Business World

Sunday 25 August 2019

China seeks US 'sincerity' as tariff troubles escalate

SATURDAY INSIGHT

Tensions: US President Donald Trump has raised the stakes in the trade war. Photo: AFP/Getty Images
Tensions: US President Donald Trump has raised the stakes in the trade war. Photo: AFP/Getty Images
Targeted: Tech giant Huawei has been put on a business blacklist by the United States

Ben Blanchard

THE United States must show sincerity if it is to hold meaningful trade talks, China said yesterday, after US President Donald Trump had dramatically raised the stakes with a potentially devastating blow to Chinese tech giant Huawei.

China has yet to say whether or how it will retaliate against the latest escalation in trade tension between the countries.

Please log in or register with Independent.ie for free access to this article.

Log In

But state media has taken an increasingly strident tone, with the ruling Communist Party's 'People's Daily' newspaper publishing a front-page commentary that has evoked the patriotic spirit seen during past wars.

China's currency slid to its weakest in almost five months, although losses were capped after sources told Reuters that the central bank would ensure that the yuan did not weaken past the key seven-per-dollar level in the immediate term.

The world's two largest economies are locked in an increasingly acrimonious dispute that has seen them level escalating tariffs on each other's imports in the midst of negotiations, adding to fears about risks to global growth and knocking financial markets.

Foreign ministry spokesman Lu Kang, who was asked about state media reports suggesting that there would be no more US-China trade talks, said that China always encouraged resolving disputes between the two countries with dialogue and consultations.

"But because of certain things the US side has done during the previous China-US trade consultations, we believe if there is meaning for these talks, there must be a show of sincerity," he told a daily news briefing.

The US should observe the principles of mutual respect, equality and mutual benefit, he said. And it must also keep its word, Mr Lu said, without elaborating.

On Thursday, Washington put telecoms equipment maker Huawei Technologies, one of China's biggest and most successful companies, on a blacklist that could make it extremely difficult for the telecom giant to be able to do business with any US firms.

That followed Mr Trump's decision on May 5 to increase tariffs on $200bn (€179bn) worth of Chinese imports, a major escalation after the two sides appeared to have been close to reaching a deal in negotiations to end their trade battle. China can be expected to make preparations for a longer-term trade war with the United States, said a Chinese government official who has knowledge of the situation.

"Indeed, this is an important moment, but not an existential, live-or-die moment," the official said. "In the short term, the trade situation between China and the United States will be severe, and there will be challenges.

"Neither will it be smooth in the long run. This will spur China to make adequate preparations in the long term," the official added.

The impact of trade friction on China's economy is "controllable", the state planner said yesterday, pledging to take countermeasures as needed, Meng Wei, a spokeswoman for the National Development and Reform Committee (NDRC), told a media briefing.

'The South China Morning Post', citing an unidentified source, reported that a senior member of China's Communist Party said the trade war with the United States could reduce China's 2019 growth by one percentage point in the worst-case scenario.

Wang Yang, the fourth-most senior member of the party's seven-member Standing Committee, the top decision-making body, told a delegation of Taiwan businessmen on Thursday that the trade war would have an impact. But it would not lead to any structural changes, the paper said, citing an unidentified source who was at the meeting.

One company that says it has been making preparations is Huawei's Hisilicon unit, which purchases US semiconductors for its parent.

Its president told staff in a letter yesterday that the company had been secretly developing back-up products for years in case Huawei was one day unable to obtain the advanced chips and technology it buys from the US.

"Today, the wheel of destiny has turned and we have arrived at this extreme and dark moment, as a super-nation ruthlessly disrupts the world's technology and industry system," the company president said in the letter.

The letter was widely shared on Chinese social media.

It gained some 180 million impressions in the first few hours after it had been published on the Weibo microblogging site. "Go Huawei! Our country's people will always support you," wrote one Weibo user.

Reuters

Irish Independent

Also in Business