China vows to protect its interests from 'reckless' U.S. trade threats

[May 30, 2018]  By Michael Martina and Ben Blanchard

BEIJING (Reuters) - China lashed out on Wednesday at renewed threats from the White House on trade, warning that it was ready to fight back if Washington was looking for a trade war, days ahead of a planned visit by U.S. Commerce Secretary Wilbur Ross.

In an unexpected change in tone, the United States said on Tuesday that it still held the threat of imposing tariffs on $50 billion of imports from China unless it addressed the issue of theft of American intellectual property.

Washington also said it will press ahead with restrictions on investment by Chinese companies in the United States as well as export controls for goods exported to China.

Its tougher stance comes as President Donald Trump prepares for a June 12 summit with North Korean leader Kim Jong Un, whose key diplomatic backer is China, and as Washington steps up efforts to counter what it sees as Beijing's efforts to limit freedom of navigation in the South China Sea.

The trade escalation came after the two sides had agreed during talks in Washington this month to find steps to narrow China's $375 billion trade surplus. Ross is expected to try to get China to agree to firm numbers to buy more U.S. goods during a June 2-4 visit to the Chinese capital.

"We urge the United States to keep its promise, and meet China halfway in the spirit of the joint statement," Chinese Foreign Ministry spokeswoman Hua Chunying told a daily news briefing, adding that China would take "resolute and forceful" measures to protect its interests if Washington insists upon acting in an "arbitrary and reckless manner".

"When it comes to international relations, every time a country does an about face and contradicts itself, it's another blow to, and a squandering of, its reputation," Hua said.

China has said it will respond in kind to threats by Trump to impose tariffs on up to $150 billion of Chinese goods.

It was not clear if the developments would have any impact on the planned visit to China by Ross. China's Foreign Ministry referred questions to the Commerce Ministry, which did not reply to a fax seeking comment.

Several U.S. officials arrived in Beijing on Wednesday for talks, according to a U.S. embassy spokeswoman, including Under Secretary of Agriculture Ted McKinney; the U.S. Trade Representative's chief agricultural negotiator, Gregg Doud; and Commerce Department Deputy Assistant Secretary Alan Turley.

Trade war fears had receded after the Trump administration said it had reached a deal to put ZTE Corp back in business after banning China's second-biggest telecoms equipment maker from buying U.S. technology parts for seven years.

The easing in tension had fueled optimism that agreement was imminent for Chinese antitrust clearance for San Diego-based Qualcomm Inc's $44 billion purchase of Netherlands-based NXP Semiconductors NV, which has been hanging in the balance amid the trade dispute.

 Containers are seen at the Yangshan Deep Water Port in Shanghai, China April 24, 2018. REUTERS/Aly Song/File Photo

A team of Qualcomm lawyers that is expecting to meet with Chinese regulators ahead of Ross's arrival remained in San Diego as of late Tuesday, a source familiar with the matter said.

"On hold now," another person familiar with Qualcomm's talks with the Chinese government said on Wednesday, declining to be identified as the negotiations are confidential.

"Trump is crazy. Crazy tactics might work, though," the person added.

TARIFFS AND TACTICS

William Zarit, chairman of the American Chamber of Commerce in China, said the U.S. threat of tariffs appeared to have been "somewhat effective".

"I don't think it is only a tactic, personally," he told reporters on Wednesday, adding that the group does not view tariffs as the best way to address the trade frictions.

"The thinking became that if the U.S. doesn't have any leverage and there is no pressure on our Chinese friends, then we will not have serious negotiations."

The Global Times, an influential tabloid run by the ruling Communist Party's official People's Daily, said the United States was suffering from a "delusion" and warned that the "trade renege could leave Washington dancing with itself".

State news agency Xinhua said China hoped that the United States would not act impulsively but stood ready to fight to protect its own interests.

"China will continue to hold pragmatic consultations with the United States' delegation and hope that the United States will act in accordance with the spirit of the joint statement."

Also on Tuesday, a White House official said the U.S. government plans to shorten the length of visas issued to some Chinese citizens as part of a strategy to prevent intellectual property theft by U.S. rivals.

Citing a document issued by the Trump administration in December, the official said the U.S. government would consider restrictions on visas for science and technology students from some countries.

(Additional reporting by Brenda Goh in SHANGHAI and Matthew Miller, Ben Blanchard, Dominique Patton and Yawen Chen in BEIJING; Writing by Ryan Woo and Tony Munroe; Editing by Kim Coghill)

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