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EYE ON GLOBAL TRADE

A trade war will hurt US: China warns

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Chinese Foreign Minister Wang Yi issued the stern message as the Trump administration geared up to formally introduce steel and aluminium tariffs as early as Thursday despite global concerns.

Beijing

CHINA warned the United States on Thursday that everyone will be harmed if President Donald Trump launches a trade war, as official figures showed the Asian power maintained a robust trade surplus with the US.

Chinese Foreign Minister Wang Yi issued the stern message as the Trump administration geared up to formally introduce steel and aluminium tariffs as early as Thursday despite global concerns.

"Choosing a trade war is surely the wrong prescription, in the end you will only hurt others and yourself," Foreign Minister Wang Yi said.

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"China will certainly make an appropriate and necessary response," Mr Wang said at a press conference on the sidelines of the Communist Party's annual parliamentary session.

On Wednesday, at the World Trade Organization, China led a group of 18 members urging Mr Trump to scrap the planned tariffs, with its representative saying the levies would pose a systemic threat to the rules-based global trading system.

US imports from China of steel and aluminium make up a small proportion of its total imports from the world's second largest economy.

But the tariffs may be the first salvo in the brewing American trade war with Beijing.

In the coming weeks, the Trump administration plans to issue a report on China's intellectual property practices that's expected to hammer China and possibly bring about further tariffs on a wider range of Chinese imports.

"The US is acting swiftly on intellectual property theft. We cannot allow this to happen as it has for many years!" Mr Trump tweeted hours before Mr Wang took the stage in Beijing.

The US president also took to Twitter to say the US had asked China to "develop a plan for the year of a one-billion dollar reduction in their massive trade deficit with the United States."

"We look forward to seeing what ideas they come back with. We must act soon!" Mr Trump said.

The amount is a drop in the bucket when compared with the record US$375.2 billion trade deficit the US racked up with China last year.

Mr Trump's tweets follow China's moves to resolve the simmering trade tensions.

While Beijing has launched warning shots - like trade investigations into US goods such as sorghum, and hinted it could even take on soybeans, its largest US import - officials have worked to find a peaceful resolution.

President Xi Jinping sent his top economic aide, Liu He, to Washington to discuss trade issues last week on the heels of a similar visit by state councillor Yang Jiechi last month.

But Washington has shown little interest in negotiating, with Mr Liu's visit resulting in few major breakthroughs beyond a commitment to further talks on trade issues.

Tuesday's resignation of Mr Trump's top economic adviser Gary Cohn - who had held talks with Mr Liu during his visit - also throws cold water on the negotiations.

His departure leaves "nationalist" advisers like arch China sceptic Peter Navarro, author of "Death by China", and Commerce boss Wilbur Ross with the president's ear.

Last week, Mr Trump said "trade wars are good, and easy to win" when the US is losing billions on trade.

In Beijing, officials continue to search for a way out.

"The lessons of history show engaging in a trade war is never the right way to resolve problems," said foreign minister Wang.

Trade data released by China's customs administration on Thursday shows its massive trade surplus with the US - the root of Mr Trump's ire - far from finding a more even level.

The surplus with the US stood at US$21 billion in February, China's official data showed, more than double the US$10.4 billion surplus registered in February of last year.

"The bigger picture is that while China's trade surplus with most of the world has declined during the past year... its surplus with the US has continued to expand" said Julian Evans-Pritchard, China Economist at Capital Economics in a note.

February's surplus did edge downwards from the US$21.9 billion recorded in January and US$25.6 billion from December. AFP

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