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| Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. Picture taken April 27, 2018. REUTERS/Jason Lee/File Photo |
The two sides had appeared to be converging on a deal until last weekend, when U.S. President Donald Trump announced his intention to hike tariffs with his negotiators saying that China was backtracking on earlier commitments.
“The U.S. side has given many labels recently, ‘backtracking’, ‘betraying’ etc ... China sets great store on trustworthiness and keeps its promises, and this has never changed,” Commerce Ministry spokesman Gao Feng told reporters in Beijing on Thursday.
Gao said it was normal for both sides to have disagreements during the negotiating process.
Speaking to supporters at a rally in Florida on Wednesday, Trump said China had “broke the deal, and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing “stops cheating our workers.”
A protracted trade war between the world’s two largest economies would be damaging for global economic growth, and investors pulled their money out of stock markets this week as fears that the prospective agreement was unraveling.
Gao said the decision to send the delegation led by Vice Premier Liu He to Washington despite the tariff threat demonstrated China’s “utmost sincerity”.
“We hope the U.S. can meet China halfway, take care of each others’ concerns, and resolve existing problems through cooperation and consultations,” Gao said.
He said it was normal to have disagreements during a negotiating process, and urged the United States to resist taking unilateral action, while warning that China was fully prepared to defend its interests.
“China’s attitude has been consistent, and China will not succumb to any pressure,” Gao said. “China has made preparations to respond to all kinds of possible outcomes.”
He did not elaborate.
The U.S. Trade Representative’s office said tariffs on $200 billion of Chinese goods would rise to 25 percent from 10 percent at 12:01 a.m. (0401 GMT) on Friday, during the talks in Washington.
The tariffs would target chemicals, building materials, furniture and some consumer electronics among other goods.
Trump also threatened on Sunday to levy tariffs on an additional $325 billion of China’s goods, on top of the $250 billion of its products already hit by import taxes.
Since July last year, China has cumulatively imposed countertariffs of up to 25 percent on about $110 billion of U.S. products. It last levied tariffs, of 5 percent to 10 percent, on $60 billion of U.S. goods including liquefied natural gas and small aircraft in September.
Based on 2018 U.S. Census Bureau trade data, China would only have about $10 billion in U.S. imports left to levy in retaliation for any future U.S. tariffs, including crude oil and large aircraft.
Gao did not answer directly when asked if China would consider imposing tariffs on imported U.S services.
While the United States wants to reduce the scale of its trade deficit with China, it is also seeking stronger protection for American intellectual property and more market access in China for U.S. companies.
Gao described accusations about Chinese firms stealing tech secrets as unreasonable and said they were not based on facts.
STRONG MENTALITY
Chinese state media on Thursday published and aired reports quoting U.S.-based organizations and individuals critical of Trump’s decision to raise tariffs, though downplaying the impact of higher U.S. tariffs on the Chinese economy.
“China is well-prepared for an escalation in trade tensions. A variety of plans are in place, such as countermeasures for any tariff rise, and favorable policies to minimize losses for Chinese enterprises,” the Global Times, a tabloid published by the ruling Communist Party’s People’s Daily, said in an editorial.
“Mentally and materially, China is much better prepared than its U.S. counterpart.”
The country’s share markets have taken a battering due to the renewed trade tensions, however.
China’s blue-chip CSI300 index has slumped about 7 percent so far this month, while In the United States, the benchmark S&P 500 index has only declined about 2 percent.
The Chinese yuan has also weakened to a four-month low, crossing the 6.80 per dollar level.
ECONOMIC IMPACT
While China’s overall economic growth has remained steady so far this year, the outlook for exporters has been challenging.
Exports unexpectedly declined in April, with some analysts attributing the drop to slumping shipments to the United States.
U.S.-bound shipments fell more than 13 percent last month, according to official data released this week.
But imports from the United States decreased by even more - falling almost 26 percent - widening China’s trade surplus with the United States.
“For months, U.S. companies and agricultural producers and their respective trade associations have desperately urged the two sides to come to some kind of trade agreement that would prevent the further use of tariffs by both countries, fearing such a scenario would cripple their already-damaged bilateral trading relationship,” said Nelson Dong, senior partner at international law firm Dorsey & Whitney.
“However, those urgent pleas seem to have been ignored. Once again, the two countries, and indeed, the entire world’s economy will be forced into a crisis mode that will likely inflict enormous losses on many individual companies and many thousands of workers and farmers in both countries.”
