WASHINGTON • China is going to this week's G-20 summit hoping for a deal to ease a damaging trade war with the United States, Beijing ambassador to Washington Cui Tiankai has said while warning of dire consequences if US hardliners try to separate the world's two largest economies.
China's Vice-Premier Liu He has also told an economic conference in Hamburg that protectionist and unilateral approaches on trade would only deepen economic uncertainty, saying no country could emerge as a winner in a trade war.
"We believe that protectionist and unilateral approaches do not offer solutions to problems on trade. On the contrary, they will only bring about more economic uncertainty to the world," Mr Liu said on Tuesday.
"The history of economic development has proven time and again that raising tariffs will only lead to economic recession and no one ever emerged as a winner from a trade war. Our approach therefore is to seek a negotiated solution to the problems we have on the basis of equality and mutual respect," he added.
The US has levied additional duties of between 10 per cent and 25 per cent on US$250 billion (S$344 billion) of Chinese goods this year as punishment for what it calls the country's unfair trade practices, with the 10 per cent tariffs set to rise to 25 per cent next year.
US President Donald Trump has also threatened to impose tariffs on an additional US$267 billion of Chinese goods - a step many fear would plunge the two giants into a full-fledged economic Cold War.
Mr Trump has, however, signalled a new willingness to make a deal with Chinese President Xi Jinping, whom he will meet over dinner on Saturday in Buenos Aires, Argentina, after a summit meeting of leaders of the Group of 20 (G-20) industrialised nations.
"There's a good possibility that we can make a deal, and he is open to it," Chief Economic Adviser Larry Kudlow said on Tuesday.
But if the meeting failed to produce a breakthrough, he said, Mr Trump was "perfectly happy to stand on his tariff policies".
If the two leaders agree to talks, however, officials said Mr Trump would most likely postpone the increase to 25 per cent and hold off on any new tariffs.
Mr Cui, speaking to Reuters on Tuesday before joining Mr Xi's delegation at the G-20 summit, said China and the US had a shared responsibility to cooperate in the interests of the global economy.
Asked whether he thought hardliners in the White House were seeking to separate the closely linked US and Chinese economies, Mr Cui said he did not think it was possible or helpful to do so, adding: "I don't know if people really realise the possible consequences - the impact, the negative impact - if there is such a decoupling."
He drew parallels to the tariff wars of the 1930s among industrial countries, which contributed to a collapse of global trade and heightened tensions in the years before World War II. "The lessons of history are still there. In the last century, we had two world wars, and in between them, the Great Depression. I don't think anybody should really try to have a repetition of history... People have to act in a responsible way."
Asked whether he thought the current tensions between the US and China could degenerate into all-out conflict, Mr Cui called the outcome "unimaginable" and the two countries should do everything to prevent it.
"We are against any trade war," he said, but added that China would "fight to safeguard our own interests". "We believe that the key to a negotiated solution to the trade issues is a balanced approach to the concerns of both sides."
Mr Cui also said he did not believe Beijing was seriously considering using its massive US Treasury debt holdings as a trade war weapon, citing concerns that such a move would destabilise financial markets. China is the largest foreign holder of US Treasury debt, with US$1.15 trillion on Sept 30, according to the latest Treasury data, compared with US$1.19 trillion a year earlier.
Mr Cui noted that Mr Trump and Mr Xi had "a very good working relationship and personal friendship" formed in three previous face-to-face meetings, including two formal summits, and that had been shown by a long phone conversation in early this month.