AsianFin -- U.S. Treasury Secretary Scott Bessent on Wednesday expressed his optimism about a trade deal with Chinese counterpart, a day after President Donald Trump softened tone on China levies.
Credit：Xinhua News Agency
"There is an opportunity for a big deal" if China is willing to take actions to rebalance its economy to more consumption and less dependence on export-led manufacturing growth as the U.S. seeks rebalancing in the opposite direction, Bessent said at the Institute for International Finance (IIF) in Washington,D.C.
"Let's do it together," Bessent said in a question-and-answer session. "This is an incredible opportunity. I think if Bridgewater founder Ray Dalio were to write something, he could call it a beautiful rebalancing."
In his keynote prepared for the IIF event, Bessent said China needs such rebalancing. “Recent data shows the Chinese economy tilting even further away from consumption toward manufacturing. China’s economic system, with growth driven by manufacturing exports, will continue to create even more serious imbalances with its trading partners if the status quo is allowed to continue,” he noted.
Bessent continued: “China’s current economic model is built on exporting its way out of its economic troubles. It’s an unsustainable model that is not only harming China but the entire world.” He added that China knows it needs to change and the U.S. wants to help it change “because we need rebalancing too.”
Bessent believes if China shifts the focus of its economy to domestic consumption, it would help the international economic system pivot to a more stable equilibrium. "China can start by moving its economy away from export overcapacity and towards supporting its own consumers and domestic demand," he said. "Such a shift would help with global rebalancing that the world desperately needs."
However, Bessent gave a cautioned outlook of the trade deal, stating it could take two or three years to come up with a full U.S.-China deal. He dismissed a report about the Trump administration's possible cutting China tariffs in some cases by more than half.
White House is discussing slashing tariffs on Chinese imports, in some cases by more than half of the current level, as part of efforts to seek de-escalation of the U.S.-China trade war, the Wall Street Journal reported on Wednesday. There are several options on the table as U.S. President Donald Trump hasn’t made final decision, per the report.
The report cited a senior U.S. government official that China tariffs could be lower to between 50% and 65%, compared with a total of 145% tariffs on China since Trump returned to the White House in January. One of options the Trump administration is reportedly considering is the layered tariffs, namely, 35% levies for Chinese imports the U.S. doesn’t deem as a threat to its national security, and at least 100% for items labeled as strategic to the country’s interest.
Bessent told reporters both U.S. and China need to come down mutually before bilateral talks can start. He reiterated his remarks on Tuesday that the trade war between two countries is expecte to de-escalate. “Neither side believes that these are sustainable levels,” he said. “This is the equivalent of an embargo and a break between the two countries in trade does not suit anyone's interests.”
"I think both sides are waiting to speak to the other," Bessent said. "I think at this point there would have to be a de-escalation by both sides," the Treasury secretary added, saying that "I would not be surprised if they went down in a mutual way," and that there is "no unilateral offer from the president to just de-escalate."
White House Press Secretary Karoline Leavitt later Wednesday echoed Bessent’s comments, stating that there would be no unilateral reduction in tariffs aginst China. Trump has made it clear, China needs to make a deal with America, and “we are optimistic that will happen”, Leavitt said in an interview with Fox News. She added that "we certainly need to see a reduction in tariffs and non-monetary tariff barriers from China."
