China warns US over Uighur bill, raising doubts over early trade deal

[BEIJING] China warned on Wednesday that US legislation calling for a tougher response to Beijing's treatment of its Uighur Muslim minority will affect bilateral cooperation, clouding prospects for a near-term deal to end a trade war.

Expectations of a quick deal had receded already, after US President Donald Trump said on Tuesday that it might take until late 2020 to reach agreement.

Approval by the US House of Representatives of the Uighur Act of 2019, which still requires passage by by the Republican-controlled Senate before being sent to Mr Trump, has angered Beijing and further strained an already testy relationship.

Several sources familiar with Beijing's stance told Reuters that the bill could jeopardize the so-called phase one trade deal already fraught with disagreements and complications.

With a new round of US tariffs on Chinese goods scheduled to take effect in less than two weeks, the possibility of another breakdown is growing.

"Do you think if America takes actions to hurt China's interests we won't take any action," Chinese foreign ministry spokeswoman Hua Chunying told reporters when asked whether the Uighur bill would affect the trade negotiations. "I think any wrong words and deeds must pay the due price."

Negotiators have continued to work on the trade deal. But sources familiar with the talks say the two sides are still wrangling over the details including whether existing US tariffs on Chinese goods will be removed and how much in additional U.S. agricultural products China will buy.

Bloomberg reported on Wednesday that Washington and Beijing are "moving closer" to agreeing on how much tariffs would be rolled back in an initial trade deal despite the Hong Kong and Xinjiang issues, citing people familiar with the talks.

US Commerce Secretary Wilbur Ross told CNBC on Tuesday that staff-level trade negotiations with China were continuing but no high-level trade talks had been scheduled. Planned US tariffs on remaining Chinese imports will take effect on Dec 15 barring significant progress in the talks, or a deal, he said.

Ms Hua said China would set no timeline or deadline for a trade deal and would take "decisive" countermeasures to defend its interests if what she called US protectionism and bullying over trade continued.

She did not elaborate on what the measures might be.

A Chinese official who declined to be identified warned that US implementation of the new round of tariffs scheduled on Dec 15 will be countered by China with retaliatory tariffs - an outcome the official said would seriously disrupt ongoing negotiations.

Another Chinese government official who declined to be identified said it may take a very long time for Washington and Beijing to reach a deal if they cannot find a way to strike a deal while "the iron is hot."

The Uighur bill, which was passed 407-1 in the Democratic-controlled House, requires the US president to condemn abuses against Muslims and call for the closure of mass detention camps in its western region of Xinjiang. It urges Mr Trump to impose sanctions for the first time on a member of China's powerful politburo, Xinjiang Communist Party Secretary Chen Quanguo.

Beijing called the bill a malicious attack on China, demanded the United States keep it from becoming law and said it would act to defend its interests as necessary.

Vice Foreign Minister Qin Gang made "stern representations" to William Klein, the US embassy's minister counselor for political affairs, and urged the United States to stop interfering in China's domestic affairs, state TV reported.

The US Embassy in China, in an e-mail statement, told Reuters it would not speculate on China's possible counter-measures.

"We continue to call on the PRC to immediately release all those arbitrarily detained, and to end its draconian policies that for more than two years have terrorized its own citizens in Xinjiang," the statement said, using the initials of China's official name, People's Republic of China.

The White House has yet to say whether Mr Trump would sign or veto the bill, which contains a provision allowing the president to waive sanctions if he determines that to be in the national interest.

Dilxat Raxit, spokesman for the World Uyghur Congress, said the House bill was an important action opposing "China's continued push of extreme persecution", and that the organisation looks forward to Mr Trump signing it into law.

Analysts say China's response to the passage of the Uighur bill could be stronger than its reaction to the US law backing Hong Kong protesters. Beijing said on Monday it banned US military ships and aircraft from visiting the island and sanctioned several U.S.-based non-government organisations.

Global Times, an influential tabloid published by the official newspaper of China's ruling Communist Party, tweeted on Tuesday that Beijing would soon release a so-called unreliable entities list imposing sanctions against those who harm Chinese interests.

It said China was expediting the process for the list because the US House bill would "harm Chinese firms' interests", and that "relevant" US entities would be among the targets. 

REUTERS