FILE - This Aug. 15, 2012, file photo shows sorghum at a farm in Waukomis, Okla. As China-U.S. trade talks resume in Washington, China said Friday, May 18, 2018 it is dropping anti-dumping and anti subsidy investigations into imported U.S. sorghum, saying it is not in the public interest. (AP Photo/Sue Ogrocki, File)
A field of US sorghum, which is a popular ingredient in China animal feed © AP

China’s Commerce ministry has axed anti-dumping penalties imposed on US sorghum imports, bolstering hopes that the world’s two largest economies can seal an interim trade agreement when negotiations resume in Washington on Friday.

The announcement came just hours after US President Donald Trump received Liu He, China’s lead trade negotiator and vice-premier, in the Oval Office on Thursday.

The two sides have been discussing a possible “mini agreement” in which Washington would revise sanctions against ZTE, a Chinese telecommunications group, in return for pledges by Beijing not to impose punitive tariffs on US agricultural exports.

Negotiating teams led by Mr Liu and Steven Mnuchin, US Treasury secretary, are also discussing Mr Trump’s earlier demand that China more than halve its $375bn trade surplus with the US over the next two years.

In a statement on Friday, China’s commerce ministry said the anti-dumping measures were “not in the public interest” because of their inflationary impact on animal feed, which would especially impact pig farmers already suffering from falling pork prices.

The ministry had required importers of US sorghum to pay a 178 per cent surcharge. Last year China imported $1.1bn worth of US sorghum, which is grown principally in Kansas and Texas.

The retraction of the measures was the latest signal that the Chinese government is moving rapidly to facilitate an agreement in Washington that would at least postpone moves by both side to impose tariffs of up to 25 per cent on $100bn worth of bilateral trade.

On Thursday evening Beijing time, Toshiba announced that Chinese competition regulators had cleared the stalled $18bn sale of its memory chip business to Bain Capital of the US. Chinese regulatory approval of Qualcomm’s proposed $47bn takeover of NXP is still pending.

But people briefed on the talks cautioned that a larger agreement formally ending the threat of a trade war might not be reached for weeks or even months. President Xi Jinping’s administration wants the US to end its “ Section 301” investigation of Beijing’s allegedly unfair trade practices, while US negotiators are pushing for dramatic changes in Chinese foreign investment and industrial development policies. 

“It would be very awkward for [Mr Trump] to say OK, you’ve bought a bunch of our stuff so it’s OK if you continue to force our companies to transfer technology and block market access,” one of the people said. 

While America’s European and Japanese allies are broadly supportive of Mr Trump’s effort to force wholesale changes in China’s foreign investment environment and industrial policies, they remain angry at his March decision to impose unilateral tariffs on steel and aluminium imports.

Japan on Friday notified the World Trade Organization that it may impose retaliatory tariffs on the US over its duties on steel. Tokyo did not say what goods it would target and avoided imposing the tariffs straight away, preferring to use the threat as leverage while it sought an exemption from the US levies.

China’s anti-dumping investigation into US sorghum exports was launched in early February, shortly after the Trump administration imposed a 30 per cent tariff on imported solar cells.

After Mr Trump proposed tariffs on imported steel and aluminium, China’s Commerce ministry announced retaliatory measures targeting $3bn worth of US imports including fruits, wine and nuts.

Additional reporting by Robin Harding

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