Trump's China Trip Brings Admonitions on North Korea, Along With Business Deals

Xi Jinping welcomed Donald Trump to China with a series of business deals and a private tour of the Forbidden City, seeking to impress the U.S. president even as he stepped up pressure on Beijing to curb financial ties with North Korea.

The deals, valued at an estimated $9 billion, were designed to set a positive tone for Mr. Trump's 1 1/2 -day visit. Hours before Mr. Trump landed, China reported an almost $27 billion trade surplus with the U.S. in October.

On Wednesday afternoon, the presidents and their wives toured the former imperial palace off Beijing's Tiananmen Square before a Peking opera performance and a private dinner.

Mr. Trump arrived in Beijing from South Korea, where he took direct aim at North Korean leader Kim Jong Un in a speech that both opened a path to negotiation and warned of the potential consequences of Pyongyang's nuclear-weapons program.

Mr. Trump also put Beijing on notice ahead of his talks with Mr. Xi, again calling on China to do more to pressure Pyongyang to change course. China is by far North Korea's top trading partner, but is also the U.S.'s largest.

"Why would China feel an obligation to help North Korea?" Mr. Trump said in his 35-minute address to the South Korean National Assembly.

A senior White House official told reporters en route to Beijing that Mr. Trump would raise those concerns directly with Mr. Xi. There were still financial links between the countries that shouldn't exist under United Nations sanctions, the official said.

"We're going to work closely with the Chinese to identify that activity and end it," the official said.

A Chinese Foreign Ministry official said Beijing is faithfully abiding by U.N. sanctions and will put an end to any violations it finds.

The White House official also said Mr. Trump would raise "severe imbalances in the U.S.-China economic relationship," including a "grossly unlevel playing field."

Among the deals announced by U.S. Commerce Secretary Wilbur Ross in Beijing were agreements by General Electric Co., DowDuPont Inc. and Smithfield Foods Inc. with Chinese counterparts. Mr. Ross said more contracts between U.S. and Chinese companies would be unveiled on Thursday.

"Today's signings are good examples of how we can productively build up our bilateral trade," Mr. Ross said.

The skew toward export contracts in the deals reflects the Trump administration's difficult progress on more fundamental China trade issues, such as barriers to entry for U.S. companies to key Chinese sectors.

Mr. Ross said addressing such imbalances was a key objective for Mr. Trump's trip, but he steered clear of the fiery rhetoric that the Trump administration had previously directed at Beijing.

"Achieving fair and reciprocal treatment for the companies is a shared objective," Mr. Ross said.

Mr. Xi, who last month was granted political powers comparable to those once held by Chairman Mao, is unlikely to make major concessions on trade without securing greater access to the U.S. market, some analysts and diplomats said. China appears focused instead on trying to flatter Mr. Trump with lavish hospitality and deals that could play well with his political base while doing little to reduce trade tensions.

Economists said the deals signed in Beijing won't noticeably reduce the trade gap between the two countries. While China's trade surplus with the U.S. narrowed somewhat in October, to $26.62 billion from $28.08 billion in September, according to official figures, it was the fifth straight monthly surplus over $25 billion.

Louis Kuijs, an economist at Oxford Economics, estimates the two countries' trade gap will widen to nearly $370 billion this year, from the $347 billion difference in 2016, according to U.S. figures.

Some members of the U.S. trade delegation said they fear Chinese retaliation if the Trump administration, which is investigating China trade, follows through with threats to punish Beijing over its trade practices.

Paul Burke, North Asia regional director of the U.S. Soybean Export Council, said his group was warned by China's agriculture and commerce ministries in September.

"In both those meetings, the Chinese government officials said it would be really unfortunate if there was some kind of trade disruption," he said. "Because soybeans, being so important, would probably be a commodity that would be targeted."

Among the deals signed on Wednesday was a letter of intent to ship what executives with the council said are "billions of dollars" of American-grown soybeans to China. A separate deal on soybeans was expected to be signed on Thursday by Archer Daniels Midland Co. and China's state-owned Cofco Corp.

Executives in other sectors also said they hoped the U.S. administration wouldn't escalate the trade tensions.

"We would prefer to see the rhetoric be less strong," said Tad Walker, chief executive of Partner Reinsurance, on the sidelines of the Beijing event. His company has been waiting since 2015 on a license to operate in China.

Many of the deals were already in the pipeline. The U.S. Embassy in Beijing in August emailed American companies to request submission of deals for the trade mission, according to a copy of the email reviewed by The Wall Street Journal.

Deals involving Qualcomm Inc., Boeing Co., Goldman Sachs Group Inc., Ford Motor Co., General Motors Co. and other U.S. companies are scheduled to be announced on Thursday.

Write to Eva Dou at eva.dou@wsj.com and Jeremy Page at jeremy.page@wsj.com

(END) Dow Jones Newswires

November 08, 2017 19:43 ET (00:43 GMT)