China says it is fully prepared to respond with a fierce counter strike
PHOTO:AFP
BEIJING/ WASHINGTON: China warned on Friday it was fully prepared to respond with a "fierce counter strike" of fresh trade measures if the United States follows through on President Donald Trump's threat to slap tariffs on an additional $100 billion in Chinese goods.
In light of China's "unfair retaliation" against earlier US trade actions, Trump upped the ante on Thursday by ordering US officials to identify extra tariffs, escalating a high stakes tit-for-tat confrontation with potentially damaging consequences for the world's two biggest economies.
China's Commerce Ministry spokesman, Gao Feng, called the US action "extremely mistaken" and unjustified, adding that the spat was a struggle between unilateralism and multilateralism. He also said no negotiations were likely in the current circumstances.
"The result of this behaviour is to smash your own foot with a stone," Gao told a news briefing in Beijing. "If the United States announces an additional $100 billion list of tariffs, China has already fully prepared, and will not hesitate to immediately make, a fierce counter strike."
Gao was speaking shortly after Trump defended his proposed tariffs on US radio, saying the move might cause "a little pain" but the US will be better off in the long run.
On Wednesday, China unveiled a list of 106 US goods - from soybeans and whiskey to frozen beef and aircraft - targeted for tariffs, in a swift retaliatory move only hours after the Trump administration proposed duties on some 1,300 Chinese industrial, technology, transport and medical products.
Washington has called for the $50 billion in extra duties after it said a probe determined Chinese government policies are designed to transfer US intellectual property to Chinese companies and allow them to seize leadership in key high-technology industries of the future.
China said it was not afraid of a trade war, even though it did not seek one, and accused the US of provoking the conflict.
Gao said comments from US officials about ongoing talks about trade issues were incorrect. "Under these conditions, the two sides cannot conduct any negotiations on this issue," Gao said, without elaborating.
While Beijing's claims that Washington is the aggressor and is spurring global protectionism, China's trading partners have complained for years that it abuses World Trade Organization rules and propagates unfair policies at home that lock foreign firms out of some sectors.
Damaging consequences
Analysts at Oxford Economics warned that a full-blown trade war will have damaging consequences.
"Importantly, these threatened tariffs will be subject to negotiation and therefore shouldn't be considered as final," the analysts wrote in a note to clients.
"A (full-blown) trade war meanwhile would have a more pronounced effect. The US and China would suffer significant slowdown in real GDP growth - a cumulative loss around one percentage point," and cut global economic growth to 2.5% in 2019 from 3% in Oxford's baseline scenario.
Published in The Express Tribune, April 7th, 2018.
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