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Companies await Chinese retaliation amid trade dispute with US

Companies await Chinese retaliation amid trade dispute with US

BEIJING: Companies waited on Monday to see how China will retaliate for United States President Donald Trump’s escalation of a fight over technology and trade that threatens to disrupt a Chinese economic recovery.

Regulators threatened “necessary countermeasures” for Trump’s tariff hikes on Friday on $200 billion of Chinese imports. But three days later, in a break with previous tit-for-tat penalties imposed immediately, Beijing had yet to announce what it might do.

Beijing is running out of imports for penalties due to the lopsided US-Chinese trade balance. Regulators have started targeting American companies in China by slowing down customs clearance for shipments and issuance of business licenses.

Officials appeared to be studying the potential impact on China’s economy before picking their next steps, said Jake Parker, vice president of the US-China Business Council, an industry group.

He said officials might be worried companies may shift operations out of China in response to “aggressive retaliatory actions.”

“I assume this goes fairly high within China’s government before retaliatory actions are settled upon,” said Parker.

The latest talks ended on Friday with no word of progress after Washington accused Beijing of trying to backtrack on earlier commitments.

The chief Chinese envoy, Vice Premier Liu He, told state TV the remaining issues had to do with principles and “we will make no concessions on matters of principle.” ‘China will never surrender to foreign pressure’

The Chinese foreign ministry said on Monday the country will never surrender to foreign pressure after Washington renewed its threat to impose tariffs on all Chinese imports in an escalating trade dispute. Foreign ministry spokesman Geng Shuang made the comments at a daily briefing in Beijing.

Geng declined to comment on what countermeasures China planned to announce in response to the US tariff hike on $200b worth of Chinese goods on Friday.

Trump started raising tariffs last July over complaints China steals or pressures companies to hand over technology. Washington wants Beijing to roll back plans for government-led creation of Chinese global competitors in robotics and other technology that its trading partners say violate its free-trade commitments.

A stumbling block has been US insistence on an enforcement mechanism with penalties to ensure Beijing carries out its commitments. Economists say Chinese leaders probably reject that as a violation of Chinese sovereignty.

Trump’s surprise May 5 tariff announcement renewed anxiety in financial markets about global economic growth.

On Monday, China’s stock market benchmark fell 1 per cent and Tokyo’s main index lost 0.6pc. Markets in South Korea and Southeast Asia also declined.