Source: Global Times    Published: 2018-9-18

Showing defiance in the face of intense pressure from the US, China on Tuesday said it would not back down from an escalating trade standoff with the US, vowing to take measures to counter the latest round of US tariffs on billions of dollars worth of Chinese goods.

Defying widespread opposition at home and abroad and global trade rules and norms, the US on Tuesday announced new tariffs on $200 billion worth of Chinese products while threatening to impose additional tariffs on all Chinese goods if China retaliates.

The announcement immediately drew a brief but firm response from China. In an online statement, the Chinese Ministry of Commerce (MOFCOM) said China would have to take countermeasures.

"To safeguard its legitimate rights and interests and the global free trade order, China will have to counter at the same pace," the statement said. "We hope the US realizes that this kind of behavior could lead to negative results and require convincing means to correct it in time."

In response to the US tariffs, China on Tuesday announced it would impose tariffs of 5 and 10 percent on $60 billion worth of US goods in more than 5,000 product categories, also starting Monday (September 24), the Customs Tariff Commission of the State Council said in a statement.

"The Chinese side reiterates once again that the aforementioned tariff measures are aimed at containing trade tensions from further escalating and is a forced response to US unilateralism and trade protectionism," it said.

China on Tuesday also filed a lawsuit at the WTO against the latest round of US tariffs, the MOFCOM said.

While Chinese officials refrained from announcing specific countermeasures on Tuesday, analysts said that China has options at its disposal to inflict pain on the US economy in defending its economic interests.

China has already announced tariffs on $60 billion worth of US goods in response to US tariffs on $200 billion in Chinese products, which analysts said would immediately take effect after the US tariffs are imposed.

Analysts have suggested that China could also put restrictions on Chinese-made parts, materials and equipment that the US is dependent on, take regulatory measures against US products and companies as well as unload its massive US Treasury holdings.

"While we can't openly discuss many options, China certainly has many ways of countering the US," said Huo Jianguo, vice chairman of the MOFCOM's China Society for WTO Studies. "Maybe some of these options are not ideal, and would hurt both sides, but to defend our own interests, we would have to do it."

Huo noted that by imposing the new tariffs, US President Donald Trump is trying to take advantage of recent downward pressure on the Chinese economy and project personal strength amid political turbulence at home, but such a move might be "misguided."

While China has seen slowing growth in investment and consumption, "our system makes the economy much more resilient," he said, "[Trump] is squandering the credibility and interests of the entire US."

Renewed uncertainty

The latest round of US tariffs, which are set to take effect on Monday, came just days after Chinese officials confirmed that US officials have invited them for a new round of talks in Washington.

While there is no official word on whether China has accepted the invitation, the MOFCOM statement said that the tariffs have brought "new uncertainties" to trade talks.

"The Chinese side has repeatedly stressed that dialogue and consultations based on fairness, integrity and mutual respect are the only correct course for addressing economic and trade issues between China and the US," Geng Shuang, a spokesperson for the Chinese Ministry of Foreign Affairs, told a routine press briefing on Tuesday. "Right now, the US actions do not reflect sincerity and goodwill."

Huo said that there is no way China can accept an invitation to trade talks with the imposition of new tariffs.

"It just doesn't work like that: pointing a gun at my head and forcing me to negotiate," Huo told the Global Times on Tuesday. "Such a tactic is beyond common sense and might work with other countries, but not with China."

He Weiwen, a former economic and commercial counselor at Chinese consulates in San Francisco and New York, said that whether it be imposing additional tariffs or inviting Chinese officials to new talks, the US' intention has not changed, which is to force China into making concessions.

"The US must understand that it has chosen the wrong target. China can't and won't back down," He told the Global Times on Tuesday, noting that China must be prepared for both talks and a fight.

Although the trade friction with the US is escalating, the Chinese government is increasing engagement with foreign companies in China.

On Monday, Chinese Commerce Minister Zhong Shan met with executives from six foreign companies, including two US firms. At the meeting, Zhong reassured executives that China would continue to open up, improve intellectual property protection and create a better business environment, read a statement released on MOFCOM's website.

This shows China's confidence in its economy and determination to push the opening-up to offset US tariffs, so that this could bring greater opportunities to friendly foreign companies and investors in China, analysts said.

He Weiwen is a senior fellow of Chongyang Institute for Financial Studies, Renmin University of China.