US Treasury Secretary Steven Mnuchin waves as he arrives at a hotel in Beijing on April 30, 2019. Photo: AFP / Greg Baker

The eagles have landed. The United States trade team, spearheaded by Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, arrived in Beijing on Tuesday for the tenth round of talks.

Washington indicated that China’s state-subsidies model would be high on the agenda when US negotiators hold discussions with Vice-Premier Liu He’s team.

President Xi Jinping tried to preempt the move last week during a speech at the Belt and Road Forum.

“We will overhaul and abolish unjustified regulations, subsidies, and practices that impede fair competition and distort the market,” he told foreign dignitaries at the summit.

While Beijing has no attention of curbing its “New Silk Road” foreign policy initiative or the controversial “Made in China 2025” high-tech program, it appears a step in the right direction.

“Some subsidies have been stopped, and I believe the principle of competitive neutrality will be implemented in all aspects in the future,” Cui Fan, an economist at the University of International Business and Economics, told AFP.

Jacob Parker, the vice-president of the US-China Business Council, went even further.

‘Reforms’

“It being mentioned in that forum may foreshadow reforms resulting from US-China trade talks, allowing Beijing to frame such outcomes as steps forward for the Chinese economy rather than concessions to Washington,” he said.

“[The main US goal] would be to list out all subsidies that are received domestically within China today,” Parker added.  “Transparency, equal access for foreign companies, and enforcement of that transparency is probably the key.”

Naturally, Mnuchin was giving very little away when he addressed the media after arriving in Beijing.

“We hope to make substantial progress in these two meetings,” he told reporters.

The US trade team touched down just hours after data released by China’s National Bureau of Statistics released numbers showing that factory activity cooled in April after flickering into life last month.

According to the NBS, the official Purchasing Managers’ Index, or PMI, came in at 50.1 this month, which was 0.4 down from 50.5 in March. A figure above 50 separates expansion from contraction.

“The latest survey data disappoint hopes for a further recovery,” Julian Evans-Pritchard, of Capital Economics, said in a note. “The official PMIs suggest that [the second quarter] got off to a weaker start and reinforce our view that there are still some downside risks to near-term activity.”

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