China threat­ens re­tal­i­a­tion for Trump’s planned tar­iff hike

The Saline Courier - - NEWS -

BEI­JING — China on Fri­day threat­ened re­tal­i­a­tion if U.S. Pres­i­dent Don­ald Trump’s planned tar­iff hikes go ahead, while the re­newed ac­ri­mony be­tween the two big­gest global economies sent stock mar­kets tum­bling.

China’s govern­ment ac­cused Trump of vi­o­lat­ing his June agree­ment with Pres­i­dent Xi Jin­ping to re­vive ne­go­ti­a­tions aimed at end­ing a costly fight over Bei­jing’s trade sur­plus and tech­nol­ogy am­bi­tions.

Trump rat­tled fi­nan­cial mar­kets with Thurs­day’s sur­prise an­nounce­ment of 10% tar­iffs on $300 bil­lion of Chi­nese im­ports, ef­fec­tive Sept. 1. That would ex­tend puni­tive du­ties to ev­ery­thing the United States buys from China.

If that goes ahead, “China will have to take nec­es­sary coun­ter­mea­sures to res­o­lutely de­fend its core in­ter­ests,” said a for­eign min­istry spokes­woman, Hua Chuy­ing.

“We don’t want to fight, but we aren’t afraid to,”

Hua said at a reg­u­lar news brief­ing. She called on Wash­ing­ton to “aban­don its il­lu­sions, cor­rect mis­takes, and re­turn to con­sul­ta­tions based on equal­ity and mu­tual re­spect.”

Wash­ing­ton and Bei­jing are locked in a bat­tle over com­plaints China steals or pres­sures com­pa­nies to hand over tech­nol­ogy. The Trump ad­min­is­tra­tion wor­ries Amer­i­can in­dus­trial lead­er­ship might be threat­ened by Chi­nese plans for govern­ment-led cre­ation of global competitor­s in ro­bot­ics and other tech­nolo­gies. Europe and Ja­pan echo

U.S. com­plaints those plans vi­o­late Bei­jing’s mar­ke­topen­ing com­mit­ments.

Wash­ing­ton ear­lier im­posed 25% tar­iffs on $250 bil­lion in Chi­nese prod­ucts. Bei­jing has re­tal­i­ated by rais­ing im­port du­ties on $110 bil­lion of U.S. goods.

Bei­jing is about to run out of Amer­i­can im­ports for re­tal­i­a­tion due to their lop­sided trade bal­ance.

China im­ported U.S. goods worth about $160 bil­lion last year. But reg­u­la­tors have ex­tended re­tal­ia­tory mea­sures to in­clude slow­ing down cus­toms clear­ance for Amer­i­can com­pa­nies and putting off is­su­ing li­cense in in­sur­ance and other fields.

Bei­jing also is threat­en­ing to re­lease an “un­re­li­able en­ti­ties” black­list of for­eign com­pa­nies that might face re­stric­tions on do­ing busi­ness with China. Plans for that were an­nounced after Wash­ing­ton im­posed crippling re­stric­tions in May on sales of U.S. tech­nol­ogy to Chi­nese tech gi­ant Huawei Tech­nolo­gies Ltd.

Trump’s an­nounce­ment sur­prised in­vestors after the White House said Bei­jing promised to buy more farm goods. It came as their lat­est trade talks ended in Shang­hai with no sign of a deal. Of­fi­cials said they would re­sume next month in Wash­ing­ton.

The an­nounce­ment “is likely to put a com­pre­hen­sive deal fur­ther out of reach,” said Fitch So­lu­tions in a re­port.

Tokyo’s main stock mar­ket in­dex fell 2.5% by mid­day and Hong Kong’s bench­mark lost 2.3%. Mar­kets in Shang­hai, Syd­ney and Seoul also de­clined.

Ear­lier on Wall Street, the bench­mark Stan­dard & Poor’s 500 fell for a fourth day, los­ing 0.9% to 2,953.56.

The Dow Jones

In­dus­trial Aver­age de­clined 1% to 26,583.42. The

Nas­daq com­pos­ite ended 0.8% lower at 8,111.12.

Also Fri­day, China’s yuan fell to its low­est level this year against the dol­lar after Trump’s tar­iff threat fu­eled con­cerns about slow­ing eco­nomic growth, com­ing close to break­ing the po­lit­i­cally sen­si­tive level of seven to the U.S. cur­rency.

The yuan tum­bled to 6.9520 to the dol­lar, its weak­est since De­cem­ber, but re­cov­ered slightly by mid­day.

Trump’s threat “will likely put more de­pre­ci­a­tion pres­sure” on the cur­rency, said Tao Wang of UBS in a re­port. She said Bei­jing is likely to “tightly man­age” the ex­change rate “to avoid any sig­nif­i­cant de­pre­ci­a­tion.”

The cur­rency’s weak­ness is help­ing to fuel Wash­ing­ton’s trade com­plaints. The U.S. Trea­sury De­part­ment de­clined in May to la­bel China a cur­rency ma­nip­u­la­tor but said it was closely watch­ing Bei­jing.

The level of seven yuan to the dol­lar has no eco­nomic sig­nif­i­cance, but could re­vive U.S. at­ten­tion to the ex­change rate.

Trump’s ear­lier tar­iffs were in­tended to min­i­mize the im­pact on or­di­nary Amer­i­cans by fo­cus­ing on in­dus­trial goods. But the new tar­iffs will hit a vast range of con­sumer prod­ucts from cell­phones to silk scarves.

China’s for­eign min­is­ter crit­i­cized the move.

“Im­pos­ing tar­iffs is def­i­nitely not the right way to re­solve trade fric­tions,” Wang Yi told reporters in Bangkok, where he was at­tend­ing a meet­ing of the As­so­ci­a­tion of South­east Asian Na­tions.

Trump has long said he was pre­par­ing to tax the $300 bil­lion in ad­di­tional Chi­nese tar­iffs. But he had sus­pended the threat after meet­ing Xi at a gath­er­ing of the Group of 20 ma­jor economies in Osaka, Ja­pan.

The pres­i­dent ac­cused Bei­jing of fail­ing to fol­low through on stop­ping the sale of fen­tanyl to the United States or on pur­chas­ing large quan­ti­ties of farm goods such as soy­beans. Speak­ing to reporters Thurs­day at the White House, Trump com­plained Xi is “not mov­ing fast enough.”

Talks broke down in

May after the United States ac­cused the Chi­nese of reneg­ing on ear­lier com­mit­ments.

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