Escalating trade dispute looms: What do Trump and Xi want?

Leaders of the US and China to discuss a looming trade war as well as other issues like Taiwan and South China Sea.

    Trump expects concessions from Xi, after lamenting  the US trade deficit of $336bn last year [Jim Watson/AFP]
    Trump expects concessions from Xi, after lamenting the US trade deficit of $336bn last year [Jim Watson/AFP]

    US President Donald Trump and Chinese President Xi Jinping are set to meet on Saturday for some dinner diplomacy on the sidelines of the Group of 20 summit in Argentina.

    The US-China trade war tops their agenda, but the two leaders also have other topics they hope to tackle, including Taiwan, the South China Sea and Americans being detained in China.

    Here's a look at what each side wants:

    What Trump wants

    The United States and China have both raised tariffs on hundreds of billions of dollars of each other's goods in what is quickly becoming a perilous trade war.

    The Trump administration says its demands of China are clear: Stop stealing trade secrets. Stop coercing technology transfers. Stop favouring Chinese companies over the US and other foreign competitors.

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    The US president, who expects concessions from Xi, has repeatedly lamented the US's gaping trade deficit with China, which amounted to $336bn last year.

    To retaliate, Trump increased tariffs over complaints that Beijing steals or pressures companies to hand over technology in violation of its market-opening obligations.

    The bottom line, according to Trump: "China has to treat us fairly. They haven't been. They have to treat us fairly."

    The president, who celebrates US economic gains as a positive benchmark of his own performance, can ill afford a slowdown or recession heading into his re-election effort in 2020. At the same time, the self-professed expert dealmaker can hardly be seen caving to Chinese intransigence.

    "I think we're very close to doing something with China, but I don't know that I want to do it, because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes," Trump told reporters before he left Thursday for the summit.

    Adding to the tensions is a new report from the US trade representative that accused Beijing of stepping up efforts to steal technology.

    China rejected the charges as "new unwarranted accusations."

    Trump also has threatened that an even larger set of US duties affecting China will go into effect in the new year.

    Besides trade, tensions between the two nations have been high regarding China's claim to sovereignty over virtually the entire South China Sea.

    The US challenges that claim and has vowed to maintain a presence in the waters to promote freedom of navigation and overflight.

    Trump has threatened more tariffs against China that would take effect on January 1 [File: AP Photo/Evan Vucci]

    On another issue, Trump said Thursday he will bring up with Xi the case of an American woman and her two grown children who are suspected of being held in China to force their estranged father to return to China to face fraud charges.

    John Bolton, national security adviser, tweeted a story in The New York Times about the plight of Victor and Cynthia Liu and their mother, Sandra Han, writing: "These Americans need to be allowed to return home."

    What Xi Wants

    Xi will be hoping for progress towards a ceasefire in the bitter trade war with the US.

    But while Xi portrays China as a force for peace and free trade, he also needs to appear tough against the US to maintain his standing among nationalists at home.

    The US has imposed punitive tariffs on $250bn in Chinese exports, and has threatened to double that unless China offers concessions on trade and investment policies the US regards as unfair.

    China has responded with tariffs on $110bn in US goods, but Chinese officials say they still are not clear what exactly the US wants from it, and Xi will likely attempt to gain more clarity and possibly put forward new proposals.

    While Beijing has offered to buy more US products to narrow the massive trade deficit, Trump's administration rejected that outright.

    The US wants China to abandon demands that American and other foreign companies hand over key technologies in exchange for access to the Chinese market.

    China denies making unreasonable demands and remains committed to becoming a global competitor in cutting-edge technologies such as robotics, artificial intelligence and biotechnology by 2025.

    At the very least, the talks could serve as a stalling tactic to buy China more time and delay additional tariffs. Xi's administration also hopes talks will exclude or sideline key trade hawks, such as Trump adviser Peter Navarro.

    On Taiwan, Xi wants to make Trump understand how seriously China feels about the self-governing island and that closer engagement between Taipei and Washington threatens to destabilise the region - and possibly even prompt a conflict.

    In talks earlier this month setting the stage for the Xi-Trump meeting, a top Chinese foreign policy adviser had sharp words for the US side over Washington's increased support for the island, which China claims as its own territory.

    China demands the US cancel a $330m sale of spare parts and related support for Taiwan's US-made F-16 fighter jets and other military aircraft. While Washington has no official relations with Taiwan, it is legally obligated to ensure it has the means to defend itself.

    Trump's administration has also approved official contacts with Taiwan at higher levels than before and recently opened a gleaming new representative office in Taipei.

    Xi is also expected to stand firm on issues related to the South China Sea. China demands the US stop sending ships and military aircraft close to islands Beijing claims in the South China Sea.

    SOURCE: AP news agency