump has demanded a $100 billion annual reduction in the $375 billion U.S. goods trade deficit with China.

But the divergent U.S. trade delegation is likely to have differing views on the merits of such an offer.

The group includes Commerce Secretary Wilbur Ross along with noted China hawks Robert Lighthizer, the U.S. trade representative, and White House trade and manufacturing adviser Peter Navarro.

(Reporting by Ben Blanchard and Michael Martina. Editing by Lincoln Feast.)