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China ‘not afraid’ of trade war with Trump

Monday,Apr 09, 2018


Beijing condemns new US tariff threat and warns of ‘comprehensive countermeasures’


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US soyabean industry groups have warned that a trade war would have “devastating” effects © AP

Beijing has condemned Donald Trump's threat of an additional $100bn in tariffs on imports from China, as Chinese experts warned the US it stood more to lose politically from a worsening tit-for-tat trade dispute that has unnerved global markets.

On Friday, a Ministry of Commerce spokesman said China was prepared to adopt “comprehensive countermeasures” in its dispute with the US, adding: “China doesn’t want a trade war, but we’re not afraid to fight a trade war.”

Lu Kang, China’s foreign ministry spokesperson, echoed the commerce ministry’s statement, adding: “We will accompany [the US] until the end, we will not hesitate in paying any price.”

“It has been months since fiscal and economic officials from both governments have had any negotiations,” a commerce ministry spokesperson said later on Friday. “The US started its 301 investigation and proposed another $100bn of tariffs. Against this backdrop, China will not negotiate.”

After the US and China exchanged threats earlier this week to impose tariffs over roughly $50bn worth of imports each, on Thursday evening Mr Trump instructed the US trade representative’s office “to consider whether $100bn of additional tariffs would be appropriate …and if so, to identify the products upon which to impose such tariffs”.

Beijing would be likely to follow suit in ramping up its own tariff threats if the US government implemented Mr Trump’s suggestion of additional penalties. “When someone uses a big stick, the response is to use yours in return,” said Shi Yinhong, professor of international relations at Renmin University in Beijing.

Former commerce ministry official He Weiwen, now a senior fellow at the Center for China and Globalization(CCG), a Beijing think-tank, warned that China would almost certainly be pushed to pursue tit-for-tat measures in retaliation if the additional tariffs materialised.

Mr Trump slammed China's response to the tariffs proposed by his administration on Tuesday. On Wednesday, China announced plans to raise 25 per cent duties on 106 products, including soyabeans, cars and chemicals, on a date to be decided — depending on when the US implements its own tariffs.

Chu Shulong, professor of international strategy at Tsinghua University, said: “China will follow what the US does: if the US wants to threaten, it will threaten, if the US wants to talk, China will talk.”

But, Mr Chu cautioned,?“This is a strategy, not the start of a trade war.?As with previous China-US disputes, the initial threats are very high but will be lowered when both sides start talking.”

Chinese analysts said an escalation of tariffs was likely to cause more political trouble for Mr Trump than for the Chinese Communist party because of the differences in the two countries’ governance structures.

“American industry groups have differing views on Mr Trump’s plan of raising tariffs, which will be likely to influence the final policy,” said Zhang Yingchao, financial analyst at investment bank Everbright SHK in Beijing. “But voices in China have been unified in supporting the government’s decisions.”

The head of the China Association of Automobile Manufacturers told domestic media earlier this week that carmakers in China?“should not fear” a trade war. But US?soyabean industry groups warned that a conflict over trade would have “devastating” effects.

“Wall Street is not happy, and this is damaging for Mr Trump at home,” added Mr Shi.?“A trade war will hurt both countries, but in the US, this could hurt the Republican party in the November midterm elections. China does not have this problem.”

On Thursday, Beijing had indicated it was willing to escalate its fight with Mr Trump by opening?a World Trade Organization challenge to the US’s proposed tariffs.

 

From Financial Times,2018-4-6

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