China says fully ready to defend interests in trade war

China is fully prepared to defend its interests in its trade war with the United States, but hopes the United States can resolve problems through dialogue instead of unilateral steps, the Chinese commerce ministry said on Thursday.

The comments came as a Chinese delegation led by Vice Premier Liu He was set to hold talks in Washington on Thursday and Friday aimed at salvaging a deal that appeared to be unraveling after U.S. officials accused China of backtracking on earlier commitments and President Donald Trump threatened to hike tariffs on Chinese goods on Friday.

Speaking to reporters in Beijing, the commerce ministry’s spokesman, Gao Feng, said China has the determination and capacity to defend its interests, but hopes the U.S. can meet it halfway.

“China’s attitude has been consistent, and China will not succumb to any pressure,” Gao said. “China has made preparations to respond to all kinds of possible outcomes.”

He did not elaborate.

The U.S. Trade Representative’s office said tariffs on $200 billion of Chinese goods would rise to 25 percent from 10 percent at 12:01 a.m. (0401 GMT) on Friday.

These include chemicals, building materials, furniture and some consumer electronics.

The U.S. tariff action would come in the middle of the meetings in Washington.

Trump also threatened on Sunday to levy tariffs on an additional $325 billion of China’s goods, on top of the $250 billion of its products already hit by import taxes.

Until last weekend, when a deep rift opened up over the language of the proposed accord, there had been strong expectations that the two sides would reach a deal to de-escalate a tariff war that broke out last year.

Reaching a deal required effort from both sides, Gao said, adding that China had demonstrated its sincerity by sending its negotiators to Washington despite the U.S. threat to raise tariffs.

Trade negotiations are a long process, and it is normal to have disagreements, Gao said, adding that China is willing to continue talks with the United States to resolve their trade dispute.

While the United States wants to reduce the scale of its trade deficit with China, it is also seeking better protection for American intellectual property and more market access in China for U.S. companies.

Gao described accusations about Chinese firms stealing tech secrets as unreasonable and said they were not based on facts.

CHINESE RETALIATION

Since July last year, China has cumulatively imposed countertariffs of up to 25 percent on about $110 billion of U.S. products. It last levied tariffs, of 5 percent to 10 percent, on $60 billion of U.S. goods including liquefied natural gas and small aircraft in September.

Based on 2018 U.S. Census Bureau trade data, China would only have about $10 billion in U.S. imports left to levy in retaliation for any future U.S. tariffs, including crude oil and large aircraft.

Chinese state media on Thursday published and aired reports quoting U.S.-based organizations and individuals critical of Trump’s decision to raise tariffs, though downplaying the impact of higher U.S. tariffs on the Chinese economy.

“China is well-prepared for an escalation in trade tensions. A variety of plans are in place, such as countermeasures for any tariff rise, and favorable policies to minimize losses for Chinese enterprises,” the Global Times, a tabloid published by the ruling Communist Party’s People’s Daily, said in an editorial.

“Mentally and materially, China is much better prepared than its U.S. counterpart.”

China’s blue-chip CSI300 index has slumped about 7 percent so far this month on the renewed trade tensions. That compares with a smaller decline of about 2 percent in the benchmark S&P 500 index.

The Chinese yuan has also retreated to a four-month low against the dollar, crossing the psychologically key 6.80 level.