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Free AccessREPEAT: MNI: China Could Absorb $550Bn U.S. Levies: Advisor
Repeats Story Initially Transmitted at 14:33 GMT Jul 6/10:33 EST Jul 6
--China Equipped To Deal With Latest Trump Threat: Advisor
By Iris Ouyang
BEIJING (MNI) - China has already studied and started to prepare for
potentially "extreme" scenarios in its developing trade war with the U.S.,
including President Donald Trump's threat to eventually expand the value of
Chinese goods subject to U.S. tariffs to $550bn, a researcher at the Chinese
Academy of International Trade and Economic Cooperation under China's Ministry
of Commerce, told MNI in an interview on Friday.
Based on China's "style of doing things," when Beijing says it is ready for
a trade war, it means that it is well prepared to tackle a range of possibly
drastic situations, said Mei Xinyu, whose comments are regularly published in
Chinese state media and are thus seen as a good gauge of official thinking.
After Washington imposed levies on $34 billion worth of Chinese imports on
Friday, Trump suggested that the U.S. could go much further -- potentially
targeting as much as $550 billion of Chinese products -- more than the total
value of goods shipped to the U.S. by China in 2017. In reference to Trump's
statement, Mei said that he feels relatively unconcerned as Beijing is equipped
to deal with such a situation.
The Chinese government illustrated its resolve by responding immediately to
the U.S. move on Friday, placing levies on an equivalent value of U.S. goods,
China's Ministry of Foreign Affairs (MFA) confirmed at a press briefing.
--U.S. CREDIBILITY GAP
"The biggest barrier for the two countries (in resuming talks) isn't
whether or not the U.S. trade demands are met," Mei commented, but rather
whether Washington can convince Beijing of the "value" of holding such talks
given their lack of success to date. He followed this up by saying that the U.S.
has lost credibility following its flip-flops in reversing the agreements it
reached with China during trade talks between the two sides in Washington.
Mei added that mutual tariffs of $34 billion between the two economic
powerhouses will not have a significant impact on either country, given the
relatively small share of total economic output for which they account.
Moreover, he pointed out, the negative ramifications of any hostile trade action
against Beijing would not be felt by China alone, but would also hurt the U.S.
economy.
Once the U.S. starts to feel such impacts, it will likely then restrain
from taking further hostile action, Mei said.
In interviews with MNI, other trade advisors to the Chinese government
echoed Mei's view that there would be no advantage for either side in elevating
trade tensions further.
--NO WINNERS
"China will not unilaterally initiate any escalation in the trade war,"
because economic development is still China's key goal, said Wang Haifeng,
Director of International Trade and Investment at the Chinese Academy of
Macroeconomic Research, which is affiliated with the National Development and
Reform Commission.
Wang said in an interview with MNI that both countries should formulate
plans on specific concessions that they could make in order to reach a
compromise. However, he believes that such action is currently unlikely to be
taken unless both nations face substantially more pressure from the public and
business community.
"There's no winner in a trade war," Wang concluded, adding that he is
"afraid" the situation could nonetheless get out of control "once nationalism
becomes a major factor."
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.