China raises tariffs on billions of US products as likely retaliation
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China on Wednesday issued a $50 billion list of U.S. goods including soybeans and aircraft targeted for possible retaliation in an escalating technology dispute with Washington that companies worry could set back the global economic recovery.
The Chinese tax agency said the date the 25 percent tariff hike might take effect would be announced later depending on what U.S. President Donald Trump’s government does about plans to raise duties on a similar amount of Chinese goods. A Commerce Ministry statement said China was protecting its “legitimate rights and interests.”
Chinese authorities warned they would respond with the “same strength” after U.S. authorities issued a list of Chinese goods Tuesday targeted for 25 percent duties in response to complaints Beijing pressures foreign companies to hand over technology.
China’s list of 106 products included the biggest U.S. exports to China, reflecting Beijing’s intense sensitivity to the dispute over complaints it pressures foreign companies to hand over technology.
Market bleeding because of trade war fearNifty & banknifty (@BankniftyNifty) 4 April 2018
China sets new tariff rate on US products (increase by 25%)
New tarrif rates includes 106 products pic.twitter.com/kPi5mgUnOx
The clash reflects the tension between President Donald Trump’s promises to narrow the multibillion-dollar U.S. trade deficit with China and the ruling Communist Party’s ambitious development plans. Those include using access to China’s vast market as leverage to induce foreign automakers and other companies to help create or improve industry and technology.
China said it would immediately challenge the U.S. move in the World Trade Organization.
“It’s our hope that both sides will bear in mind our interests and work in a constructive manner to jointly tackle the challenges we face instead of acting in a willful way or doing anything that will significantly undermine the interests of both nations,” said a deputy finance minister, Zhu Guangyao, at a news conference.
Zhu warned against expecting Beijing to give in. “Pressure from the outside will only urge and encourage the Chinese people to work even harder,” he said.
The proposed Chinese increase mirrors the possible 25 percent tariffs on goods announced Tuesday by the Trump administration including aerospace, telecoms and machinery.
The American list strikes at high-tech industries seen by Chinese leaders as the key to the country’s economic future.
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!Donald J. Trump (@realDonaldTrump) 4 April 2018
Companies and economists have expressed concern growing global economic activity might cool if other governments are prompted to raise their own import barriers.
The dispute “may compel countries to pick sides,” said Weiliang Chang of Mizuho Bank in a report.
American companies have long chafed under Chinese regulations that require them to operate through local partners and share technology with potential competitors in exchange for market access. Business groups say companies feel increasingly unwelcome in China’s state-dominated economy and are being squeezed out of promising industries.
Chinese policies “coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises,” said a USTR statement.
A report released Tuesday by the USTR also cited complaints Beijing uses cyber spying to steal foreign business secrets, but it was unclear whether the latest tariff hike was in response to that.
China’s list on Wednesday included soybeans, the biggest U.S. export to China, and aircraft that weigh up to 45 tons. That excludes much heavier Boeing jetliners, leaving Beijing additional high-profile targets for possible future rounds of the conflict.
Other products on the list include American beef, whisky, passenger vehicles and industrial chemicals.
The Global Times newspaper, published by the ruling party and known for its nationalistic tone, suggested Beijing also might target service industries in which the United States runs a trade surplus. Regulators have wide discretion to withhold licenses or take other action to disrupt logistics and other service businesses.
“What China needs to do now is to make the United States pay the same price” so Americans “understand anew the Chinese-U.S. strength relationship,” said the newspaper.
The USTR also launched a WTO case last month challenging Chinese policies it said unfairly limit foreign companies’ ability to control their technology.
U.S. authorities say Beijing denies foreign companies the right to block use of technology by a Chinese entity once a licensing period ends and imposes contract terms that are less favorable than for local technology.
Foreign companies are increasingly alarmed by initiatives such as Beijing’s long-range industry development plan, dubbed “Made in China 2025,” which calls for creating Chinese global leaders in electric cars, robots and other fields. Foreign companies complain that strategy appears to limit or outright block access to those industries.
Beijing reported a trade surplus of $275.8 billion with the United States last year, or two-thirds of Beijing’s global total. Washington reports different figures that put the gap at a record $375.2 billion.
China has accused Trump of damaging the global system of trade regulation by taking action under U.S. law instead of through the WTO.