REPEAT: China Plays Down Possibility Of Trade War With US

Repeats Story Initially Transmitted at 09:30 GMT Aug 14/05:30 EST Aug 14

--Say Trade Issues Not Linked To Resolution Of Korean Crisis

By Vince Morkri

     BEIJING (MNI) - China on Monday refused to say whether it would retaliate

if the United States initiates trade sanctions against it for what Washington

claims is widespread infringement of intellectual property rights, stressing

only that the two sides had reached an agreement on trade during their

Comprehensive Economic Dialogue in Washington last month and that China hoped to

resolve any issues through talks.

     "The two sides have reached consensus on China-U.S. trade economic

cooperation," Foreign Ministry spokeswoman Hua Chunying said at the regular

Ministry of Foreign Affairs press briefing. "A trade war between the two

countries has no future. The only result between the two countries would be

'lose-lose.'"

     Hua also said there was no linkage between the U.S.-China trade issue and

the resolution of the crisis on the Korean Peninsula.

     "The China-U.S. trade issue is totally different, and it's not appropriate

to use one as a tool to keep pressure on the other issue," she said, adding that

China had made "relentless efforts for the resumption of dialogue" between the

United States and North Korea.

     During a phone call on Friday, President Xi Jinping and U.S. President

Donald Trump had an "in-depth exchange of views" on trade and on North Korea,

agreeing that all parties involved in the latter issue should stay directed

toward a political settlement, Hua said.  

     "Trump has an understanding of China's role in relation to the Korean

Peninsula," she said, reiterating that China would maintain neutrality if North

Korea were to launch a first strike against the United States.

     According to the White House, Trump asked Xi during their phone

conversation to do more to rein in North Korea's nuclear ambitions. The request

came after Trump vowed to rain "fire and fury" on North Korea after Pyongyang

threatened to lob missiles near Guam, a U.S. territory.

     Trump also said last week that if China helped the U.S. to pressure North

Korea, "I feel a lot differently toward trade." 

     The White House issued a statement saying that Trump and Xi had agreed that

North Korea "must stop its provocative and escalatory behavior," and reiterated

Washington's and Beijing's commitment to denuclearizing the Korean Peninsula. 

     The White House said over the weekend it planned to announce on Monday an

investigation into what U.S. officials describe as rampant intellectual property

rights theft by China, as well as online and physical piracy. 

     In an editorial on Monday, China's state-run Global Times harshly

criticized the plan. Trump, it said, "stubbornly believes that the U.S. has

suffered losses from the current international trade system while China has

gained an advantage." 

     "Trump cannot use Section 301 at will as a lever against China, another

trade giant," it said, referring to the section of the U.S. Trade Act of 1974

under which the administration would conduct the investigation. "The Trump

administration should have second thoughts about putting pressure on China on

trade and avoid a full-blown trade war," it said, adding that if China were to

sue under World Trade Organization rules should Trump launch an investigation

into China's trade practices, "it is highly likely that China would win.

     It also called the linkage of the China-U.S. trade issue with the Korean

nuclear issue "illogical," but said the two sides would "continue to maintain

their complex bilateral relations."

     The Wall Street Journal on Monday reported that the Pentagon's top military

officer, General Joe Dunford, the chairman of the Joint Chiefs of Staff, said

the U.S. military had an array of military options to use in case of any action

by North Korea, but that the focus remains on finding a diplomatic solution to

the problem. 

     General Dunford had planned to arrive in Beijing on Monday, presumably for

talks with Chinese government officials. 

     Tensions showed signs of easing on Monday and Asian markets were mostly up

on the lack of saber-rattling.

--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