China says reserves right to retaliate against US actions on its investments

China's Ministry of Commerce spokesman Gao Feng told reporters at a regular news briefing that the country is not willing to see an escalation in Sino-US trade frictions.
China's Ministry of Commerce spokesman Gao Feng told reporters at a regular news briefing that the country is not willing to see an escalation in Sino-US trade frictions.PHOTO: REUTERS

BEIJING (AFP, REUTERS) - The United States' measures against China's investments are against World Trade Organisation rules, and China reserves the right to take countermeasures, the commerce ministry said on Thursday (May 31).

China is not willing to see an escalation in Sino-US trade frictions, and believes the two countries have a huge potential for cooperation, Ministry of Commerce spokesman Gao Feng told reporters at a regular news briefing.

"We hope that China and US economic and trade cooperation can benefit people in both countries, and we are not willing to see trade frictions escalate," Gao said.

After trade tensions between the two countries appeared to cool following talks in Washington earlier in the month, the US on Tuesday said it still holds a threat of imposing tariffs and will press ahead with restrictions on investment by Chinese companies in the United States.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods.

A 50-strong US delegation arrived in Beijing on Wednesday for follow-up meetings, Gao said on Thursday, without proving more details.

The delegation is laying the groundwork for a weekend visit by US Commerce Secretary Wilbur Ross.

The Trump administration said Tuesday that US sanctions announced in March - including restrictions on Chinese investment, export controls and 25 per cent tariffs on as much as US$50 billion in Chinese tech exports - remain under development.

Gao slammed the proposal, saying US measures to implement investment restrictions and export controls against China "do not conform with the basic principles and spirits of the WTO (World Trade Organisation)".

"China will carefully evaluate the US measures and relevant impact and retain its rights to adopt relative measures."

Separately, the Chinese government announced in a statement late Wednesday that it would further cut import tariffs on daily consumer goods from July 1.

The average tariff on clothing, shoes and hats, kitchenware, and sports and fitness supplies will be reduced from 15.9 per cent to 7.1 per cent.

The rate for home appliances such as washing machines and refrigerators will be lowered from 20.5 per cent to 8 per cent.

'No forced tech transfers'

Gao said China will also publish a "negative list" of foreign investment by June 30 to ease restrictions in fields including energy, resources, infrastructure and transportation. A negative list includes all the industries with foreign investment restrictions.

Beijing previously said it would relax restrictions on foreign investment in automobiles, shipbuilding and aircraft firms.

At a meeting Wednesday chaired by Premier Li Keqiang, the State Council - or cabinet - also decided that China would widen market access through more foreign investor-friendly measures, according to the official Xinhua news agency.

"We should raise our innovation capacity in the new round of opening up and see that all intellectual property be fully protected," Li said.

"No forced technology transfer will ever be imposed on foreign-invested enterprises and IPR (intellectual property rights) infringements will be penalised to the full extent of the law."

Donald Trump has accused China of forcing US firms to hand over their industrial secrets to Chinese firms in order to do business in the country, a charge that Beijing has rejected.

In other measures announced by Xinhua, overseas traders will be encouraged to participate in crude oil and iron ore futures trading.

Severe measures will be taken to punish infringements, counterfeiting, commercial secret violators and trademark squatters.