Thursday 13 December 2018

Beijing will defend its own trade interests, US warned

US Treasury Secretary Steven Mnuchin. Photo: Getty Images
US Treasury Secretary Steven Mnuchin. Photo: Getty Images

Ryan Woo

The United States has flouted trade rules with an inquiry into intellectual property and China will defend its interests, Vice Premier Liu He told US Treasury Secretary Steven Mnuchin in a telephone call.

The call between Mr Mnuchin and Mr Liu, a confidante of President Xi Jinping, was the highest-level contact between the two governments since US President Donald Trump announced plans for tariffs on up to $60bn (€48.5bn) of Chinese goods on Thursday.

The deepening rift has sent a chill through financial markets and the corporate world as investors predicted dire consequences for the global economy should trade barriers start going up.

Several US chief executives attending a high-profile forum in Beijing on Saturday, including BlackRock's Larry Fink and Apple's Tim Cook, urged restraint.

In his call with Mr Mnuchin, Mr Liu said China still hoped both sides would remain "rational" and work together to keep trade relations stable, the official Xinhua news agency reported.

US officials say an eight-month probe under the 1974 US Trade Act has found that China engages in unfair trade practices by forcing American investors to turn over key technologies to Chinese firms. However, Mr Liu said the investigation report "violates international trade rules and is beneficial to neither Chinese interests, US interests nor global interests".

In a statement on its website, the office of the US Trade Representative Robert Lighthizer said it had filed a request - at the direction of Mr Trump - for consultations with China at the World Trade Organisation to address "discriminatory technology licensing agreements".

China's commerce ministry expressed regret at the filing and said China had taken strong measures to protect the legal rights and interests of both domestic and foreign owners of intellectual property.

During a visit to Washington early this month, Mr Liu had requested Washington set up a new economic dialogue mechanism, identify a point person on China issues, and deliver a list of demands.

The Trump administration responded by telling China to immediately shave $100bn off its record $375bn trade surplus with the United States. Beijing told Washington that US export restrictions on some high-tech products are to blame.

"China has already prepared, and has the strength, to defend its national interests," Mr Liu said on Saturday.

According to an editorial by China's state-run 'Global Times', it was Mr Mnuchin who called Mr Liu. Firing off a warning shot, China on Friday declared plans to levy additional duties on up to $3bn of US imports in response to US tariffs on steel and aluminium, imposed after a separate US probe.

Zhang Zhaoxiang, senior vice president of China Minmetals, said that while the state-owned mining group's steel exports to the US are tiny, the impact could come indirectly.

"China's direct exports to the US are not big. But there will be some impact due to our exports via the United States or indirect exports," Mr Zhang said.

Reuters

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