China urges US to meet halfway for trade deal

Foreign Ministry says preparations underway for next round of talks

China’s Ministry of Foreign Affairs urged joint efforts by the United States and China to meet halfway and strive to achieve a win-win trade agreement based on mutual respect.

Following a new US threat to increase tariffs on Chinese imports, the ministry announced on Monday that the Chinese team is preparing to visit the US for further economic and trade consultations.

US President Donald Trump tweeted on Sunday that he would hike tariffs on Chinese goods beginning on Friday.

Beijing maintained a cool head when it responded to the fresh tariff threat by Washington, and the two countries should work to avoid the escalation of trade tensions, analysts said.

They also called on the two largest economies in the world to shelve their differences and come to a resolution in a timely manner.

Joe Kaeser, CEO of Germanybased multinational conglomerate Siemens AG, said: “We are all already worried about the China-US trade dispute. I think the whole world is worried about it because it’s a dispute between the No 1 and No 2 economies. As a result, all the other countries will have a problem.”

The world economy is showing signs of slowdown. Major international organizations, such as the International Monetary Fund, have warned that global growth may slow this year because of head-winds and uncertainties caused by trade tensions.

Immediately after Trump’s Twitter announcement on the tariff hike threat, David French, senior vicepresident for government relations at the National Retail Federation, said: “Tariffs are taxes paid by US businesses and consumers, not by China. A sudden tariff increase with less than a week’s notice would severely disrupt US businesses, especially small companies that have limited resources to mitigate the impact.”

If the administration follows through on this threat, US consumers will face higher prices and US jobs will be lost, French added.

Vincent Chan, head of China Equity Strategy Research at Credit Suisse, said he hopes the two nations can reach an agreement as soon as possible. Otherwise, the shock to the world economy could be huge, he said.

“In order to reach such an agreement, both parties may have to make some compromises, or some issues, which are unable to be solved now, should be postponed. Any agreement is better than no agreement at all,” Chan added.

Given uncertainties brought about by the trade friction, foreign small and medium-sized enterprises in China will face more difficulties, Chan said.

Ma Yu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, said any escalation of trade tension would hurt the recovery of the world economy, especially regarding foreign direct investment.

Ma said many manufacturers, especially original equipment manufacturers and small and mediumsized enterprises, would suffer heavily not only this year, but in the long run as well, because they don’t have branding power and their market channels are limited.

Global stock markets were generally down on Monday. In the AsiaPacific region, the benchmark Hang Seng Index in Hong Kong dropped 2.9 percent, while Japan’s Nikkei 225 Index dipped 0.22 percent.

The Shanghai Composite Index slumped 5.58 percent, and the Shenzhen Component Index plunged 7.56 percent.

In Europe, the CAC 40 Index of France dropped 1.8 percent when the market opened on Monday.

Market analysts said the US administration should bear in mind that a full-blown trade war would not damage China alone. It would affect US industries and workers as well as the world economy as a whole, they said.

Despite any short-term pain, the Chinese economy would show more resilience in the long run, thanks to its huge domestic market, said Wang Bin, deputy director-general of the Commerce Ministry’s department of market operations and consumption promotion.

Meanwhile, China has shown more entrenched signs of stabilization, as its first-quarter GDP growth came in at 6.4 percent, halting recent slides.