US should bear 'sole and entire responsibility' for severe setback to trade talks

China commerce vice-minister Wang Shouwen vigorously defended China over accusations of backtracking, intellectual property theft and forced technology transfer, calling them groundless. PHOTO: EPA-EFE

BEIJING - China has pinned the blame of the worsening trade war squarely on the United States, saying it should bear "sole and entire responsibility" on the talks going south.

In a white paper released on Sunday (June 2), Beijing accused Washington of backtracking on three occasions, and spelt out the damage that the US had wreaked on its own economy as well as the world's since the Trump administration took over.

"The trade war has not made America great again," said the paper, adding that tariff measures have ballooned production costs for US companies, made goods in the US more expensive, and hit US exporters to China.

For an hour on Sunday, commerce vice-minister Wang Shouwen vigorously defended China over accusations of backtracking, intellectual property theft and forced technology transfer, calling them groundless.

"It's irresponsible for the US to smear China. In talks, nothing is agreed until everything is agreed," he told reporters at a press conference on the white paper.

Instead, the paper claimed the US kept changing its demands during the talks, and outlined how it had backtracked last year and this year by slapping tariffs on Chinese goods even though talks were already underway with the aim of ridding all additional tariffs.

"Resorting to intimidation and coercion, it persisted with exorbitant demands, maintained the additional tariffs imposed since the friction began, and insisted on including mandatory requirements concerning China's sovereign affairs in the deal," stated the paper.

Said Mr Wang: "When you give them an inch, they want a yard."

Since Washington moved last month to impose additional tariffs on nearly all Chinese products after trade talks soured, Beijing retaliated with tariffs on US$60 billion (S$82 billion) of American goods, which kicked in on Saturday.

The Chinese authorities also responded to a US ban on tech company Huawei by compiling a blacklist of "unreliable" foreign firms that have violated market rules or hurt Chinese interests.

The white paper made clear that China wants to resolve the trade dispute through dialogue but it will not compromise on its principles.

As a prerequisite for a trade deal, it wants the US to remove all additional tariffs, be realistic about China's purchases of US goods, and have "proper balance" in the text of the agreement.

China has signalled it could play the rare earths card, by curbing its exports to the US.

The American manufacturing sector imports as much as 80 per cent of its rare earths needs - used to produce mobile phones, electric vehicles and computer hard disks - from its trade rival.

International relations professor Shi Yinhong of Renmin University said the white paper did not give further insights into why the talks stalled, but its release reflected the extent to which relations have taken a nosedive since.

China has shown restraint by keeping the fight to the trade and tech domains, where the US has an advantage, said Prof Shi. "If China used North Korea and Iran as retaliatory tools, I think President Trump will feel the pain more."

Trade tensions may ease if President Xi Jinping and Mr Trump meet later this month at the Group of 20 summit in Japan.

When asked, Mr Wang said he had no information about whether a meeting would take place.

"If they don't meet, it will be a major international relations embarrassment," said Professor Shi, who does not think a deal could be reached then.

"The divide is too wide. Both think no deal is better than a bad deal, and their definitions of a bad deal have not changed."

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