Washington's 'capricious' trade actions will hurt U.S.
workers, China warns
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[June 21, 2018]
By Yawen Chen and Se Young Lee
BEIJING (Reuters) - China's commerce
ministry on Thursday accused the United States of being "capricious"
over bilateral trade issues, and warned that the interests of U.S.
workers and farmers ultimately will be hurt by Washington's penchant for
brandishing "big sticks".
Previous trade negotiations with the United States were constructive,
but Beijing has had to respond in a strong manner due to the U.S. tariff
threats, commerce ministry spokesman Gao Feng said.
President Donald Trump threatened on Monday to hit $200 billion of
Chinese imports with 10 percent tariffs if Beijing retaliates against
his previous announcement to target $50 billion in imports. The United
States has accused China of stealing U.S. intellectual property, a
charge Beijing denies.
Washington's accusations of forced tech transfers are a distortion of
reality, and China is fully prepared to respond with "quantitative" and
"qualitative" tools if the U.S. releases a new list of tariffs, Gao told
a regular briefing in Beijing.

China could hit back at U.S. firms listed on the Dow Jones Industrial
Average if Trump keeps heightening tension with Beijing over trade,
state-controlled Chinese tabloid the Global Times said on Thursday.
The 30-stock Dow, which counts Boeing Co, Apple Inc and Nike Inc among
its constituents, fell 0.17 percent on Wednesday and has declined 0.25
percent this year. By contrast, China's benchmark Shanghai Composite
Index has slumped 13.1 percent year-to-date.
"It is deeply regrettable that the U.S. has been capricious, escalated
the tensions, and provoked a trade war," Gao said. "The U.S. is
accustomed to holding 'big sticks' for negotiations, but this approach
does not apply to China."
White House trade adviser Peter Navarro, who views China as a hostile
economic and military power, said on Tuesday Trump's actions were a
necessary defense of the "crown jewels" in the U.S. economy.
None of the U.S. administration's efforts to negotiate with Beijing had
yielded progress on changing China's "predatory" trade practices,
Navarro said.
Fending off criticism from some Western countries, China has said it is
willing to boost imports and widen market access.
In April, President Xi Jinping told a high-profile Chinese forum that
import tariffs would be cut on goods such as cars, among other promises.
In May, Beijing said it would lower import tariffs on 1,449 consumer
goods, starting from July 1.
"I've been honoring my words with actions," Xi told a group of foreign
chief executives in Beijing on Thursday.
OPEN TRADE CONFLICT
Xi said countries should not fight among themselves, but instead
cooperate and meet challenges together, adding that the last global
financial crisis happened not too long ago.

"We still have vivid memories of what happened during the financial
crisis and we are not yet fully recovered," he said.
"We must also stay vigilant because, as economic growth still lacks
momentum, we have seen a surge of trade protectionism, isolationism and
populism."
Global financial markets have shuddered this week amid worries about
open trade conflict between the world's two biggest economies.
Three rounds of high-level talks since early May failed to reach a
compromise on U.S. complaints over Chinese practices and its record
deficit with China.
Last year, the deficit was about $375 billion, as China imported $129.89
billion of U.S. goods, while the United States purchased $505.47 billion
of Chinese products, according to U.S. data.
A Sino-U.S. trade war could disrupt global supply chains for the tech
and auto industries, sectors heavily reliant on outsourced components,
and derail world growth.
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China's Ministry of Commerce spokesperson Gao Feng attends a news
conference at the commerce ministry in Beijing, China, June 19,
2018. REUTERS/Thomas Peter

"U.S. unilateral protection measures will ultimately harm the interests of U.S.
companies, workers and farmers," Gao told reporters.
British forecaster Oxford Economics, in a recent note, said it "will not be easy
for the U.S. to identify $200 billion worth of Chinese imports that it can levy
tariffs on without hurting U.S. companies and/or consumers, given the strong
involvement of U.S. companies in a large share of China's exports to the U.S."
Gao said China and the U.S. were due to negotiate on issues around the
manufacturing and service industries in the near future.
Chinese shares fell on Thursday on investor worries about the trade dispute,
with the Shanghai index languishing at a two-year low and stocks of about 100
firms down by the daily limit of 10 percent.
"I suspect that the U.S. indices will start to sniff out the specific losers
from this trade war, and individual stocks will get hurt much more than the
broad index as investors understand this isn't going to kill global growth,"
Andrew Polk, co-founder of research firm Trivium China, told the Reuters Global
Markets Forum.
"But it will impact some companies disproportionately."
EVEN MORE TARIFFS
China said it would impose additional tariffs on 659 U.S. goods, with duties on
545 to kick in on July 6, after Trump said Washington would levy tariffs on $50
billion of Chinese products.
Beijing's planned tariffs would add to duties it had already slapped on 128 U.S.
goods, such as pork, fruits and nuts, in reaction to Trump's earlier move to
impose taxes on Chinese steel and aluminum.

The U.S. goods affected on July 6 also include pork and fruit, as well as
soybeans, autos and an array of marine products.
A trade war would hit U.S. farmers, a vast majority of whom supported Trump in
the 2016 election.
"Jobs for the Chinese are just as precious as those for the Americans," Zha
Daojiong, a professor of international political economy at Peking University,
told Reuters in an email.
"It will be wise for the two sides to come back to the negotiation table, abide
by a temporary agreement and turn down the rhetoric."
Beijing has yet to set a tariff activation date for the remaining 114 U.S.
products, which include crude oil, coal and a host of refined fuel products.
"We cannot be soft with Trump. He is using his 'irrationality' as a tactic and
he is trying to confuse us," said Chen Fengying, an economics expert at
state-backed China Institutes of Contemporary International Relations.
"But if we could accomplish some of the things that he wants us to do - such as
IP, market reforms, he'd be helping us. Of course there are risks, those would
depend on how we handle those reforms."
(Reporting by Se Young Lee and Yawen Chen; Additional reporting by Ben Blanchard
in BEIJING and Divya Chowdhury in MUMBAI; Writing by Ryan Woo; Editing by Sam
Holmes and Clarence Fernandez)
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