US, China negotiating behind scenes to ease trade tensions: Gurria

Chinese leader Xi Jinping

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China's exports growth unexpectedly fell in March, the first drop since February previous year, raising questions about the health of one of the economy's key growth drivers even as trade tensions rapidly escalate with the United States.

President Donald Trump has approved a possible tariff hike on $50 billion of Chinese goods in response to complaints Beijing steals or pressures foreign companies to hand over technology.

"We could take the lead in identifying the clusters and make them a reality", he said.

Total trade between the two nations rose 13% during the quarter, China's data showed, but the first shots in the latest trade spat were not likely to be felt in the recording period.

That sent its quarterly trade surplus with the U.S. surging 19.4 per cent to US$58.25 billion (RM225.6 billion), though the March reading narrowed to US$15.43 billion from US$20.96 billion in February.

For the first quarter as a whole, China's exports grew a hearty 14.1 percent from a year earlier. China exported US$137.8 billion worth of high-tech products in the first quarter, up 20.5 per cent on-year.

Against the backdrop of recent tensions, customs bureau spokesman Huang Songping repeated China's line that it is not looking for an advantage over its trading partners.

China's response Friday appeared to be aimed at increasing domestic US pressure on Trump by making clear which exporters, including farm areas that voted for him in 2016, might be hurt.

President Xi Jinping this week struck a conciliatory note on trade, promising to cut tariffs on cars - a key point of USA anger - and other imports, as well as further open up the economy, which drew a warm response from Trump.

Xi said in a speech to participating naval officers that the People's Liberation Army should persevere in the development of its marine forces, build modern systems of maritime combat and improve its capacity in diversified military missions.

"He's going to open it up, take down a lot of the trade barriers - maybe all of them - but take down a lot of trade barriers".

Trump has portrayed the issue in a more favourable light.

Robert Manning, a US-China analyst at the Atlantic Council, calls Trump's view of global trade "nutty", but acknowledges that his tough talk may be working. "I think we're having some great discussions", he told the gathering of lawmakers in Washington, though he repeated that the USA would win a trade war between the two sides.

"The business community worries about escalation of trade tensions, this idea of tit-for-tat that has characterized the past couple of weeks has been troubling", said Jake Colvin, vice president of the National Foreign Trade Council, a pro-trade business group.

That helped narrow its surplus with the U.S. in March alone to $15.43 billion from $20.96 billion in February, but that was still almost 18 percent higher than March 2017.

So far the large threats wielded by both sides have not been implemented.

"This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products", Xi said.

- Loan demand for the real economy picked up in the first quarter with the index for loan demand rising 5.2 percentage points from last quarter to 70.9 percent.

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