China will ‘fight to the end’ on trade
CHINA: China has warned that it will ‘‘fight to the end’’ to defend its interests and is considering a World Trade Organisation complaint in response to punitive tariffs set to be imposed by the United States.
The Trump administration will impose tariffs worth US$60 billion (NZ$83b) on Chinese goods – targeting technology products – restrict Chinese investments, and file a WTO case.
A strongly worded statement from the Chinese embassy in Washington yesterday said Beijing did not want a trade war but would not recoil from one and would ‘‘fight to the end ... with all necessary measures’’.
‘‘We will retaliate. If people want to play tough, we will play tough with them and see who will last longer,’’ ambassador Cui Tiankai said.
Stocks fell sharply on Trump’s announcement, with the Dow Jones Industrial Average falling nearly 3 per cent. Major industrials that could become targets of Chinese trade retaliation slumped further, with aircraft maker Boeing down 5.2 per cent and earthmoving equipment maker Caterpillar falling 5.7 per cent.
Trump signed a memorandum imposing the restrictions after an investigation found Chinese violations of technology intellectual property rights.
Trump said there was a trade deficit of US$504b (NZ$700b) with China and ‘‘a tremendous intellectual property theft situation going on’’. He said he had spoken with Chinese President Xi Jinping and asked him to reduce the deficit by US$100b (NZ$138b) immediately, and was ‘‘in the midst of a very large negotiation’’ with Beijing.
‘‘I view them as a friend,’’ Trump said of the Chinese as he started his announcement.
The US action will target key areas identified in China’s ‘‘Made in China 2025’’ programme, including electronics, robotics, and aviation and aerospace products.
There are fears the move could trigger a trade war between the world’s No 1 and No 2 economies.
‘‘China will never sit idly and let its lawful rights and interests be undermined, and will surely take all necessary measures to firmly safeguard its legitimate rights and interests,’’ said Chinese foreign ministry spokeswoman Hua Chunying.
Before the Trump announcement, China’s ambassador to the WTO, Zhang Xiangchen, said China was considering a WTO complaint against the expected package of tariffs, but this was only one option.
Hua highlighted key US exports to China but declined to say whether these would be likely targets for retaliatory action. ‘‘China’s market receives the largest number of US planes and soybeans and the second-largest number of US cars and cotton.’’
She said the US side had complained about the need for ‘‘fairness’’ and ‘‘reciprocity’’ in trade, but China believed the trade imbalance between the two countries was partly the result of US policies restricting exports to China.
Chinese Premier Li Keqiang said earlier this week that China wanted the US to ease restrictions on the sale of high-tech goods to China to help rebalance trade between them.
Li said China would improve conditions for foreign companies in China, bring down overall tariffs for imports, slash tariffs for day-to-day consumer goods, and eliminate tariffs for drugs. Manufacturing would be opened up to foreign investors with no requirement for technology transfer, he said, addressing a longtime sore point for foreign companies.
American and European business have long complained about a lack of action on reform by China, despite pledges that it would continue to open up its markets.