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China warns U.S. over Uighur bill, raising doubts over early trade deal

[December 04, 2019] By Se Young Lee and David Brunnstrom

BEIJING/WASHINGTON (Reuters) - China warned on Wednesday that the U.S. House of Representatives bill calling for a tougher U.S. response to Beijing's treatment of its Uighur Muslim minority will impact bilateral cooperation, clouding prospects for a near-term deal to end a trade war.

Expectations of a quick deal had receded already, after U.S. President Donald Trump said on Tuesday that it might take until late 2020 to reach agreement.

The U.S. House's approval of the Uighur Act of 2019, which still has to be approved by the Republican-controlled Senate before being sent to Trump, has angered Beijing and further strains an already testy relationship.

Several sources familiar with Beijing's stance told Reuters that the bill could jeopardize the so-called phase one deal already fraught with disagreements and complications.

With a new round of U.S. tariffs on Chinese goods scheduled to take effect in less than two weeks, the possibility of another breakdown is growing.

"Do you think if America takes actions to hurt China's interests we won't take any action," Chinese foreign ministry spokeswoman Hua Chunying told reporters when asked whether the Uighur bill will affect the trade negotiations. "I think any wrong words and deeds must pay the due price."

Negotiators have continued to work on the trade deal, but sources familiar with the talks say the two sides are still wrangling over the details including whether existing U.S. tariffs on Chinese goods will be removed and how much in additional U.S. agricultural products China will buy.

Bloomberg reported on Wednesday the U.S. and China are "moving closer" to agreeing on how much tariffs would be rolled back in a phase-one trade deal despite the Hong Kong and Xinjiang issues, citing people familiar with the talks.

U.S. Commerce Secretary Wilbur Ross told CNBC on Tuesday that staff-level trade negotiations with China were continuing but no high-level trade talks have been scheduled. The planned tariffs on remaining Chinese imports will take effect on Dec. 15 if there is no significant progress in the talks or a deal, he said.

Hua said China will not set any timeline or deadline for a trade deal and would take "decisive" countermeasures to defend its interests if Washington's protectionism and bullying over trade continues. She did not elaborate on what the measures might be.

One Chinese official, who declined to be identified, warned that U.S. implementation of the new round of tariffs scheduled on Dec. 15 will be countered by China with retaliatory tariffs - an outcome that the official said would seriously disrupt ongoing negotiations.

Another Chinese government official, who declined to be identified, said it may take a very long time for Washington and Beijing to reach a deal if they cannot find a way to strike a deal while "the iron is hot."

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A Chinese police officer takes his position by the road near what is officially called a vocational education centre in Yining in Xinjiang Uighur Autonomous Region, China September 4, 2018. REUTERS/Thomas Peter/File Photo

UIGHUR BILL

The Uighur bill, which was passed 407-1 in the Democratic-controlled House, requires the U.S. president to condemn abuses against Muslims and call for the closure of mass detention camps in its western region of Xinjiang. It calls on Trump to impose sanctions for the first time on a member of China's powerful politburo, Xinjiang Communist Party Secretary Chen Quanguo.

Beijing called the bill a malicious attack on China, demanded the United States keep it from becoming law and said it would act to defend its interests as necessary. [L1N28D1TH]

The U.S. Embassy in China, in an e-mail statement, told Reuters it would not speculate on China's possible counter-measures.

"We continue to call on the PRC to immediately release all those arbitrarily detained, and to end its draconian policies that for more than two years have terrorized its own citizens in Xinjiang," the statement said referring to the initials of China's official name, People's Republic of China.

The White House has yet to say whether Trump would sign or veto the bill, which contains a provision allowing the president to waive sanctions if he determines that to be in the national interest.

Dilxat Raxit, spokesman for the World Uyghur Congress, said in a statement the House bill is an important action opposing "China's continued push of extreme persecution" and that the organization looks forward to Trump signing it into law.

Analysts say China's response to the passage of the Uighur bill could be stronger than its reaction to the U.S. law supporting Hong Kong protesters. Beijing said on Monday it banned U.S. military ships and aircraft from visiting the island and sanctioned several U.S.-based non-government organizations.

Global Times, an influential tabloid published by the official newspaper of China's ruling Communist Party, tweeted on Tuesday that Beijing would soon release a so-called unreliable entities list imposing sanctions against those who harm China's interests.

The paper said China was expediting the process for the list because the U.S. House bill would "harm Chinese firms' interests", and that "relevant" U.S. entities would be among the targets.

(Reporting by David Brunnstrom, Patricia Zengerle and Matt Spetalnick in Washington, Steve Holland and William Schomberg in London, Se Young Lee and Huizhong Wu in Beijing; Editing by Raju Gopalakrishnan & Simon Cameron-Moore)

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