To return to reason on trade, says tactics wont work

Saturday, 04 Aug, 2018

The Trump administration says it's looking into whether to increase the proposed tariff on 200 billion us dollar worth of Chinese imports from 10 percent to 25 percent.

Earlier this week, the White House said it was considering boosting tariffs on $200 billion worth of Chinese goods, raising those tariffs to 25 percent from 10 percent.

Trump has also "privately told advisers this week that he was intent on staying the course to punish China with additional tariffs", and the argument of Treasury Secretary Mnuchin, that negotiations should come before more tariffs, was "weakened by a recent and rapid depreciation in China's currency".

In its statement, however, the Chinese Commerce Ministry said China can achieve "high-quality" economic growth despite the toll exacted by tariffs: "China always holds on to the belief that bad things can be turned into good things".

Trump has threatened to escalate the conflict even more by taxing virtually all of the $500 billion worth of goods China ships annually to the United States.

Since China joined the World Trade Organization (WTO) in 2001, its current account has consistently maintained a surplus, however due to the recent trade conflict with the US that record of performance may be preparing to take a tumble. "Unilateral threats and pressure will only be counterproductive". China upholds the use of dialogue to resolve disputes but equal treatment and keeping to promises are pre-requisites for dialogue, it said in a statement.

If the Chinese government was hoping to see US President Donald Trump blink in the ongoing trade dispute, those hopes have been dashed.

In measured and balanced responses, China made two points.

The ministry said timing of the implementation of the new tariffs on USA goods would depend on the actions of the US.

The ministry also took note of what it said were conflicting White House messages: threats of higher tariffs but also signals it wants to resume settlement talks.

Lighthizer said he initiated this process on July 10.

Officials have cautioned that a specific timetable, the issues to be discussed and the format for talks aren't finalised, but added there was agreement among the principals that more discussions need to take place.

Despite lethargic expansion rates, the European Central Bank last week reaffirmed plans to end its 2.6 trillion-euro stimulus programme this year and the Bank of England is widely expected to raise borrowing costs on Thursday. "Regrettably, instead of changing its harmful behaviour, China has illegally retaliated against United States workers, farmers, ranchers and business", Lighthizer argued. "Nor did it make concerted efforts with China".

Mr. Wang, who is in Singapore for a Foreign Ministers' meeting, said the spat will not affect diplomatic cooperation with Washington on North Korea. Beijing retaliated by imposing similar charges on the same amount of US products. "This won't work on China", Geng was quoted by Reuters as saying.

Until now, China has matched U.S. tariff moves but not sought to escalate them, which has also probably also emboldened the White House to think it holds a stronger position on the escalation ladder.

China's government, however, shows no sign of bending to Washington's pressure.