China holds back as it plays for time in trade conflict

Top News | Agencies and Jimmy Ding 13 Jul 2018

Officials in Beijing appear to be toning down their responses to US President Donald Trump's tariff threats amid a slowing economy, a falling stock market and a weakening currency.

Evidence of the shift continued yesterday when the Commerce Ministry held off detailing how it plans to retaliate against Trump's latest threat to impose tariffs on US$200 billion (HK$1.56 trillion) worth of Chinese-made goods.

Spokesman Gao Feng said the government will take "necessary" steps to hit back, but when pressed he stopped short of repeating a previous pledge to respond with "quantitative" and "qualitative" measures and did not outline specifics about which measures China would retaliate with.

To observers, the ever-so-slight change of tone suggests China could be playing for time with the aim of restarting stalled negotiations for a solution that would limit the need to unleash punitive measures that could hurt its own economy. For President Xi Jinping, gathering problems at home and abroad may be prompting a less confrontational course.

Gao said foreign firms operating in China would suffer in a trade war as he urged US companies to lobby their government to protect their interests.

"We hope US firms can do more to lobby the US government and work hard to defend their own interests," he said.

Gao said no negotiations between the two sides were going on currently, adding: "The precondition for negotiations is trust. From what I have learned, both sides have not been in touch about restarting talks."

On Wednesday, Beijing said it would hit back after the Trump administration raised the stakes in their trade dispute. It would bring to US$250 billion the total of Chinese goods impacted, once the latest list of duties takes effect after a two-month period.

Meanwhile, Sheng Liugang, assistant professor of the Department of Economics at the Chinese University of Hong Kong, said the initial tariffs will lead to a drop of US$15.4 billion of Chinese exports to the United States, while US exports to China worth US$120 billion would be lost under retaliation tariffs.

Beijing also cut its forecast for imports of soybeans - the most-valuable crop it buys from the United States - after it imposed a 25 percent retaliatory tariff on an array of agricultural goods, which could inflict pain in Trump-supporting states.

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