US negotiators have diluted the demand that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing, said Reuters.
In the push to secure a deal in the next month or so, US negotiators have become resigned to securing less than they would like on curbing the subsidies and are focused instead on other areas where they consider demands are more achievable, said a Reuters source.
The issue of industrial subsidies in China is sticky because they are intertwined with the Chinese government’s industrial policy. Beijing grants subsidies and tax breaks to state-owned firms and to sectors seen as strategic for long-term development and in the Xi administration the government has become more intertwined in the economy.
Beijing pledged earlier this year to end market-distorting subsidies for its domestic industries but offered no details on how it would achieve that goal, Reuters sources disclosed in February.