China vows to take ‘all legal measures’ to protect interests as US trade war looms

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As the Trump administration prepared on Thursday to slap trade sanctions on China, perhaps including restrictions on investment and tariffs on as much as $60bn worth of products, fears of a trade war heightened.

A Chinese foreign ministry spokeswoman said her country would “take all legal measures to protect our interest” if the US took “actions that will harm both China and itself”.

The US announcement will mark the end of a seven-month investigation into tactics China has used to challenge US supremacy in technology, including dispatching hackers to steal commercial secrets and demanding US companies hand over trade secrets in exchange for access to the Chinese market.

The Trump administration argues that years of negotiations have failed to produce results. Dozens of industry groups, however, sent a letter to Trump warning that “the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliation; stifling US agriculture, goods, and services exports; and raising costs for businesses and consumers”.

“It could be a watershed moment,” said Stephen Ezell, vice-president of global innovation policy at the Information Technology & Innovation Foundation, a thinktank. “The Trump administration’s decision to go down this path is illustrative that previous strategies have not borne the hoped-for fruit.”

Business groups mostly agree something needs to be done – but worry China will retaliate and start a trade war between the world’s two biggest economies.

“The sanctions are a very big deal,” said Mary Lovely, a Syracuse University economist and senior fellow at the Peterson Institute for International Economics. “The Chinese see them as a major threat and do not want a costly trade war.”

Speaking to reporters on Thursday Hua Chunying, a foreign ministry spokeswoman, referred to imports of US soya beans, airplanes, cotton and cars, saying they could be viewed as examples of “unequal” trade. The US also “refuses to export what China wants”, Hua said, possibly referring to restrictions on technology and military sales.

“We are firmly against unilateralism and protectionism,” Hua said. “China will not watch our legal interest being harmed. China will take all legal measures to protect our interest. We hope the US can understand the core of mutual benefits, do not take actions that will harm both China and itself.”

Trump’s move against China comes just as the US prepares to impose tariffs of 25% on steel and 10% on aluminium, sanctions that are meant to hit China but will probably fall hardest on allies such as South Korea and Brazil which ship more to the US.

Trump campaigned on promises to bring down America’s trade deficit – $566bn last year – by rewriting trade agreements and cracking down on what he called abusive practices. But he was slow to act. In January, he imposed tariffs on imported solar panels and washing machines. Then he unveiled the steel and aluminium tariffs, saying reliance on imported metals jeopardised US national security.

At first it looked like Trump and the Chinese president, Xi Jinping, were going to get along. They enjoyed an amiable summit at Trump’s Mar-a-Lago resort in Florida. But longstanding complaints about Chinese economic practices continued to simmer.

The Chinese premier, Li Keqiang, this week urged Washington to act “rationally” and promised to open China up to more foreign products and investment.

Lovely said: “China has been trying to cool things down for weeks. They have offered concessions. Nothing seems to cool the fire. I fear they will take a hard line now that their efforts have been rebuffed … China cannot appear subservient to the US.”

On Thursday, foreign ministry spokeswoman Hua said some reports on the issue had used the term “economic invasion”.

“We really don’t like this expression,” she said. “We cannot understand, or accept this expression. No matter in which way some people explain it, this expression can not be the one to describe China.”

Hua added that China hoped “that two sides can sit and talk calmly. On the principle of equality and mutual respect, we seek ways to guarantee mutual benefits through constructive dialogues and discussion”.

But she said: “China will not just sit and watch its legal interest be harmed. China will take all necessary measures to uphold its interest.”

Source: The Guardian