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On April 30, U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer will visit Beijing for the latest round of China-U.S. trade talks. Chinese Vice Premier Liu He will then visit Washington on May 8 for more discussions, according to the spokesperson of the White House. While both sides are still intensively working on the technical issues in drafting a trade agreement, it is believed that the China-U.S. trade negotiations are getting close to the final round. The people are waiting for the details of the agreement, and the expectations are high.

At the very beginning, the China-U.S. trade conflicts seemed to be all about the bilateral trade imbalance. China immediately responded by assuring to reduce its trade surplus against the U.S. However, now it has become clearer that the U.S. was targeting more directly at the tougher structural issues, for example, market entrance barriers, intellectual property protection, so-called enforced technology transfers, industrial policies and related subsidies to state-owned enterprises (SOEs).

Even worse, the U.S. side`s arrogant "my way or the highway" attitude made it almost impossible to negotiate initially. As a result, the world`s two largest economies imposed high tariffs on each other`s products. China has imposed tariffs more intensively on U.S. agricultural products such as soy beans, impacting U.S. farmers, the most crucial vote bank of U.S. President Donald Trump. As a result, the attitude of the U.S. side, during trade talks, has gradually become more down-to-earth.

Based on the subtle differences in round-to-round announcements, we can clearly see that both countries are making progress to narrow down mutual differences. But to strike a final trade deal, the U.S. side needs to put away its prejudice against China and show more understanding. To achieve it, the U.S. side should take a deeper look at the historical reasons leading to the subjects that the U.S. is today concerned about. Knowing more about each other could reduce biases. Especially, the U.S. should be more open-minded about diversified paths of economic growth.

For example, the U.S. has been asking China to stop giving subsidies to the SOEs. However, the relationship between the government and SOEs is not a clear-cut case in China, and it is much more complicated than the U.S. had thought.

Although the U.S. has been accusing that Chinese SOEs can get advantages by preferential bank loans or so-called political connections. The SOEs also have to undertake many responsibilities that many private firms don`t, such as implementing the government`s development strategy which may lead to financial losses in the short term. Thus, it is hard to clearly say the SOEs are more or less privileged.

Moreover, the more significant role of the government and SOEs in the economy is determined by China`s unique development history. It is true that the vibrant private sector is an important contributor to China`s growth miracle. But it is unrealistic to ignore the starting point historically. Until late 1970s, the Chinese economy was largely state-owned and the private sector started to grow only after China initiated the reform and opening-up policy in 1978.

The Chinese government has been working on reforming the SOEs continuously and deepening the reform in line with China`s long term interests. Instead of making unreasonable demands to China in the short run, the U.S. should be more patient about the reform, which simply takes time.

There are some areas where China and the U.S. may reach consensus relatively more easily. First, China passed the new Foreign Investment Law early this year and the law`s supporting policies will be coming out soon. This will improve the business environment for foreign firms in China, including American firms. Second, China may lower market access barriers for foreign investors in more industries. This is in line with China`s long term opening-up policy.

Third, China will improve the intellectual property protection. Recently China revised the Trademark Law in which the punishment for trademark infringement has been enhanced. In these areas, China and the U.S. share common interests which may more likely lead to agreements.

China is still a developing country, with a particularly long history. Not all developing countries` growth will exactly converge to the same path as the U.S. China will never compromise on issues concerning its core interests. If both sides, especially the U.S. side, could set realistic goals about trade talks and understand the complexity of structural issues, a trade deal is more likely to be around the corner.

Editor`s note: Shi Huimin is an associate professor at the School of Economics and a Research Fellow with the National Academy of Development & Strategy, Renmin University of China.

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