BEIJING - There will be no winner if a trade war breaks out between China and the United States, said Chinese Premier Li Keqiang on Tuesday (March 20), urging Washington not to act “emotionally”.
Using “war” in the context of trade is against its basic rules, which are based on negotiation, consultation and dialogue, Mr Li told reporters after the end of the annual parliamentary session.
“I hope both countries will act rationally instead of being led by emotions, and avoid a trade war,” said Mr Li at the Great Hall of the People in Beijing.
His comments came amid fears of a global trade war after US President Donald Trump imposed stiff import tariffs on steel and aluminium earlier this month.
According to media reports, Mr Trump is set to announce this week a package of US$60 billion ($79 billion) in annual tariffs on Chinese technology and consumer goods to punish China for intellectual property infringement.
Mr Li pledged on Tuesday to “strictly protect” intellectual property rights and ensure that no foreign firms will be forced to transfer technology to their Chinese partners as China opens its markets wider to foreign investors.
“The Chinese economy has deeply integrated into the global economy, closing our doors would mean blocking our own way,” he said.
Mr Li promised to lower import tariffs on consumer goods especially cancer drugs, ease market access to the eldercare, healthcare, education and finance sectors, and completely open up the manufacturing sector to foreign investments.
“China’s aim is to ensure that both domestic and foreign firms, and companies under all kinds of ownership structure, are able to compete fairly in its large market of 1.3 billion people,” he added.
However, he stressed that China’s opening up is a gradual process and should entail efforts on both sides.
He reiterated calls for Washington to ease restrictions on high tech and high value-added exports to China.
“We hope this important means for balancing China-US trade will not be missed, because that would be missing a good opportunity for making money,” he said, referring to the longstanding complaint of a large US trade deficit with China, which stands at US$375 billion at the end of last year.
Mr Li also ruled out the possibility of any systemic financial risks derailing the world’s No.2 economy, adding that the fundamentals of the Chinese economy are sound and the financial sector is stable.
China has said that fighting financial risks - such as reducing debt, preventing housing bubbles and stamping out shadow banking - will be one of its top priorities in the next three years.
Mr Li struck a positive note by saying that Chinese banks have enough provisions to fend off risks as they have set aside about 15 per cent of total deposits, or about more than 20 trillion yuan (S$4.2 trillion), as reserves.
He added that China is confident of achieving its economic targets this year, which includes a growth target of around 6.5 per cent, as it has already recorded a double-digit growth in government revenue in the first two months.
Overall, the government has enough tools at its disposal to deal with uncertainties in the global environment as well as new risks at home.
Meanwhile, regulators will continue to double up on efforts to crack down on irregular or illegal activities in the financial sector, including illegal fundraising.
The latest move to merge the banking and insurance regulators - part of the sweeping government reorganisation - is one of these efforts to curtail activities that evade regulation, said Mr Li.