Xi Jinping aide on the spot for first shots of US-China trade war

Xi Jinping’s top economic adviser has tried in vain to dissuade Donald Trump from firing the first big shots in his trade war.

Chinese President Xi Jinping in Beijing last month. Picture: AP

Harvard-educated Liu He, the top economic adviser to China’s President Xi Jinping, has spent the past three days in the US trying in vain to dissuade Donald Trump from firing the first big shots in his long-anticipated trade war.

Mr Trump’s election campaign strongly featured promises to protect manufacturing jobs against foreign competition, but his visit to Asia late last year — when he toned down his trade threats — appeared to indicate he had put protection on hold.

But The Wall Street Journal ­reported earlier this week that trade hawk Peter Navarro — whose embryonic White House career had already seemed to be in decline — had re-emerged among Mr Trump’s top aides, and is ­expected to be appointed soon as one of two dozen “assistants to the President”.

A White House official said the talks Mr Liu had with Treasury Secretary Steven Mnuchin, trade representative Robert Lighthizer and National Economic Council director Gary Cohn were “frank and constructive”.

“We underscored the importance of achieving balance and reciprocity in the economic relationship,” the official said.

Mr Liu — who is topping many lists as the likely new governor of China’s central bank, to be ­announced during the National People’s Congress annual session — also met top executives with corporations heavily involved in China. They included Boeing, JP Morgan Chase, Goldman Sachs, BlackRock and Chubb.

China is the 11th biggest source of steel imported by the US, comprising only about 2 per cent of the total. But it is claimed that substantial amounts of China-derived steel and aluminium also find their way in to the US through third countries such as Vietnam and Mexico.

And the American critics of China’s trade say that it is Chinese overcapacity and overproduction of products including steel and aluminium that are especially ­responsible for distorting markets.

Beijing strongly rejects the claim, saying it has already forced substantial closures in such ­sectors, at considerable cost to its own workforce, in seeking greater efficiency and true market pricing.

Australia exports of more than $170 million steel and aluminium products to the US are also set to be jeopardised by the new protectionist measures.

The public response from ­Beijing has been guarded, as it awaits a formal announcement from the White House.

­Beijing is distracted by the NPC session opening on Monday, which is set to remove term limits on the presidency, allowing Mr Xi to become president for life, The NPC is also likely to stress China’s claimed role as the leading global champion of freer trade.