China Vows Action If U.S. Damages Trade Ties

--China Foreign Ministry Repeats No Linkage Between Trade, N.Korea

By Vince Morkri

     BEIJING (MNI) - China will "take measures to protect our legitimate rights

and interests" in response to the decision by U.S. President Donald Trump to

green-light an investigation into China's intellectual property trade practices,

China's Foreign Ministry said Tuesday. 

     The U.S. "cannot destroy multilateral trade rules" as outlined by the World

Trade Organization, Foreign Ministry spokeswoman Hua Chunying said at a regular

press briefing, a rebuke to the U.S. administration's invoking a little-used

provision of the U.S. Trade Act of 1974 in an attempt to stop what it views as

China's widespread infringement of intellectual property rights and forced

technology transfers by U.S. companies. 

     China's Commerce Ministry also voiced "grave concern" with Trump's

decision, warning in a statement on its website that China would take measures

"if the U.S.'s action inflicts damage on the bilateral trading relationship."

     The U.S. Trade Representative now has a year to decide whether to launch a

formal investigation of China -- a tack, perhaps, that buys Trump time to

persuade Beijing to more forcefully deal with the problem of North Korea, which

has threatened to lob missiles near the U.S. territory of Guam in response to

the U.S.-led initiative to impose sanctions on Pyongyang over its recent testing

of intercontinental ballistic missiles.

     "We will stand up to any country that unlawfully forces American companies

to transfer their valuable technology as a condition of market access," Trump

said Monday at the White House, adding that the initiative was intended to

"protect forgotten Americans who have been left behind by a global trade system

that has failed to look out for their interests."

     The White House announcement was welcomed by the U.S. Chamber of Commerce,

which represents U.S. companies with investments in  China. "China must end

forced technology transfer and protect foreign-owned intellectual property

rights within China," it said. 

     "If the U.S.-China relationship is to deliver mutually beneficial growth,

U.S. firms must enjoy the same broad, secure access to the Chinese market that

Chinese firms already enjoy to the United States," it said.

     Moody's Investors Service argued in comments it sent to clients on Monday

that any potential U.S. action or responses by China "would be consistent with

earlier WTO agreements, which implies that the broad architecture of the

U.S.-China trade relationships would remain." 

     "U.S. measures targeted at specific sectors are unlikely to have a material

economy-wide impact," it added.  

     China has argued that rules of the World Trade Organization, of which both

the U.S. and China are members, should govern the resolution of any trade

disputes between the two sides, and not Section 301 of the U.S. Trade Act of

1974, which the White House said it would use to investigate and potentially

sanction China.

     China Foreign Ministry spokeswoman Hua also continued to voice the China

position that the trade issue with the United States was not linked to

settlement of the Korean Peninsula nuclear crisis. Trump has been pressing China

to rein in North Korea's nuclear ambitions, saying last week that if China

helped the U.S. to pressure North Korea, "I feel a lot differently toward

trade."

     "The situation on the Korean Peninsula is sensitive and complex, and now is

the time to make a decision to return to peace talks," Hua said. "The U.S. and

North Korea hold the key to resolving the issue."

     Tensions on the Korean Peninsula continued to ease Tuesday, with North

Korea's official news agency reporting that the North's leader, Kim Jong Un, had

delayed a decision on firing missiles toward Guam. The Korean Central News

Agency reported that Kim "will make an important decision" on the matter should

"the Yankees persist in their extremely dangerous reckless actions" toward North

Korea. 

     Kim "said that the U.S. imperialists caught the noose around their necks

due to their reckless military confrontation racket, adding that he would watch

a little more the foolish and stupid conduct of the Yankees spending a hard time

of every minute of their miserable lot," the KCNA report said.

     Meanwhile, China said it would start enforcing the latest sanctions against

North Korea, banning imports of North Korean coal, iron, iron ore, lead, lead

ore and seafood. The sanctions are expected to cost North Korea $1 billion in

revenue.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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