China warns US not to open Pandora's Box, unleash trade ills on world

Shipping containers at the Port of Los Angeles in San Pedro, California on Feb 23, 2018.
Shipping containers at the Port of Los Angeles in San Pedro, California on Feb 23, 2018. PHOTO: EPA-EFE

BEIJING (REUTERS) - China warned the United States on Thursday (March 29) not to open Pandora's Box and spark a flurry of protectionist practices across the globe, even as Beijing pointed to US goods that it could target in a deepening Sino-US trade dispute.

China could target a broad range of US businesses from agriculture to aircraft, autos, semiconductors and even services if the trade conflict escalates, the official China Daily newspaper said in an editorial on Thursday.

US President Donald Trump's move last week to slap up to US$60 billion (S$79 billion) in tariffs on some Chinese imports has since provoked a warning from Beijing that it could retaliate with duties of up to US$3 billion of US imports.

China's biggest US imports are aircraft and related equipment, soybeans and autos, with the total bill about US$40 billion last year.

"The malicious practices of the United States are like opening Pandora's Box, and there is a danger of triggering a chain reaction that will spread the virus of trade protectionism across the globe," a commerce ministry spokesman said.

The official line from China continues to be stern even as Beijing says it is all for dialogue and negotiations. The feedback from US and Chinese officials on the nature and extent of trade talks remains mixed, media reports show.

The Financial Times reported only on Monday that China had offered to buy more US micro-chips and move more quickly to finalise rules allowing foreign firms to take majority stakes in Chinese securities firms, citing people briefed on the negotiations.

Chinese customs data shows the US accounted for just US$2.6 billion, or 1 percent, of China's total semiconductor imports last year by value, with suppliers in South Korea, Taiwan and Japan commanding a bigger share.

But a source in the US semiconductor industry said US companies have slightly more than 50 percent of China's market for chips, though export data doesn't reflect that because much of the product is sent off-shore for low value added processing.

The source said the US semiconductor industry had not asked the Trump administration to urge China to buy more US chips and had been told by senior U.S. officials that the US government had not made such a request to Beijing.

"We don't need China to buy more chips," the source said, adding that U.S. industry was concerned about being targeted by Chinese non-tariff barriers.

"It's more about (Chinese) subsidies, IP protection, and cyber rules," the source said, referring to concerns over Chinese retaliation.

China has long said it would like to import more U.S. high-tech goods, including high-end chips, but has been stymied by US export controls set on national security grounds.

China's commerce ministry said on Thursday the US approach to trade could trigger a domino effect and US trade protectionism will only hurt US consumers.

While China hopes the US will resolve trade conflicts with China through dialogue, it will take all possible steps to protect its interests, ministry spokesman Gao Feng told a regular briefing in Beijing.

"Negotiations must be equal, and China will not accept any consultation under unilateral coercion," Gao said.

SERVICES MAY BE TARGETED

On Wednesday, Trump's top trade envoy said he would give China a 60-day window before tariffs on Chinese goods take effect, but added that it would take years to bring the two countries' trading relationship "to a good place."

The tariff list is expected in the next several days.

The China Daily on Thursday quoted Premier Li Keqiang as telling a US Congressional delegation this week that China was open to dialogue but "fully prepared with countermeasures".

It warned that if the conflict continued to escalate "China could consider taking reciprocal measures against US imports of agricultural products besides soybeans, as well as aircraft, automobiles and semiconductors."

"And should the Trump administration further obstruct Chinese investments in the US, even tougher measures such as restrictions on imports of U.S. services and similar investment reviews would likely be on the table," it said.

Separately, Hong Kong's South China Morning Post reported on Thursday that US and Chinese officials had been holding talks to shield American soybeans and other agricultural products from trade sanctions.

China is still considering import curbs on US soybeans, US Soybean Export Council Asia director Paul Burke said on Thursday, following a meeting with the Ministry of Agriculture.