Tuesday 22 January 2019

China lists $50bn of US goods which could face tariff hikes

Beijing responded after the the US issued a list of products subject to its own increases.

Zhu Guangyao (Andy Wong/AP)
Zhu Guangyao (Andy Wong/AP)

By Joe McDonald

China has issued a 50 billion dollar (£27 billion) list of US goods set for possible tariff hikes in an escalating technology dispute that companies worry could set back the global economic recovery.

The country’s tax agency gave no date for the 25% increase to take effect and said that will depend on what President Donald Trump does about US plans to raise duties on a similar amount of Chinese goods.

Beijing’s list of 106 products included the biggest US exports to China, such as soybeans and small aircraft, reflecting its intense sensitivity to the dispute over US complaints that it pressures foreign companies to hand over technology.

It must be said, we have been forced into taking this action Wang Shouwen

The clash reflects the tension between Mr Trump’s promises to narrow a US trade deficit with China that stood at 375 billion dollars (£267 billion) last year and the ruling Communist Party’s development ambitions.

Mr Trump said that the US lost a trade war with China “years ago”.

In a tweet after China announced its new list, he said: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.”

Regulators use access to China’s vast market as leverage to press foreign car makers and other companies to help create or improve industries and technology.

A list the US issued on Tuesday of products subject to tariff hikes included aerospace, telecoms and machinery, striking at hi-tech industries seen by China’s leaders as the key to its economic future.

China said it would immediately challenge the US move at the World Trade Organisation.

“It must be said, we have been forced into taking this action,” a deputy commerce minister, Wang Shouwen, said at a news conference. “Our action is restrained.”

A deputy finance minister, Zhu Guangyao, appealed to Washington to “work in a constructive manner” and avoid hurting both countries.

He warned against expecting Beijing to back down: “Pressure from the outside will only urge and encourage the Chinese people to work even harder.”

Targeted goods include whisky, beef, passenger vehicles and industrial chemicals (Andy Wong/AP)

Companies and economists have expressed concern that improved global economic activity might falter if other governments are prompted to raise their own import barriers.

American companies have long chafed under Chinese regulations that require them to operate through local partners and share technology with potential competitors in exchange for market access.

Business groups say companies feel increasingly unwelcome in China’s state-dominated economy and are being squeezed out of promising industries.

Chinese policies “coerce American companies into transferring their technology” to Chinese enterprises, said a US Trade Representative statement (USTR).

Foreign companies are increasingly alarmed by initiatives such as Beijing’s long-range industry development plan, dubbed “Made in China 2025”, which calls for creating global leaders in electric cars, robots and other fields. Companies complain that might block access to those industries.

Mr Wang defended Made in China 2025, saying it was “transparent, open and non-discriminatory” and foreign companies could participate.

He said the plan, which sets specific targets for domestic brands’ share of some markets, should be seen as a guide rather than mandatory.

A report released on Tuesday by the USTR also cited complaints that Beijing uses cyber spying to steal foreign business secrets. It was unclear whether the latest tariff hike was a direct response to that.

The new Chinese list included soybeans, the biggest US export to China, and aircraft up to 45 tons in weight. That excludes high-end Boeing jetliners such as the 747 and 777, leaving Beijing high-profile targets for possible future conflicts.

Also on the list were American beef, whisky, passenger vehicles and industrial chemicals.

Press Association

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