[180918.EN.BIZ] China Not Happy to Just Play Defense in Trade War: China Report

A WIDELY read Chinese tabloid, Global Times, which is published by the ruling Communist Party's People's Daily, has warned in an editorial that China will not be content to only play defense in an escalating trade war with the United States, as President Donald Trump was expected to announce new tariffs on US$200 billion in Chinese goods.

Beijing may also decline to participate in proposed trade talks with Washington later this month if the Trump administration goes ahead with the additional tariffs, the Wall Street Journal reported, citing Chinese officials.

The Journal report quoted one senior Chinese advisory official saying China would not negotiate "with a gun pointed to its head."

The United States and China have already levied duties on $50 billion worth of each other's goods in an intensifying row that has jolted global financial markets in the past few months.

Last week, the world's two biggest economies appeared to be making progress on the trade snag after the US Treasury Department invited senior Chinese officials including Vice Premier Liu He for more talks.

However, a senior administration official told Reuters over the weekend that Mr Trump is likely to announce the new tariffs as early as Monday (September 17).

"It is nothing new for the US to try to escalate tensions so as to exploit more gains at the negotiating table," the Global Times said in the editorial on Monday.

"We are looking forward to a more beautiful counter-attack and will keep increasing the pain felt by the US," the Chinese-language column said.

Besides retaliating with tariffs, China could also restrict export of goods, raw materials and components core to US manufacturing supply chains, former finance minister Lou Jiwei told a Beijing forum. Mr Lou is chairman of the National Council for Social Security Fund.

One person, who attended the event and is familiar with the White House's thinking, said such a move would likely attract sharp retaliation from Washington, which has studied its own limits on exporting key technologies to China.

"Lou Jiwei's approach would feed the most hawkish sentiments in the US government," the person said, declining to be identified given the sensitivity of the matter.

Trump has demanded that China cut its $375 billion trade surplus with the US, end policies aimed at acquiring US technologies and intellectual property and roll back high-tech industrial subsidies.

Source : HKSG.