China has responded guardedly to the decision by the United to States to raise tariffs on a raft of Chinese exports, signaling Beijing’s intent to play the “long game” and avoid a trade war.
The Chinese commerce ministry on Friday issued a statement stating its plan to impose fresh duties on US products, which would amount to $3 billion.
Earlier on Thursday, U.S. President Donald Trump announced a 25 % levy on Chinese goods worth around $60 billion.
The commerce ministry said it planned to impose a 25 % levy on 8 U.S. products, including pork and recycled aluminum, worth $2 billion.
Besides a 15 % tariff was in the pipeline on 120 items, such as fruit, nuts and wine as well as steel pipes,--altogether worth $1billion.
But the statement stressed that the U.S. should “pull back from the brink” and avoid the world’s two largest economies locking horns in a trade war. “China doesn't hope to be in a trade war, but is not afraid of engaging in one,” the ministry observed. China said that it would impose its own set of counter-tariffs only if the two countries were unable to resolve their trade differences.
According to a Xinhua report quoting the commerce ministry, Beijing’s proposed measures will be implemented in two stages. In the first stage, the 15% tariff will be levied if the two countries cannot reach an agreement on trade issues within a scheduled time. In the second stage, the 25% import tax will be imposed after evaluating the impact caused by the U.S. policies.
“With the restrained response, China hopes Mr. Trump can realise his errors and mend his ways,” Reuters quoted Xu Hongcai, deputy chief economist at the China Centre for International Economic Exchanges, a Beijing think tank.
“If we really want to counter, the strongest response would be to target soybean and automobiles. This would hurt the U.S.,” Mr. Xu observed. “China is ‘drawing its bow but not firing. We still have some cards to play.”
There could be room for dialogue as the presidential memorandum signed by U.S. President Donald Trump on Thursday said that there would be a 30-day consultation period that begins once a list of Chinese goods that are targeted is published. The U.S. side alleges that Chinese companies have been engaged in stealing U.S. intellectual property and indulging in forced technology transfers.
Analysts say that China’s proposed retaliation to the U.S. decision has so far been proportionate, and is in tune the rules of the World Trade Organisation rules, which allow “counter-safeguard measures” on
imported products.
In fact, the commerce ministry said on its website that the U.S. move, restricting imports on national security grounds, “has severely undermined the multilateral trade system led by the WTO, disrupted international trade order, and has drawn opposition from other WTO members”.
It added: “China will take legal action under the WTO framework and work with other WTO members to safeguard the stability and authority of the multilateral trade rules.”
In a conversation with The Hindu , John Ross senior fellow at Beijing’s Chongyang Institute of Financial Studies said that,” China is indicating clearly that it stands for the multilateral framework embodied in the WTO.”
He added: “This flows from its fundamental strategy that it is against a trade war but will defend itself if, against its wishes, it is attacked.”
Stock markets in Asia tumbled on Friday amid escalating trade tensions between the U.S. and China. The Indian benchmark equity indices lost more than 1 % each during the morning trading session following concerns related to a U.S.-China trade war.
