China detonated its tentative trade deal with the US by abruptly deleting swathes of text that it didn't want to commit to, report says

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China detonated its tentative trade deal with the US by abruptly deleting swathes of text that it didn't want to commit to, report says

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Mikhail Svetlov/Getty Images

Chinese President Xi Jinping and US President Donald Trump in Hamburg, Germany, in July 2017. Their countries have been embroiled in a yearlong trade war.

  • President Donald Trump's administration vowed to increase tariffs on $200 billion worth of Chinese goods over the weekend, marking a huge upheaval in the two countries' yearlong trade war.
  • US officials said on Monday the move was prompted by China's "retreating from specific commitments that had already been made."
  • According to a new Reuters report, China had deleted swathes of text from a tentative trade agreement that promised to change laws to resolve US trade complaints.
  • The tariff increase is scheduled to go into effect on Friday, May 10.
  • Visit Business Insider's homepage for more stories.

China blew up a tentative trade deal with the US by secretly deleting swathes of text from a draft agreement that it didn't want to commit to according to a report by Reuters.

Citing government and private sectors sources who were briefed on the negotiations, Reuters said that Chinese officials quietly removed large amounts of text which had been earmarked for inclusions.

The erased segments of the deal included Chinese promises to change its laws to satisfy long-standing US complaints, including claims that China allows its companies to profit from stealing US intellectual property and trade secrets.

The edits in the nearly 150-page document were found in a diplomatic cable last Friday night, the news agency said.

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Reuters/Kevin Lamarque

Xi, Trump, and their deputies - including Vice Premier Liu He (second-left) and National Security Advisor John Bolton (second-right) at a working dinner in Buenos Aires, Argentina, in December 2018.

The deleted text dealt with intellectual property theft, trade secrets, forced technology transfers, competition policy, access to financial services, and currency manipulation, Reuters reported.

These were the complaints that launched the Trump administration's yearlong trade war with China.

The dramatic breakdown of the talks, apparently prompted by the deletions, are came shortly before President Donald Trump announced plans to raise tariffs on $200 billion worth of Chinese goods, from 10% to 25%, in a Sunday tweet.

Read more: Global stocks are a sea of red on trade-war fears after Trump claimed that China 'broke the deal'

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US Trade Representative Robert Lighthizer said on Monday that the upcoming tariff increase was triggered by China's "unacceptable" and sudden reversal on key agreements in trade talks, Business Insider's Bob Bryan reported.

Lighthizer said: "Over the course of the last week or so, we have seen an erosion in commitments by China, I would say retreating from specific commitments that had already been made." 

The new tariffs are scheduled to go into effect at 12:01 a.m. on Friday, May 10.

Chinese Vice Premier Liu He, the country's top economic premier, is scheduled to visit Washington on May 9 and 10 to continue trade talks.

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From left to right: US Trade Representative Robert Lighthizer, US Treasury Secretary Steve Mnuchin, and Chinese Vice Premier Liu He in Beijing on May 1, 2019.

'China got greedy'

Lighthizer and US Treasury Secretary Steve Mnuchin were "taken aback at the extent of the changes" in the draft trade deal, according to Reuters.

An unnamed source in the private sector, who was briefed on the matter, told Reuters: "China got greedy."

"After 20 years of having their way with the U.S., China still appears to be miscalculating with this administration," the person said.

In a Wednesday press briefing, Chinese Foreign Ministry spokesman Geng Shuang declined to discuss the edits in the trade text, but described the move as part of a "process of discussions."

"It is only natural to have differences in a negotiation, which, by definition, is a process of discussions," Geng said. "The Chinese side will not sidestep differences and is sincere in continuing consultations."

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An unnamed Chinese official familiar with the talks also told Reuters that changing laws in China requires a lot of time and bureaucracy, and that US demands were becoming more and more "harsh" and the road to a deal increasingly "narrow."

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Oliver Contreras/Getty; Greg Baker/Getty; Shayanne Gal/Business Insider

Trump's tariffs on Chinese goods are scheduled to go into effect on Friday.

Trump claimed on Wednesday that China pulled back on the tentative trade deal in "the sincere HOPE that they will be able to 'negotiate' with Joe Biden or one of the very weak Democrats."

China on Wednesday vowed to retaliate if the US went ahead with the tariff increase, saying it would take "necessary" countermeasures and that it "deeply regrets" the Trump administration's new measures.

Follow Business Insider's full coverage of the US-China trade war here.

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