China Rejects US "Blackmail" On Eve Of Trade War, Vows To Fight Back

  • Written by Zero Hedge
  • Published in Economics

With just hours left until the US officially declares trade war on China at midnight on Friday, when the Trump admin enacts tariffs on $34bn in Chinese products and Beijing retaliates instantly, China on Thursday rejected "threats and blackmail" ahead of a threatened U.S. tariff hike, once again striking a defiant stance in the dispute which companies have warned could flare into a full-blown trade war and chill the global economy.

A government spokesman said Beijing will defend itself if U.S. President Donald Trump goes ahead Friday with plans to raise duties on Chinese goods in the escalating conflict over technology policy. The Chinese government has already issued a list of U.S. goods for retaliation, but the Commerce Ministry said it will wait to see what Washington does.

“China will not bow in the face of threats and blackmail, nor will it be shaken in its resolve to defend global free trade,” said ministry spokesman Gao Feng at a news conference.

“China will never fire the first shot,” Gao said. “However, if the United States adopts taxation measures, China will be forced to fight back to defend the core interests of the nation and the interests of the people.”

Friday’s tariff hikes are the first stage in threatened U.S. increases on up to $450 billion of imports from China over complaints Beijing steals or pressures foreign companies to hand over technology. According to Goldman calculations, if the full scope of proposed protectionist measures is implemented, this would raise the total amount of tariffs the Trump administration has proposed from around $500bn to nearly $800bn, or about 4 times the cumulative amount that had been proposed as of a few month ago, before President Trump proposed tariffs on global auto imports on national security grounds.

And while Xi’s government has expressed confidence China can hold out against U.S. pressure, but companies and investors are uneasy. Trade worries are adding to anxiety over cooling economic growth and tighter lending controls that have hit real estate and other industries. The main Chinese stock market index has tumbled 12 percent over the past month.

According to AP, Chinese exporters of tools, lighting and appliances say U.S. orders have shrunk as customers wait to see what will happen to prices.

Ningbo Top East Technology Co., which makes soldering irons in Ningbo, south of Shanghai, used to export 30 percent of its output to the United States, according to its general manager, Tong Feibing. He said American orders have fallen 30 to 50 percent compared with a year ago.

The company wants customers to split the cost of the tariff hike, but few are willing, said Tong.

“There is a chance the company will lose money and might go bankrupt,” said Tong. “I will do whatever I can, including layoffs.”

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