Tag Archives: Beijing

New U.S. ambassador to China says North Korea a top priority

U.S. President Donald Trump (R) holds an umbrella over U.S. Ambassador to China Terry Branstad, former governor of Iowa, as they arrive together aboard Air Force One at Eastern Iowa Airport in Cedar Rapids, Iowa, U.S. June 21, 2017. REUTERS/Jonathan Ernst

BEIJING (Reuters) – The new U.S. ambassador to China has said that stopping the threat posed by North Korea will be a top priority, along with resolving the U.S.-China trade imbalance, according to a video message to the Chinese people released on Monday.

Terry Branstad, a former Iowa governor, has been described by Beijing as an “old friend” of China. Branstad was confirmed on May 22 as President Donald Trump’s new ambassador to China but his arrival date has yet to be announced.

“Resolving the bilateral trade imbalance, stopping the North Korea threat, and expanding people-to-people ties will be my top priorities,” Branstad said in the video message, which was released on a popular Chinese video-streaming platform.

Trump has placed high hopes on China and its president, Xi Jinping, exerting greater influence on North Korea, although he said last week Chinese efforts to rein in the reclusive North’s nuclear and missile programs had failed.

China’s foreign ministry regularly says that Beijing is doing all that it can with regard to North Korea by implementing United Nations Security Council sanctions, while also pushing for greater dialogue to reduce tensions.

U.S. Secretary of State Rex Tillerson said he had pressed China to ramp up economic and political pressure on North Korea during his meeting with top diplomat Yang Jiechi in Washington last week.

“We face many of the same challenges. A strong U.S.-China relationship can contribute to solutions,” Branstad said in the video, without giving details about how he hoped to work with China.

Branstad also recounted his three decades of engagement with China, from his first visit there in 1984 to hosting Xi, then a county-level Communist Party leader, in Iowa in 1985, and then again in 2012 when Xi was vice president.

Trump pledged during his campaign to take a tough stance on Chinese trade practices deemed unfair to the United States, but his rhetoric softened after a friendlier-than-expected meeting with Xi in Florida in April.

Shortly after their meeting, Trump said he had told Xi that China would get a better trade deal if it worked to rein in the North. China is neighboring North Korea’s lone major ally.

The United States ran a trade deficit of $347 billion with China last year, U.S. Treasury figures show.

(This story corrects date of ambassador’s confirmation to May 22, not May 24, paragraph 2)

(Reporting by Christian Shepherd; Editing by Paul Tait)

U.S. urges bigger Chinese role to combat global terrorism

China's President Xi Jinping waits to greet Brazil's Foreign Minister Aloysio Nunes (not seen), Russia's Foreign Minister Sergey Lavrov (not seen), South Africa's Foreign Minister Maite Nkoana-Mashabane (not seen) and Indian Minister of External Affairs Vijay Kumar Singh (not seen) as he meets with foreign affairs officials from the BRICS countries at the Great Hall of the PeopleÕs Fujian Room in Beijing on June 19, 2017. REUTERS/Nicolas Asfouri/Pool

By David Brunnstrom

WASHINGTON (Reuters) – The United States wants China to become more involved in supporting the global fight against terrorism and efforts to defeat Islamic State, including in Iraq, a senior U.S. official said on Monday ahead of high-level security talks with Beijing.

Susan Thornton, the U.S. acting assistant secretary of state for East Asia, said that China has taken only a limited role in counter-terrorism efforts, although it appeared to be becoming more interested.

“We would like to see them step up and take more responsibility,” Thornton told reporters as Washington and China’s diplomatic and defense chiefs prepared for a meeting in the U.S. capital on Wednesday.

“They have a lot of interests, for example in Iraq, and we think they should be doing to more to contribute to the efforts of the international coalition to defeat ISIS (Islamic State),” she said.

Thornton said Beijing, which is not a member of the 68-member coalition, was increasingly affected by terrorism, as was seen by the recent killing of two Chinese nationals in Pakistan.

Beijing has sent out “early feelers” about getting more involved, Thornton said.

“We’d like to have a good discussion with them about what more we think they can do, certainly in the way of providing resources to governments that are battling against terrorism and trying to help with capacity-building for governments and security forces in various places,” she added.

Chinese Foreign Ministry spokesman Geng Shuang told a regular press briefing in Beijing on Tuesday that China and the United States were both victims of terrorism.

“Cooperation is in the interests of both sides,” he said, without elaborating.

Wednesday’s talks will involve U.S. Secretary of State Rex Tillerson, Secretary of Defense Jim Mattis as well as China’s top diplomat, State Councilor Yang Jiechi, and General Fang Fenghui, chief of state of the People’s Liberation Army.

The State Department says they will focus on ways to step up pressure on North Korea to give up its nuclear and missile programs, but also cover areas such as counter-terrorism and territorial rivalries in the strategic South China Sea.

The United States has been at odds with China over the latter’s building and fortifying of islands in the disputed waterway.

Thornton said now that there were moves towards agreeing a code of conduct over the South China Sea, Washington would like to see a freeze on all such construction activity.

She reiterated a call on China to fully implement U.N. sanctions on North Korea and, while praising Beijing for imposing a ban on North Korean coal imports, added: “We would like to see China do more.”

(Reporting by David Brunnstrom; Additional reporting by David Alexander in Washington and Christian Shepherd in Beijing; Editing by Paul Simao and Nick Macfie)

North Korea fires Scud-class ballistic missile, Japan protests

People watch a television broadcasting a news report on North Korea firing what appeared to be a short-range ballistic missile, at a railway station in Seoul, South Korea,

By Jack Kim and Ju-min Park

SEOUL (Reuters) – North Korea fired at least one short-range ballistic missile on Monday that landed in the sea off its east coast, the latest in a fast-paced series of missile tests defying world pressure and threats of more sanctions.

The missile was believed to be a Scud-class ballistic missile and flew about 450 km (280 miles), South Korean officials said. North Korea has a large stockpile of the short-range missiles, originally developed by the Soviet Union.

Monday’s launch followed two successful tests of medium-to-long-range missiles in as many weeks by the North, which has been conducting such tests at an unprecedented pace in an effort to develop an intercontinental ballistic missile (ICBM) capable of hitting the mainland United States.

North Korea was likely showing its determination to push ahead in the face of international pressure to rein in its missile program and “to pressure the (South Korean) government to change its policy on the North,” South Korea’s Joint Chiefs of Staff spokesman Roh Jae-cheon said.

It was the third ballistic missile test launch since South Korea’s liberal President Moon Jae-in took office on May 10 pledging to engage with the reclusive neighbor in dialogue.

Moon says sanctions alone have failed to resolve the growing threat from the North’s advancing nuclear and missile program.

Japan's Chief Cabinet Secretary Yoshihide Suga attends a news conference after the launch of a North Korean missile at Prime Minister Shinzo Abe's official residence in Tokyo, Japan

Japan’s Chief Cabinet Secretary Yoshihide Suga attends a news conference after the launch of a North Korean missile at Prime Minister Shinzo Abe’s official residence in Tokyo, Japan May 29, 2017. REUTERS/Toru Hanai

The missile reached an altitude of 120 km (75 miles), Roh said.
“The assessment is there was at least one missile but we are analyzing the number of missiles,” he said.

North Korea, which has conducted dozens of missile tests and tested two nuclear bombs since the beginning of 2016 in defiance of U.N. Security Council resolutions, says the program is necessary to counter U.S. aggression.

The White House said President Donald Trump had been briefed about the launch. The U.S. Pacific Command said it tracked what appeared to be a short-range ballistic missile for six minutes and assessed it did not pose a threat to North America.

The United States has said it was looking at discussing with China a new U.N. Security Council resolution and that Beijing, North Korea’s main diplomatic ally and neighbor, realizes time was limited to rein in its weapons program through negotiations. [nL4N1IS196]

Trump portrayed the missile test as an affront to China in a morning post on Twitter. “North Korea has shown great disrespect for their neighbor, China, by shooting off yet another ballistic missile…but China is trying hard!” he wrote.

U.S. Defense Secretary Jim Mattis, asked what a military conflict with North Korea might look like if diplomacy failed, warned on Sunday it would be “probably the worst kind of fighting in most people’s lifetimes”.

“The North Korean regime has hundreds of artillery cannons and rocket launchers within range of one of the most densely populated cities on Earth, which is the capital of South Korea,” Mattis told CBS news program “Face the Nation”.

“And in the event of war, they would bring danger to China and to Russia as well,” he said.

TESTING NEW CAPABILITIES

China reiterated that U.N. Security Council resolutions had “clear rules” about North Korean missile activities and it urged Pyongyang not to contravene them.

“The situation on the Korean peninsula is complex and sensitive, and we hope all relevant sides maintain calm and exercise restraint, ease the tense situation as soon as possible and put the issue back onto the correct track of peaceful dialogue,” China’s foreign ministry said in a statement.

Russia condemned the launch and also called for restraint, “including toward military activity,” from the partners it was working with, the RIA news agency quoted a deputy Russian foreign minister as saying.

Japan lodged a protest against the test missile, which appeared to have landed in its exclusive economic zone.

Japanese Prime Minister Shinzo Abe vowed action along with other nations to deter Pyongyang’s repeated provocations.

“As we agreed at the recent G7, the issue of North Korea is a top priority for the international community,” Abe told reporters in brief televised remarks. “Working with the United States, we will take specific action to deter North Korea.”

Seoul’s new liberal administration has said Pyongyang’s repeated test launches were dashing hopes for peace.

South Korea’s Moon called a meeting of the National Security Council, South Korea’s Office of the Joint Chiefs of Staff said in a statement.

North Korea last test-fired a ballistic missile on May 21 off its east coast and said on Sunday it had tested a new anti-aircraft weapon supervised by leader Kim Jong Un. [nL3N1IU014]

It has tested Scud-type short-range missiles many times in the past, most recently in April, according to U.S. officials. However, experts say it may be trying to test new capabilities that may be fed into its efforts to build an ICBM.

“There are many possibilities … It could have been a test for a different type of engine. Or to verify the credibility of the main engine for ICBM’s first stage rocket,” said Kim Dong-yub, a military expert at Kyungnam University’s Far Eastern Studies department in Seoul.

Modified versions of the Scud have a range of up to 1,000 km (620 miles).

On Tuesday, the United States will test an existing missile defense system to try to intercept an ICBM, the first such test, officials said last week.

(Additional reporting by Doina Chiacu Matt Spetalnick in WASHINGTON, Ben Blanchard in BEIJING, William Mallard in TOKYO, Soyoung Kim and Christine Kim in SEOUL, and

Philippines calls for ‘gentlemen’s agreement’ between ASEAN, China on sea code

Philippine Senator Alan Peter Cayetano speaks during the Congressional confirmation hearing of Environment Secretary Regina Lopez at the Senate in Manila, Philippines May 2, 2017. REUTERS/Erik De Castro

By Martin Petty and Manuel Mogato

MANILA (Reuters) – Southeast Asian nations and China should start with a “gentleman’s agreement” on the busy South China Sea waterway because no mechanism exists to legally enforce any deal, the Philippine foreign minister said on Friday.

The Association of South East Asian Nations (ASEAN) and China on Thursday finished a draft framework for negotiating a code of conduct, despite regional scepticism whether Beijing will commit to rules likely to restrain its maritime ambitions.

Southeast Asian nations with claims in the South China Sea have long wanted to sign China up to a legally binding and enforceable code. It was unclear if that was mentioned in the framework draft, which has not been made public.

Philippine Foreign Secretary Alan Peter Cayetano played down the importance of a legally binding contract.

“If it’s legally binding, which court can the parties go to? And the countries that do not comply, will they respect that court?” he asked reporters.

“Let’s start with it being binding, gentlemen’s agreement. We have a community of nations that signed it.”

China claims most of the energy-rich South China Sea, through which about $5 trillion in sea-borne trade passes every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

Click http://tmsnrt.rs/2qyBNpf for graphic on overlapping claims in the South China Sea

Last year, the Permanent Court of Arbitration in the Hague invalidated China’s claim to sovereignty over most of the South China Sea, in a case filed on maritime boundaries filed by the previous Philippine government in 2013.

A code of conduct is the key objective of a 2002 Declaration on Conduct, large parts of which China has ignored, particularly a commitment not to occupy or reclaim uninhabited features.

China has piled sand upon reefs to build seven islands in disputed parts of the Spratly archipelago. China has unfinished business there and has been transforming three of the reefs into what experts believe could be forward operating bases.

Philippine President Rodrigo Duterte on Friday described them as “some kind of armed garrison.”

The code framework would envisage a round-the-clock hotline and urge defense officials to find ways to follow the code, Chee Wee Kiong of Singapore’s foreign ministry said on Thursday.

Some ASEAN diplomats fear China’s sudden interest in completing it could be a strategy to buy time for Beijing to wrap up construction activities.

Experts say China wants to appear to engage ASEAN or bind its claimant states to a weak code at a time when U.S. policy on the South China Sea is in a state of flux.

One ASEAN diplomat said the latest draft did not mention any dispute settlement mechanism or sanctions for violations, but focused mostly on managing tension and building trust.

“We are very realistic and practical,” said the source, who declined to be identified. “We wanted first to pick the low hanging fruit. If we went straight to the contentious issues, we would not get to where we are now.”

The framework represented progress, but expectations should be realistic, said Jay Batongbacal, a Philippine academic and expert on the South China Sea.

“Given it’s been 15 years to get to a draft, I’m not really holding my breath,” he added.

Click http://tmsnrt.rs/2pSNmZq for graphic on Turf war on the South China Sea

(Editing by Clarence Fernandez)

After North Korea criticism, China says wants to be good neighbor

North Korean leader Kim Jong Un attends a performance held for participants of the ruling party's party meeting, December 2016. KCNA/via Reuters

BEIJING (Reuters) – China said on Thursday it wants to be good neighbors with North Korea, after the isolated country’s state news agency published a rare criticism of Chinese state media commentaries calling for tougher sanctions over the North’s nuclear program.

The United States has urged China, North Korea’s only major ally, to do more to rein in the North’s nuclear and missile programs, which have prompted an assertive response from the Trump administration, warning that an “era of strategic patience” is over.

A commentary carried by North Korea’s KCNA news agency referred to recent commentaries in China’s People’s Daily and Global Times newspapers, which it said were “widely known as media speaking for the official stand of the Chinese party and government”.

In Beijing, Foreign Ministry spokesman Geng Shuang said China’s position was consistent and clear.

“China’s position on developing friendly, good-neighborly relations with North Korea is also consistent and clear,” Geng told reporters, in response to a question about the KCNA commentary.

China was unswervingly devoted to the denuclearization of the peninsula and maintaining peace and security and resolving the issue through talks, Geng added.

The WeChat account of the overseas edition of the People’s Daily, in its reaction to the KCNA piece, said it was clear that North Korea’s nuclear and missile activities were a threat to China.

“North Korea has not left the Cold War behind and does not want to, and is enmeshed in a web of its own spinning of antagonism between its enemies and itself,” it said.

China has repeatedly said that while it is happy to help arrange talks, it is ultimately up to the United States and North Korea to sort out their differences.

Diplomats say Washington and Beijing are negotiating a possible stronger U.N. Security Council response – such as new sanctions – to North Korea’s repeated ballistic missile launches in defiance of UN Security Council resolutions.

The KCNA commentary charged that the Chinese articles had attempted to shift the blame to Pyongyang for “deteriorated relations” between China and North Korea and U.S. deployment of strategic assets to the region.

It also accused China of “hyping up” damage caused by North Korean nuclear tests to China’s three northeastern provinces.

Chinese state media calls for North Korea to dismantle its nuclear program were “a wanton violation of the independent and legitimate rights, dignity and supreme interests” of North Korea and constituted “an undisguised threat to an honest-minded neighboring country which has a long history and tradition of friendship”, KCNA said.

The United States has sent a nuclear-powered aircraft carrier to Korean waters and a pair of strategic U.S. bombers flew training drills with South Korea and Japan in another show of strength this week.

“The reckless military provocation is pushing the situation on the Korean peninsula closer to the brink of nuclear war,” KCNA said on Tuesday.

Tension on the Korean peninsula has been high for weeks, driven by concern that North Korea might conduct its sixth nuclear test, also in defiance of U.N. Security Council resolutions.

(Reporting by Michael Martina; Writing by Ben Blanchard; Editing by Nick Macfie)

ASEAN firms up South China Sea stance as Beijing lobbies over statement

An aerial view of China occupied Subi Reef at Spratly Islands in disputed South China Sea April 21, 2017. REUTERS/Francis Malasig/Pool

By Manuel Mogato and Enrico Dela Cruz

MANILA (Reuters) – Southeast Asian countries have altered a statement to be issued at Saturday’s ASEAN summit to include references to militarization and island-building in the South China Sea, the latest draft shows, in a move likely to frustrate Beijing.

Chinese embassy representatives in Manila had sought to influence the content of the communique by lobbying Philippine officials, two ASEAN diplomatic sources told Reuters.

However, four ASEAN member states disagreed with omitting “land reclamation and militarization” – terms included in the statement issued last year in Laos, but not featured in an earlier draft of this year’s statement seen on Wednesday.

China is not a member of the Association of South East Asian Nations, and is not attending the summit. China embassy officials in Manila could not be reached and China’s foreign ministry did not immediately respond to request for comment.

ASEAN references to the South China Sea issue typically do not name China. Beijing is extremely sensitive to anything it perceives as a veiled reference to its expansion of its seven manmade islands in the Spratly archipelago, including with hangers, runways, radars and missiles.

The final version of the statement has yet to be agreed, but changes so far indicate ASEAN is resisting moves by China to keep its contentious activities in the strategic waterway off ASEAN’s official agenda.

China’s lobbying, and its burgeoning friendship with Philippine President Rodrigo Duterte, may not have been enough to influence Manila’s position either.

“The Philippines is under too much pressure,” one of the sources said.

(For graphic on the Scarborough Shoal, click http://fingfx.thomsonreuters.com/gfx/rngs/ASEAN-SUMMIT-SOUTHCHINASEA/010021LX3Z6/ASEAN-SUMMIT-SOUTHCHINASEA.jpg)

(For graphic on the turf war on the South China Sea, click http://fingfx.thomsonreuters.com/gfx/rngs/1/6/12/index.html)

TABOO TOPIC

This year’s summit comes at a time of uncertainty about U.S. interests in the region and whether it will maintain its maritime presence to counter China’s assertiveness.

Chinese officials pressed for words that might allude to last year’s international arbitration ruling to be kept out of the statement, the diplomats said, particularly the term “full respect for legal and diplomatic processes”.

The latest draft still includes that, although it was moved out of the South China Sea section to another.

“They do not want any phrase linked to the arbitration case,” one source said.

The Hague ruling, in a case brought by the Philippines in 2013, angered China because it invalidated China’s claim of sovereignty over almost the entire South China Sea. China refuses to recognize the decision.

As part of his engagement with China, Duterte has decided not to press it to abide by the arbitration award anytime soon. On Thursday he said it was pointless for ASEAN to pressure China.

In his address to open the leaders’ summit, Duterte made no mention of the South China Sea, but touched on many issues central to his 10-month administration.

Duterte mentioned extremism, piracy, interference in a country’s affairs, and his signature fight against drugs, for which he has been widely condemned over the deaths of thousands of Filipinos.

“The illegal drug trade apparatus is massive. But it is not impregnable,” he said. “With political will and cooperation, it can be dismantled, it can be destroyed before it destroys our societies.”

Duterte then hosted two meetings with ASEAN leaders, which were not open to media.

ASEAN and China are hoping to this year agree on a framework to create a code of conduct over the South China Sea, 15 years after committing to draft it. Some ASEAN diplomats doubt China is sincere about agreeing to a set of rules.

In unusually direct comments for an ASEAN Secretary General, Le Luong Minh on Thursday told Reuters the code needed to be legally binding to put a stop to “unilateral actions”, because a previous commitment to play fair had been ignored.

(Additional reporting by John Ruwitch in Shanghai; Writing by Martin Petty; Editing by Lincoln Feast)

Independence push threatens Hong Kong’s autonomy, says Beijing official

FILE PHOTO: A rainbow arches over Hong Kong's Victoria Harbour June 19, 2012. REUTERS/Bobby Yip/File Photo

HONG KONG (Reuters) – The legal chief of Beijing’s representative office in Hong Kong said on Saturday growing calls for independence could make the territory’s current “one country, two systems” constitutional framework unsustainable.

Chinese leaders are increasingly concerned about a fledgling independence or secessionist movement in the former British colony of Hong Kong, which returned to mainland rule in 1997 amid promises of wide-ranging autonomy including judicial independence under the formula of “one country, two systems”.

The unusually strong comments by Wang Zhenmin, an official at the Central Liaison Office, China’s top representative office in Hong Kong, came ahead of the 20th anniversary of the handover of power to China.

Hong Kong will be on high alert ahead of the July 1st celebrations when President Xi Jinping is widely expected to attend the swearing in of leader elect Carrie Lam.

Speaking at a seminar in the territory, broadcast on local cable television, Wang attacked the separatist movement and said Hong Kong must act to defend China’s sovereignty.

“The more Hong Kong fails to actively defend (China’s) sovereignty, national security and development interests in accordance with the law, the more wary the country will be about Hong Kong’s high degree of autonomy and the ‘two systems’. There would be less room for its autonomy,” Wang said.

He said Beijing was also “disheartened” at the prospect separatists might enter the Hong Kong establishment or education system.

“If the two systems have been severely disrupted or even been used to damage one country, (China) will feel very unsafe…If one’s own existence has become a problem, no nation will continue the arrangements of ‘two systems’,” he said, according to footage of the same speech carried on government funded RTHK.

China has promised Hong Kong’s capitalist system would remain unchanged for 50 years, but it has not made clear what will happen in 2047. Some in Hong Kong fear Beijing may look to impose mainland rule on the territory before then.

Last year, China’s parliament intervened in a Hong Kong court case by passing a ruling on the Basic Law, as the territory’s mini-constitution is known.

It was one of Beijing’s most direct interventions into Hong Kong’s legal and political system since the 1997 handover.

Wang previously said on Friday that Hong Kong should have “respect and awe” for China’s system, to which it would have to adapt, government funded RTHK reported on Friday.

(Reporting by Michelle Price; Additional reporting by Venus Wu and Julie Zhu; Editing by Ros Russell)

China downplays tensions with U.S. as Xi prepares to meet Trump

Chinese President Xi Jinping and U.S. President Donald Trump. REUTERS/File Photos

By Ben Blanchard and David Lawder

BEIJING/WASHINGTON (Reuters) – Beijing sought to play down tensions with the United States and put on a positive face on Friday, as the U.S. administration slammed China on a range of business issues ahead of President Xi Jinping’s first meeting with President Donald Trump.

Trump set the tone for what could be a tense meeting at his Mar-a-Lago retreat next week by tweeting on Thursday that the United States could no longer tolerate massive trade deficits and job losses.

Trump said the highly anticipated meeting, which is also expected to cover differences over North Korea and China’s strategic ambitions in the South China Sea, “will be a very difficult one.”

Ahead of the meeting, Trump will sign executive orders on Friday aimed at identifying abuses that are causing massive U.S. trade deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said.

Separately, the U.S. Trade Representative’s office, controlled by the White House, said Beijing’s industrial policies and financial support for industries such as steel and aluminum have resulted in over-production and a flood of exports that have distorted global markets and undermined competitive companies.

Seeking to downplay the rift, Chinese Foreign Ministry spokesman Lu Kang reiterated a desire for cooperation on trade.

“With regard to the problems existing between China and the United States in trade relations, both sides should in a mutual respectful and mutual beneficial way find appropriate resolutions, and ensure the stable development of Sino-U.S. trade relations,” he told a daily news briefing.

The leaders of the world’s two largest economies are scheduled to meet next Thursday and Friday for the first time since Trump assumed office on Jan. 20.

Speaking earlier at a briefing on the Xi-Trump meeting, Chinese Vice Foreign Minister Zheng Zeguang acknowledged the trade imbalance, but said it was mostly due to differences in their two economic structures and noted that China had a trade deficit in services.

“China does not deliberately seek a trade surplus. We also have no intention of carrying out competitive currency devaluation to stimulate exports. This is not our policy,” Zheng said.

CONCILIATORY TONE

State news agency Xinhua also struck a conciliatory tone.

“Of course, it would be naive to believe that the two sides can bridge their differences in a single diplomatic meeting,” it said in an English language commentary on Friday.

“Yet as long as the two nations can maintain their good faith, which they have shown recently, to talk and to make concessions based on mutual respect, then no difference would be too difficult to iron out.”

Trump has frequently accused China of keeping its currency artificially low against the dollar to make Chinese exports cheaper, and “stealing” American manufacturing jobs.

The yuan fell 6.5 percent last year in its biggest annual loss against the dollar since 1994, knocked by pressure from sluggish economic growth and a broadly strong U.S. currency.

Trump has resisted acting on a campaign promise to declare China a currency manipulator on his first day in office, but tensions have persisted over how his administration’s China policy would evolve.

While apprehensive about a trade war, the American business community in China has grown more vocal.

Fear of retaliation had once made business lobbies eschew more forceful U.S. trade policies toward China, but such groups have increasingly urged the Trump administration to take targeted action to address market access imbalances.

Zheng said domestic consumption in China will increase as it pursues economic reforms, helping to raise demand for foreign goods and services, including those from the United States.

“This also helps ameliorate the trade imbalance between China and the United States,” he said.

The trade imbalance could be resolved by improved cooperation, Zheng said, urging Washington to lift restrictions on civilian technology exports to China and create better conditions for Chinese investment in the United States.

The USTR report, however, accused China of using a range of measures to engineer the transfer of foreign technology to local firms. It said these include denying financial or regulatory approvals to companies using foreign-owned intellectual property or that do not conduct research or manufacture products in China.

The report also brought up longstanding complaints about online piracy of movies, books, music, video games and software in China as well as a ban on U.S. beef that has been in place since 2003.

(Additional reporting by Christian Shepherd and Michael Martina in BEIJING; Editing by Lincoln Feast)

U.S., China soften tone, say to work together on North Korea

Chinese Foreign Minister Wang Yi (R) talks with U.S. Secretary of State Rex Tillerson at Diaoyutai State Guesthouse on March 18, 2017 in Beijing, China. REUTERS/ Lintao Zhang/POOL

By Yeganeh Torbati and Ben Blanchard

BEIJING (Reuters) – The United States and China will work together to get nuclear-armed North Korea take “a different course”, U.S. Secretary of State Rex Tillerson said on Saturday, softening previous criticism of Beijing after talks with his Chinese counterpart.

China has been irritated at being repeatedly told by Washington to rein in North Korea’s surging nuclear and ballistic missile programmes, one of a series of hurdles in ties between the world’s two largest economies.

But Chinese Foreign Minister Wang Yi described the talks with Tillerson as “candid, pragmatic and productive”. The two sides appeared to have made some progress or put aside differences on difficult issues, at least in advance of a planned summit between Chinese President Xi Jinping and U.S. President Donald Trump.

On Friday, Tillerson issued the Trump administration’s starkest warning yet to North Korea, saying in Seoul that a military response would be “on the table” if Pyongyang took action to threaten South Korean and U.S. forces.

Tillerson took a softer line after the meeting with Wang. He told reporters both China and the United States noted efforts over the last two decades had not succeeded in curbing the threat posed by North Korea’s weapons programmes.

“We share a common view and a sense that tensions on the peninsula are quite high right now and that things have reached a rather dangerous level, and we’ve committed ourselves to doing everything we can to prevent any type of conflict from breaking out,” Tillerson said.

He said Wang and he agreed to work together to persuade North Korea “make a course correction and move away from the development of their nuclear weapons.”

Wang said U.N. resolutions on North Korea both mapped out sanctions and called for efforts to resume efforts for a negotiated settlement.

“No matter what happens, we have to stay committed to diplomatic means as a way to seek peaceful settlement,” he said.

Wang said he and Tillerson “both hope to find ways to restart the talks”.

“Neither of us are ready to give up the hope for peace,” he said.

Tillerson had said on Friday that any talks on North Korea could only take place after it began the process of unwinding its weapons programmes.

A U.S. official had told Reuters in Washington earlier this week that Tillerson may raise the prospect of imposing “secondary sanctions” on Chinese banks and other firms doing business with North Korea in defiance of U.N. sanctions.

Trump said in a tweet on Friday that North Korea was “behaving very badly” and accused China, Pyongyang’s neighbour and only major ally, of doing little to resolve the crisis.

XI-TRUMP SUMMIT

However, the two sides appear to have toned down differences as they work on finalising a trip by Xi to the United States, possibly next month, for his first summit with Trump.

Wang said the two countries were in “close communication” on arranging the meeting, but gave no details.

The state-run Chinese tabloid the Global Times said on Saturday that it was in China’s interests to stop North Korea’s nuclear ambitions but to suggest China cut the country off completely was ridiculous as it would be fraught with danger.

“Once there is chaos in North Korea, it would first bring disaster to China. I’m sorry, but the United States and South Korea don’t have the right to demand this of China,” it said in an editorial.

A former oil executive with no prior diplomatic experience, Tillerson will meet Xi on Sunday.

North Korea has conducted two nuclear tests and a series of missile launches since the beginning of last year.

Last week, it launched four more ballistic missiles and is working to develop nuclear-tipped missiles that can reach the United States.

Washington has been pressing Beijing to do more to stop North Korea’s nuclear and missile programmes.

China has called for a dual track approach, urging North Korea to suspend its tests and the United States and South Korea to suspend military drills, so both sides can return to talks.

China has also been infuriated by the deployment of the THAAD, or Terminal High Altitude Area Defense, missile defence system in South Korea, which it says will both harm China’s own security and do nothing to ease tensions.

China says the system’s powerful radar will extend into the country’s northeast and potentially track Chinese missile launches, and maybe even intercept them. Russia also opposes THAAD, for the same reasons.

There are other tricky issues too, including the self-ruled island of Taiwan which China claims as its own.

The Trump administration is crafting a big new arms package for Taiwan that could include advanced rocket systems and anti-ship missiles to defend against China, U.S. officials said, a deal sure to anger Beijing.

Wang said Saturday’s talks included discussions on THAAD and Taiwan but did not give details.

(Additional reporting by Elias Glenn; Editing by Raju Gopalakrishnan)

China begins new work on disputed South China Sea island

Combination of satellite photos shows Chinese-controlled North Island, part of the Paracel Islands group in the South China Sea, on February 15, 2017 (top) and on March 6, 2017. Planet Labs/Handout via REUTERS

By Greg Torode

HONG KONG (Reuters) – China has started fresh construction work in the disputed South China Sea, new satellite images show, a sign that Beijing is continuing to strengthen its military reach across the vital trade waterway.

Regional military attaches and experts believe the work shows China’s determination to build up its network of reefs and islets, even if it is seeking to avoid a fresh confrontation with the new administration of U.S. President Donald Trump.

An image of North Island in the Paracels group taken on March 6 shows recent work including land clearing and possible preparation for a harbor to support what experts believe may be eventual military installations. Initial work was damaged in a typhoon last year.

The pictures, provided by private satellite firm Planet Labs, follow reports in January showing work undertaken on nearby Tree Island and other features in the Paracels, which are also claimed by Vietnam and Taiwan.

Diplomats briefed on latest Western intelligence assessments say Beijing is pursuing efforts to dominate its maritime ‘backyard’, even if it tweaks the timing of moves to avoid being overtly provocative.

“The Paracels are going to be vital to any future Chinese attempt to dominate the South China Sea,” said Carl Thayer, a South China Sea expert at Australia’s Defence Force Academy.

“We can see they are committed to militarization, whatever the official rhetoric tells us, even if they are going to do it bit by bit.”

UNCERTAINTIES OVER TRUMP

The more widely disputed Spratlys archipelago to the south are higher profile but the Paracels are key to China’s presence in the South China Sea,

China has in recent years temporarily based surface-to-air missile launchers and crack jet fighters at long established bases on Woody Island on the Paracels, helping protect its nuclear submarine facilities on Hainan Island.

North Island is part of an arc of reefs that are expected to form a protective screen for Woody, which includes civilian facilities and a listening post.

Zhang Baohui, a mainland security expert at Hong Kong’s Lingnan University, said he believed China was pursuing long-held goals of strengthening its facilities in the Paracels, and had calculated the Trump administration would not over-react given other pressing priorities.

“There’s also uncertainty with this young Trump administration, but this is very important work to the Chinese…the Paracels are vital to defending Hainan, which is in turn important to China’s nuclear deterrent,” he said.

“The calculation here is that it is really only Vietnam that will be rattled by this.”

The Vietnamese Foreign Ministry did not immediately respond to requests for comment.

China’s Defence Ministry said it was “not familiar” with any work at North Island.

“What needs to be stressed is that the Xisha Islands are China’s inherent territory,” it said, using the Chinese name for the Paracels. China fully occupied the Paracels in 1974 after forcing the navy of the-then South Vietnam off its holdings.

News of fresh Chinese activity comes as Rex Tillerson prepares for his first visit to the region as U.S. Secretary of State later this week. Tillerson sparked alarm in Beijing when he said in January China should not be allowed access to islands it has built in the South China Sea.

A U.S. official, speaking on the condition of anonymity, was unable to confirm new construction work on North Island but said it would not be surprising.

“It would be in line with what they have been doing, why else would they clearing land on the islands but for militarization,” the official said. “There is no other reason to have a presence there.”

Diplomatic sources in Beijing say China is not looking for confrontation with the United States over the South China Sea, pointing to China’s low-key reaction to last month’s patrol of a U.S. aircraft carrier strike group in the waters there.

China has recently sought to portray itself as being conciliatory over the disputed waterway, saying it and Southeast Asian nations are committed to a peaceful resolution.

Last week, Chinese Foreign Minister Wang Yi said a draft code of conduct for behavior in the South China Sea had now been completed and that tensions had “distinctly dropped”.

For a graphic of China’s reclamations in the Paracels, click http://fingfx.thomsonreuters.com/gfx/rngs/SOUTHCHINASEA-CHINA/010040500BH/china-paracel.jpg

(Additional reporting by Ben Blanchard in BEIJING and Idrees Ali in WASHINGTON; Editing by Lincoln Feast)