Amid Iranian oil waiver, U.S. - China talks divided before Trump-Xi meeting

WASHINGTON, D.C. (Bloomberg) -- The U.S. secretaries of state and defense met with their Chinese counterparts for an annual strategy session in Washington on Friday, with both sides highlighting deep differences on diplomacy and security weeks before Presidents Donald Trump and Xi Jinping plan to meet at a summit in Argentina.

Secretary of State Michael Pompeo said at a joint press conference at the State Department that he’d been “forthright in addressing significant differences between our nations,” while also emphasizing that cooperation between the world’s two biggest economies remains essential. China is reportedly one of eight nations recently granted a waiver to continue importing Iranian oil.

As, the biggest buyer of Iranian crude, China is allowed to import 360,000 bpd under the exemptions, according to Trump administration sources. That doesn’t include oil produced by projects in the Islamic Republic, in which Chinese companies have equity.

While China had bought about 658,000 bpd over the first nine months of this year, the government was said to have told at least two state oil companies to avoid purchasing the producer’s oil before the sanctions went into effect.

Key Details

Pompeo said the Trump administration hopes to work with China to reduce imports of Iranian oil now that the U.S. is reimposing sanctions after Trump’s withdrawal from the 2015 nuclear deal. Yang Jiechi, the head of the foreign affairs committee of the Communist Party’s Politburo, reiterated the Chinese belief that the original agreement between Iran and six world powers still must be abided by. While Pompeo called the meeting an “incredibly constructive conversation,” he said that he pressed China on its militarization of the South China Sea and raised concern about China’s treatment of its Muslim minority. Yang warned the U.S. against interfering in China’s internal affairs and said his nation needed security infrastructure in the South China Sea to protect civilians and respond to “threats from the outside.” Mattis said the two sides agreed to set up a military-to-military deconfliction and crisis communication network, and his counterpart Wei Fenghe said the countries will hold a joint military exercise on maritime search and rescue by the end of the year. Wei said the bilateral military relationship is moving forward “despite some problems” Mattis said the two sides discussed the importance of military and civilian vessels and aircraft operating in a safe and professional way, and in accordance with international law.