Caixin
Feb 21, 2017 04:24 PM
ECONOMY

Chinese Commerce Minister Warns of ‘Reaction’ if U.S. Imposes Tariffs

(Beijing) — Chinese and U.S. economic interests are so interwoven that the consequences of a trade war would be too costly to afford, the Chinese commerce minister said Tuesday, but he also warned of a “reaction” if Washington were to impose punitive tariffs on Chinese goods.

“If the U.S. introduces detailed plans, China will assess them in a serious manner and react in accordance with the result of the assessment,” Gao Hucheng said at a news conference in response to a question about whether Beijing is prepared to deal with a potential rise in tariffs.

U.S. President Donald Trump promised during his campaign to label China a currency manipulator on his first day of office and threatened to slap a 45% tariff on imports from the country.

In a Twitter posting dated Feb. 3 — two weeks after his Jan. 20 inauguration — Trump wrote that the U.S. should charge its trading partners “the same” taxes or tariffs “as they charge us.”

Gao said all countries “must follow international trade rules while making their trade policies.”

Beijing would rather focus on the actual “attitude the new U.S. administration will take toward trade relations with China” than Trump’s campaign rhetoric, he said. Gao downplayed concerns over a possible trade war between the world’s two largest economies.

Economic relations between the two countries are “deeply intertwined” and their trade history has shown that both sides “will mutually benefit if we cooperate, and equally suffer losses if we fight,” Gao said.

“No matter how the U.S.-China policy changes, Sino-U.S. trade relations will eventually return to the principle of having mutual benefits and win-win results,” he said.

The recent telephone conversation between President Xi Jinping and Trump, as well as other exchanges between the two countries, have consolidated Beijing’s confidence in building “healthy and stable China-U.S. trade relations,” he added.

The U.S. is China’s top export market and accounted for 4.5%, or nearly $80 billion, of total foreign direct investment the country has received by the end of 2016, Gao said.

China is the fastest-growing export market outside North America for the U.S., and U.S. shipments to the Asian country increased by an average of 11% per year over the past decade, he said.

China now buys 26% of U.S.-exported Boeing Co. aircraft, 56% of its soybeans, 16% of its automobiles, 15% of its agricultural produce and 15% of its integrated circuits, he added.

Nonfinancial-sector investment by Chinese companies in the U.S. was nearly $50 billion yuan by the end of 2016 and created almost 100,000 jobs in the country, he said.

“Therefore, cooperation is the only correct choice for China and the United States, and that’s what Chinese and U.S. leaders have agreed on,” Gao told reporters.

“China and the U.S. should keep consultations and communications between us and appropriately resolve bilateral trade frictions and disputes through dialogue and cooperation. We don’t think a trade war should become an option.”

Contact reporter Fran Wang (fangwang@caixin.com)

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