China Refuses To Dial Back Tech Regulations

Although U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are going to Beijing for trade talks later on this week, there are still a few obstacles in the way of a trade deal. Most notably, the fact that China has so far refused to ease its restrictions on foreign technology companies.

Ahead of the talks, the U.S. requested that China stop discriminating against foreign cloud computing providers, slash limits on overseas data transfers and ease a requirement for firms that want to store data locally.

While The Financial Times cited sources who reported that China did make an initial offer, the U.S. found it insufficient. And after the U.S. demanded stronger concessions, China retracted the offer altogether.

The concessions are, of course, important to America’s largest technology companies.

“Foreign cloud servicers are pretty much cut out of the market, but China gets the benefit of their well-developed business model and technology, so that’s something we would like to see go away,” said Naomi Wilson, senior director of policy for Asia at the Information Technology Industry Council, which represents major tech companies in Washington.

Another point of contention could be the Trump administration’s attacks against Huawei, the Chinese telecommunications network company that the U.S. has deemed a security threat.

“It doesn’t make sense for Beijing to give on this while we have this global campaign to block Huawei,” said Samm Sacks, a cyber security and China digital economy fellow at the New America Foundation. “Why on earth would China say: ‘Hey, let’s open up for more cloud services in China?”

But while there might not be progress on digital trade, it is believed that a formal agreement between the two countries could come around the end of March.

The U.S. is reportedly considering the removal of many sanctions brought against products from China, while Beijing might be willing to decrease restrictions and tariffs on some American goods. China could also quicken the jettisoning of limitations of foreign ownership of car ventures, as well as cut tariffs on vehicle imports below 15 percent, where they stand now. In addition, the country might increase purchases of goods from the United States.