China warns there will be no trade war win­ners

Daily Nation Newspaper - - BUSINESS & CORPORATE -

BEI­JING- Any trade war with the US will only bring dis­as­ter to the world econ­omy, Chi­nese Com­merce Min­is­ter Zhong Shan said on Sun­day, as Bei­jing stepped up its crit­i­cism of pro­posed me­tals tar­iffs by Wash­ing­ton amid fears it could shat­ter global growth.

Af­ter pres­sure from al­lies, the US has opened the way for more ex­emp­tions from tar­iffs of 25% on steel im­ports and 10% on alu­minium that US Pres­i­dent Don­ald Trump set last week.

On Satur­day, the EU and Ja­pan urged the US to grant them ex­emp­tions from metal im­port tar­iffs, with Tokyo call­ing for “calm­headed be­hav­iour”.

But the tar­get of Trump’s ire is China, whose ca­pac­ity ex­pan­sions have helped add to global sur­pluses of steel. China has re­peat­edly vowed to de­fend its “le­git­i­mate rights and in­ter­ests” if tar­geted by US trade ac­tions.

Zhong, speak­ing on the side­lines of China’s an­nual session of par­lia­ment, said China does not want a trade war and will not ini­ti­ate one.

“There are no win­ners in a trade war,” Zhong said. “It will only bring dis­as­ter to China and the US and the world.”

China can han­dle any chal­lenges and will res­o­lutely pro­tect its in­ter­ests, but the two coun­tries will con­tinue to talk, he said. “No­body wants to fight a trade war, and ev­ery­one knows fight­ing one harms oth­ers and does not ben­e­fit one­self.”

Trump’s an­nounce­ment on tar­iffs un­der­lined con­cerns about ris­ing US pro­tec­tion­ism, which has sparked bouts of tur­moil in global fi­nan­cial mar­kets as in­vestors feared a dam­ag­ing trade spat would shat­ter an uptick in world growth.

China’s me­tals in­dus­try is­sued the coun­try’s most ex­plicit threat yet in the row, urg­ing on Fri­day for the govern­ment to re­tal­i­ate by tar­get­ing US coal — a sec­tor that is cen­tral to Trump’s po­lit­i­cal base and his elec­tion pledge to re­store US in­dus­tries and blue-col­lar jobs.

The US is the world’s big­gest im­porter of steel, pur­chas­ing 35-mil­lion tonnes of raw ma­te­rial in 2017. Of this, South Korea, Ja­pan, China and In­dia ac­counted for 6.6-mil­lion tonnes.

Trade ten­sion be­tween China and the US has risen since Trump took of­fice.

China ac­counts for only a small frac­tion of US steel im­ports but its mas­sive in­dus­trial ex­pan­sion has helped cre­ate a global glut of steel that has driven down prices.

The dis­pute has fu­elled con­cerns that soya beans, the US’s most valu­able ex­port to the world’s sec­ond-largest econ­omy, might be caught up in the trade ac­tions af­ter Bei­jing launched a probe into im­ports of US sorghum, a grain used in an­i­mal feed and liquor.

Zhong said US of­fi­cial trade deficit fig­ures had been over-es­ti­mated by about 20%, and would be a lot lower if the US re­laxed ex­port re­stric­tions on some high­tech goods.

Trump be­lieves tar­iffs will safe­guard US jobs, though many econ­o­mists say the im­pact of price in­creases for users of steel and alu­minium, such as the au­to­mo­tive and oil in­dus­tries, will de­stroy more jobs than curbs on im­ports cre­ate.

Nonethe­less, there is grow­ing bi­par­ti­san con­sen­sus in Wash­ing­ton, and sup­port within some seg­ments of the US busi­ness com­mu­nity, for the US govern­ment to counter what are seen as Bei­jing’s preda­tory in­dus­trial poli­cies and mar­ket re­stric­tions on for­eign firms.

Diplo­matic and US busi­ness sources say that the US has frozen a for­mal mech­a­nism for talks on com­mer­cial dis­putes with China be­cause it is not satisfied Bei­jing has met its prom­ises to ease mar­ket re­stric­tions.-Reuters

Chi­nese Com­merce Min­is­ter Zhong Shan at­tends a news con­fer­ence on the side­lines of the Na­tional Peo­ple’s Congress in Bei­jing

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