China promises fast response as Trump readies tariffs

[Beijing] China vowed on Friday to strike back quickly if the US hurts its interests, with US President Donald Trump expected to unveil revisions to a tariff list targeting US$50 billion worth of Chinese goods. Washington and Beijing appeared increasingly to be headed toward a trade war after several rounds of negotiations failed to resolve US complaints over Chinese industrial policy, market access and a US$375 billion trade gap. "If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights," Chinese Foreign Ministry spokesman Geng Shuang told a regular daily news briefing. Mr Trump was due to give details on Friday (Saturday, Singapore time) of a revised list of 800 product categories, down from 1,300, according to an administration official and an industry source familiar with the list. Mr Trump has made up his mind to impose "pretty significant" tariffs on Chinese goods, another administration official said on Thursday. It remained unclear when Mr Trump would impose the tariffs, if he decides to do so. Several industry lobbyists told Reuters they expected the move to come as early as Friday, with publication of a Federal Register notice, or it could even be put off until next week. Washington has also completed a second list of possible tariffs on another US$100 billion in Chinese goods, in the expectation that China will respond to the initial US tariff list in kind, sources told Reuters. China has published its own list of threatened tariffs on US$50 billion in US goods, including soybeans, aircraft, and autos, and has said it would hit back if Washington followed up with further measures. Beijing and Washington have held three rounds of high-level talks since early-May that have yet to yield a compromise, with Mr Trump unmoved by a Chinese offer to buy an additional US$70 billion worth of US farm and energy products and other goods, people familiar with the matter have said. "The threshold to come to a consensus or a compromise seems high," Tai Hui, chief market strategist for Asia-Pacific at JP Morgan Asset Management wrote in a note. Renewed worries about an escalating trade conflict sent shares in Chinese telecoms gear maker ZTE Corp tumbling on Friday. The company has lost 30 per cent of its market value since resuming trade this week. ZTE last week agreed to pay a US$1 billion fine to the US government to end a crippling supplier ban imposed after it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea. Mr Trump's revised tariff list may exclude some consumer items from an earlier proposal to focus more on goods related to Beijing's Made in China 2025 program, according to a Eurasia Group report. The Made in China 2025 initiative is aimed at accelerating China's prowess and narrowing its competitiveness gap with the US and other industrial powers in key technologies such as robotics and semiconductors. While China has in recent months made incremental market-opening reforms in industries for which critics in the foreign business community say they were already planned, it has shown no inclination to yield on its core industrial policies. "US-China trade tensions will be long-lasting," said Yifan Hu, regional chief investment officer and chief China economist at UBS Wealth Management told a briefing in Beijing. "The trade skirmish is not just about the trade deficit and exchange rates, but about the rules of the game, market openness and intellectual property. It is also about values, governance and geopolitical disagreements," she said.

REUTERS