BEIJING — One year ago, when he began a multibillion-dollar trade war with China that shook the global economy, President Trump demanded that Beijing end lavish government spending aimed at making the country a world power in computer chips, robotics, commercial aircraft and other industries of the future.Today, as the two sides struggle to reach a truce, the Trump administration is finding just how difficult that will be.Trade talks between the United States and China nearly ground to a halt this past week, and a seemingly intractable dispute over subsidies is a big part of it. Robert E. Lighthizer, the United States trade representative, accused China last Monday of reneging on what he described as “good, firm commitments on eliminating market-distorting subsidies.” Vice Premier Liu He, the leader of China’s negotiating team, said that it was normal for negotiations to have ups and downs, but has also nodded to the subsidies issue in vowing repeatedly over the last several days not to bend on China’s principles.President Trump on Friday raised tariffs on $200 billion a year worth of Chinese goods, hitting goods leaving China’s shores as of that day. He has directed Mr. Lighthizer to start on Monday the long process for raising tariffs on all Chinese goods.In talks and in an exchange of documents, Chinese negotiators surprised their American counterparts by calling at the start of this month for numerous changes, people familiar with the negotiations said. While the requests covered everything from intellectual property to currency manipulation, the hardened Chinese stance against limiting government subsidies poses a particular challenge.The United States wants China to enshrine limits on subsidies in its national laws. China says it will not let a foreign country tell it how to change its laws. A schedule of planned legislation released by Chinese officials on Saturday did not include any of the subsidy-related measures that Washington has sought.Beijing has long helped its homegrown industries in strategically important areas like jetliners and parts for nuclear reactors. It also supports efforts to build up China’s high-tech industries like microchips and self-driving cars to make sure the economy will stay competitive.Stopping, or even tracking, China’s subsidies is a difficult task. Many subsidies take the form of cheap loans from government-controlled banks or through other opaque arrangements. Foreign companies also complain that they are often shut out of local government contracts through written and unwritten rules, giving Chinese competitors a strong base at home while they pursue global expansion plans.China has agreed to disclose more information about its subsidies and stop those that violate rules under the World Trade Organization, the global trade referee. But the two sides are also at loggerheads over how to interpret those W.T.O. rules, said people familiar with the talks, who asked for anonymity because they were not authori
U.S.-China Trade Talks Stumble on Beijing’s Spending at Home
BEIJING — One year ago, when he began a multibillion-dollar trade war with China that shook the global economy, President Trump demanded that Beijing end lavish government spending aimed at making the country a world power in computer chips, robotics, commercial aircraft and other industries of the future.Today, as the two sides struggle to reach a truce, the Trump administration is finding just how difficult that will be.Trade talks between the United States and China nearly ground to a halt this past week, and a seemingly intractable dispute over subsidies is a big part of it. Robert E. Lighthizer, the United States trade representative, accused China last Monday of reneging on what he described as “good, firm commitments on eliminating market-distorting subsidies.” Vice Premier Liu He, the leader of China’s negotiating team, said that it was normal for negotiations to have ups and downs, but has also nodded to the subsidies issue in vowing repeatedly over the last several days not to bend on China’s principles.President Trump on Friday raised tariffs on $200 billion a year worth of Chinese goods, hitting goods leaving China’s shores as of that day. He has directed Mr. Lighthizer to start on Monday the long process for raising tariffs on all Chinese goods.In talks and in an exchange of documents, Chinese negotiators surprised their American counterparts by calling at the start of this month for numerous changes, people familiar with the negotiations said. While the requests covered everything from intellectual property to currency manipulation, the hardened Chinese stance against limiting government subsidies poses a particular challenge.The United States wants China to enshrine limits on subsidies in its national laws. China says it will not let a foreign country tell it how to change its laws. A schedule of planned legislation released by Chinese officials on Saturday did not include any of the subsidy-related measures that Washington has sought.Beijing has long helped its homegrown industries in strategically important areas like jetliners and parts for nuclear reactors. It also supports efforts to build up China’s high-tech industries like microchips and self-driving cars to make sure the economy will stay competitive.Stopping, or even tracking, China’s subsidies is a difficult task. Many subsidies take the form of cheap loans from government-controlled banks or through other opaque arrangements. Foreign companies also complain that they are often shut out of local government contracts through written and unwritten rules, giving Chinese competitors a strong base at home while they pursue global expansion plans.China has agreed to disclose more information about its subsidies and stop those that violate rules under the World Trade Organization, the global trade referee. But the two sides are also at loggerheads over how to interpret those W.T.O. rules, said people familiar with the talks, who asked for anonymity because they were not authori
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