In the midst of roiling trade tensions between the United States and China, last week Treasury Secretary Steve Mnuchin led a delegation of Donald Trump’s top economic advisors to Beijing. Demands were made in both directions and talks were inconclusive. Beijing said “relatively big” differences remain. Unmet were the Trump administration’s requests of a reduction of up to U.S.$200 billion in the United States’ trade deficit with China of U.S.$375 billion, and for China to lower tariffs on U.S. products to levels the U.S. imposes on Chinese products. China hopes to improve production of advanced technologies such as semiconductors, artificial intelligence, and electric cars. Can it do this without U.S. trade? Can China afford to play hardball with the U.S.? Or will Beijing relent in order to protect China’s economy?

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