China rebuffs Trump claim U.S. tariffs are making firms leave

[May 21, 2019]  BEIJING (Reuters) - Foreign investors remained enthusiastic about China, the foreign ministry said on Tuesday, following U.S. President Donald Trump's claim that his tariffs are causing companies to move production away from the world's second largest economy.

Trump said in an interview aired on Sunday that his tariffs on Chinese goods are causing companies to move manufacturing out of China to Vietnam and other Asian countries, and added that any agreement to end a trade war with China cannot be a "50-50" deal.

No further trade talks between top Chinese and U.S. trade negotiators have been scheduled since the last round ended on May 10 - the same day Trump raised the tariff rate on $200 billion worth of Chinese products to 25% from 10%.

Trump took the step after China sought major changes to a deal that U.S. officials said had been largely agreed.

Since then, China has struck a sterner tone in its rhetoric, suggesting that a resumption of talks aimed at ending the 10-month trade war was unlikely to happen soon.

Chinese foreign ministry spokesman Lu Kang, responding to a question on Trump's claim at a daily news briefing, said foreign investors were "still bullish" on China.

"Even though over the past year or more the United States has continued to menace Chinese products with additional tariffs, everyone can see that the enthusiasm for foreign investors in China remains high," Lu said.

Lu listed companies, including Tesla, BASF and BMW, as all having recently increased their investment in China. He added that China would continue to improve business and investment conditions for foreign companies.

But foreign firms have grown weary of what they say are China's piecemeal economic reforms.

A worker cycles past containers outside a logistics center near Tianjin Port, in northern China, May 16, 2019. REUTERS/Jason Lee

Long considered a cornerstone of an otherwise fraught bilateral relationship, the U.S. business community in China in recent years has advocated a harder line on what it sees as discriminatory Chinese trade policies.

The American Chamber of Commerce in China said in February that a majority of its members reported in an annual survey that they favored the United States retaining tariffs on Chinese goods while Washington and Beijing try to hammer out a deal to end the trade war.

At the time, which was well before the latest tariff hikes, the chamber said that 19% of its member companies were adjusting supply chains or seeking to source components and assembly outside of China as a result of tariffs, while 28% were delaying or cancelling investment decisions in China.

China's other trade partners also complain about unfair treatment.

The European Union Chamber of Commerce in China said on Monday that compelled transfers of technology to Chinese firms in exchange for market access are increasing for European companies despite Beijing saying the problem does not exist.

Resolving that issue in an enforceable manner is a core U.S. demand in trade negotiations.

(Reporting by Ben Blanchard; Writing by Michael Martina; Editing by Simon Cameron-Moore)

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