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China to Bring Up Measures Against WeChat and TikTok in Upcoming U.S. Trade Talks

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U.S. and Chinese negotiators are set to discuss implementation of the phase one trade deal in the coming days, with Beijing pushing for the recent measures targeting businesses including TikTok and WeChat to be on the agenda.

A virtual meeting will likely take place as soon as this week though a date hasn’t been finalized, according to people familiar with preparations for the talks who asked not to be named. Along with agricultural purchases and the dollar-yuan exchange rate, which are among topics to be discussed, Chinese officials intend to bring up President Donald Trump’s prospective bans on transactions with the two apps on national security grounds, the people said. They did not elaborate on what China hopes to achieve on these issues.

Seven months after the signing of the agreement which paused a tariff war that had roiled the global economy, the purchases of U.S. goods it entails are lagging far behind schedule. The coronavirus crisis and the concurrent deterioration in U.S.-China relations on everything from tech security to Hong Kong has meant the trade deal remains one of the few areas where Washington and Beijing are still cooperating.

The “one area we are engaging is trade,” Trump’s top economic adviser Larry Kudlow said at a White House press conference Tuesday. “It’s fine right now.” China’s commerce ministry and foreign ministry did not immediately respond to faxes seeking comment.

China is seeking to defuse an unpredictable confrontation with the U.S. that’s seen several of its tech champions targeted, with the latest actions spurring a potential sale of the U.S. operations of ByteDance Ltd’s wildly popular short video app to Microsoft Corp. Trump is also banning U.S. transactions with Tencent Holdings Ltd’s WeChat app, which has more than 1 billion users.

Trump’s executive orders, set to take effect in September, have potentially an even wider impact than the multi-pronged assault on telecommunications hardware provider Huawei Technologies Co., as they threaten to sever communication links among the people of the world’s biggest economies. The U.S. argues that Chinese apps which collect information on U.S. citizens pose a grave national security risk as the data is prone to being acquired by the Chinese government.

Meanwhile given the collapse in the global economy this year due to the pandemic, which Trump blames on China, Beijing was only a quarter of the way through its effort to buy more than $170 billion in U.S. goods this year by the end of June. On Tuesday Kudlow downplayed the shortfall, saying China had “substantially” increased purchases of U.S. goods.

China would need to buy about $130 billion in the second half of this year to comply with the original terms of the agreement signed in January, which laid out purchasing an additional $200 billion of U.S. goods and services over the 2017 level by the end of 2021.

–With assistance from James Mayger.

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