×

Trump's newest orders warn China: Get ready for a tough talk next week

China may have gained some clarity on the issues the Trump administration wants to address, ahead of next week's meeting between the two countries' presidents.

Uncertainty over what the new White House wants has given the U.S. some leverage over Beijing, analysts said. In a reversal from Trump's tough campaign talk about tariffs and currency manipulation, a thinly staffed White House has softened its tone and focused more on North Korea, where Beijing has significant influence.

Two executive orders President Donald Trump is expected to sign Friday afternoon would seem to confirm that China's trade relationship with the U.S. is still in the White House crosshairs.

The first order will call for a detailed report on the cause of U.S. trade deficits within 90 days. The second will support increased collection of penalties foreign companies must pay for receiving support from their home governments and selling their goods in the U.S. too cheaply.

"Nothing we're saying tonight is about China. ... This is a story about trade abuses," Peter Navarro, author of the book "Death by China" and head of the newly formed National Trade Council, said during a news briefing on the orders Thursday evening.

However, China had the largest goods trade deficit with the U.S. at $347 billion last year, and the country's steel industry has long been criticized for dumping the commodity into the U.S.

"China doesn't intentionally pursue trade surplus, neither do we intend to use competitive currency depreciation to boost trade. That's just not our policy," Zheng Zeguang, Chinese vice foreign minister, said in a news briefing Friday, according to a transcript from The Associated Press.

As a candidate, Trump spoke forcefully and frequently about labeling China a currency manipulator and slapping a 45 percent tariff on imports. Trump tweeted Thursday that his meeting with Chinese President Xi Jinping "will be a very difficult one."

But many — especially in China — maintain that such comments are more talk than action.

"He may sound tough," said Huiyao Wang, founder and president of Beijing-based think tank Center for China and Globalization, but "for business people, always aim high and then reach in between. I think it's a negotiation tactic."

Wang added that the U.S. could work with China on regional trade agreements. "That can satisfy President Trump as not really taking Obama's legacy, but [instead] relaying a new legacy of free trade agreements for Asia-Pacific," he said.

One of Trump's first actions in office was to withdraw the United States from negotiating the Trans-Pacific Partnership, a 12-nation agreement that was brokered by the Obama administration and which excluded China.

Given the volatility in the U.S.-China relationship, Beijing is likely to remain strategically patient, just as it did in not overreacting when Trump appeared to cross the "One China" policy with his phone call with the Taiwanese president.

Xi is scheduled to meet Trump at the Mar-a-Lago resort in Floriday next Thursday and Friday.

"I expect Xi to try and box Trump in. He'll appear as magnanimous as possible, stress the mutual benefits from the relationship, and see if he can get Trump to reaffirm such a message," said Scott Kennedy, a China expert at the Center for Strategic and International Studies.

"If Trump later starts using strong unilateral measures against China, Xi can accuse Trump of breaking his word and justify retaliation," Kennedy said.

— CNBC's Karen Sloan contributed to this report.