China Rejects US 'Blackmail' on Eve of Trade War, Vows To Fight Back

By Tyler Durden  /  ZeroHedge

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 in kind, China on Thursday rejected “threats and blackmail” ahead of the tariff hike, striking the usual 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.”

As for shooting, Gao said that the “U.S. is shooting itself in the foot and hurting the world” with its tariff hikes.

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 Trump’s 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.”

China’s ruling Communist Party has insisted on making changes at its own pace while sticking to a state-led industrial strategy seen as the path to prosperity and global influence. Officials in Beijing reject accusations of theft and say foreign companies have no obligation to hand over technology. But rules on auto manufacturing, pharmaceuticals and other industries require companies to operate through state-owned Chinese partners and share know-how with potential competitors or teach them how to develop their own.

Beijing has announced changes this year including easing limits on foreign ownership in insurance and some other fields. But none directly addresses the complaints that are fueling its conflict with Washington.

The U.S. also has irked some of its closest allies by hiking import duties on steel, aluminum and autos from Europe, Japan, Canada and Mexico.

“The global trade conflict is at risk of a serious escalation,” said Adam Slater of Oxford Economics in a report.

So far tariffs imposed by all sides affect about $60 billion of goods, or 0.3% of world trade, according to Slater. He said that would rise to a full 4% of the global total if Washington, Beijing and other governments follow through on tariff threats.

Ironically, for all the bluster and counter-American rhetoric, yesterday Reuters reports that the EU flatly rejected a Chinese proposal to form s strategic alliance between the two entities and take on the US. The reason for Europe’s skepticism? The admission behind the scenes that Trump is correct in his blame of Beijing, and also the complete lack of faith in Brussels that anything China promises to do it will actually implement.

https://www.zerohedge.com/news/2018-07-05/china-rejects-us-blackmail-eve-trade-war-vows-fight-back

More great articles here: https://www.zerohedge.com