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US-CHINA-TRADE-POLITICS
China accuses Trump of ‘blackmail’ after new tariffs threat
BEIJING, June 19, 2018 (BSS/AFP) – Beijing on Tuesday accused Donald Trump
of “blackmail” and warned it would retaliate in kind after the US president
threatened to impose fresh tariffs on Chinese goods, pushing the world’s two
biggest economies closer to a trade war.
Trump said on Monday he had asked the US Trade Representative to target
$200 billion worth of imports for a 10 percent levy, citing China’s
“unacceptable” move to raise its own tariffs.
He added he would identify an extra $200 billion of goods — for a possible
total of $450 billion, or most Chinese imports — “if China increases its
tariffs yet again”.
“Further action must be taken to encourage China to change its unfair
practices, open its market to United States goods and accept a more balanced
trade relationship with the United States,” Trump said in a statement.
Last week, he announced 25 percent tariffs on $50 billion in Chinese
imports, prompting Beijing to retaliate with matching duties on US goods.
The US leader warned Friday of “additional tariffs” should Beijing hit back
with tit-for-tat measures.
“The trade relationship between the United States and China must be much
more equitable,” he said in explaining his latest decision.
“I have an excellent relationship with President Xi (Jinping), and we will
continue working together on many issues. But the United States will no
longer be taken advantage of on trade by China and other countries in the
world.”
China’s commerce ministry immediately responded by saying the US “practice
of extreme pressure and blackmail departed from the consensus reached by both
sides during multiple negotiations and has also greatly disappointed
international society”.
“If the US acts irrationally and issues a list, China will have no choice
but to take comprehensive measures of a corresponding number and quality and
take strong, powerful countermeasures.”
The news hit stock markets in Asia, with Shanghai down almost four percent
and Shenzhen tumbling nearly six percent, while Hong Kong fell more than two
percent. Leading the fall in Hong Kong was Chinese telecom giant ZTE,
plunging nearly 26 percent and shedding nearly two-thirds of its value since
striking a deal with the Trump administration to lift a ban on using critical
US components.
But on Monday, the US Senate defied Trump by voting to overrule his
administration’s deal with legislation to reimpose the ban on hi-tech chip
sales to the company, whose fate has figured prominently in the trade talks.
Trump is moving forward with the trade measures after months of sometimes
fraught shuttle diplomacy in which Chinese offers to purchase more American
goods failed to assuage his grievances over a widening trade imbalance and
China’s aggressive industrial development policies. China had offered to ramp
up purchases of American goods by $70 billion to help cut its yawning trade
surplus with the United States, whereas Trump had demanded a $200 billion
deficit cut.
“Disregarding the consensus reached by the two countries, the US is playing
fast and loose and once again stirring up a trade war,” said China’s foreign
ministry spokesman Geng Shuang.
“This way of doing things breaks faith with everyone,” Geng said.
– ‘Unacceptable’ –
The China trade offensive is only one side of Trump’s multi-front battle
with the United States’ economic partners as he presses ahead with his
protectionist “America First” agenda.
Since June 1, steel and aluminium imports from the European Union, Canada
and Mexico have been hit with tariffs of 25 percent and 10 percent,
respectively.
“This latest action by China clearly indicates its determination to keep
the United States at a permanent and unfair disadvantage, which is reflected
in our massive $376 billion trade imbalance in goods,” Trump said of China’s
retaliatory tariffs.
“This is unacceptable.”
Two decades ago, China’s economy was largely fuelled by exports, but it
has made progress in rebalancing towards domestic investment and consumption
since the global financial crisis erupted last decade — limiting the damage
trade tariffs could inflict on Beijing.
Still, strong exports this year have lifted the economy, which is now
showing signs of losing steam under the weight of Beijing’s war on debt,
launched to clean up financial risks and rein in borrowing-fuelled growth.
Initially, 545 US products valued at $34 billion will be targeted by
China, mimicking the Trump administration’s tariff rollout.
Beijing wants to “demonstrate that things will be done their way or not at
all,” said Christopher Balding, an economics professor at Shenzhen’s HSBC
Business School, who believes Chinese policymakers prefer demonstrations of
“power and control” over “technical policy rightness.”
“It is a game of chicken,” Balding said.
So far Beijing has targeted major American exports to China such as
soybeans, which brought in $14 billion in sales last year, and are grown in
states that supported Trump during the 2016 presidential election, as well as
other politically sensitive products.
Officials also drew up a second list of $16 billion in chemical and energy
products to hit with new tariffs, though China did not announce a date for
imposing them.
More American targets are likely to follow as soon as the Trump
administration follows through with publishing an expanded tariff list.
BSS/AFP/RY/1722 hrs