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A worker observes steel production at a plant of Qingdao Special Iron and Steel in the Chinese city of Qingdao.   © AP
International Relations

China warns US tariffs will prompt retaliatory measures

Beijing will talk with Washington to avert a trade war, vice foreign minister says

BEIJING -- The Chinese government said Sunday that it will pursue talks to ease trade frictions with the U.S. while warning Washington of potential retaliatory measures to protect its interests.

Speaking to journalists ahead of the annual sitting of the Chinese legislature, Executive Vice Foreign Minister Zhang Yesui responded to U.S. President Donald Trump's moves to impose tariffs on steel and aluminum imports.

"China does not want to fight a trade war with the United States, but we absolutely will not sit by and watch as China's interests are damaged," Zhang said.

President Xi Jinping has positioned managing Sino-American relations as his top diplomatic priority. Determined to avoid an escalation of trade frictions with Washington during the National People's Congress session opening Monday, Xi sent top economic adviser Liu He to Washington last week.

China and the U.S. held talks for two days. They also agreed to talk about related issues in Beijing in the near future in a bid to create conditions for further cooperation, Zhang said.

Washington has declined a Chinese request to resume their stalled comprehensive economic dialogue, according to Beijing diplomatic sources. The U.S. was apparently disappointed by the lack of progress after the previous round last July.

China appears ready to work with other nations to retaliate should Trump make good on his promise to impose the steel and aluminum tariffs. "Many European countries and Canada have all said they cannot accept this," Foreign Minister Wang Yi said Saturday.

Persistent trade deficits led to the U.S. president's drastic plan aimed at curbing foreign imports. The U.S. will impose import tariffs of 25% on steel and 10% on aluminum.

"We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON'T HAVE STEEL, YOU DON'T HAVE A COUNTRY!" said Trump in a Twitter posting on Saturday.
 
The U.S. goods trade deficit with China reached a record $375 billion last year, by far the largest the U.S. had with any country. China, however, was the source of only about 2% of U.S. steel imports, but as the world's largest producer, its excessive production has been blamed for depressing prices globally.

Beijing is gearing up for the opening of the National People's Congress. The largely rubber-stamp legislature is expected to adopt the first amendments to the state constitution in 14 years, including removing a two-term limit set for the presidency.

Executive Vice Foreign Minister Zhang Yesui, spokesman for the National People's Congress, sits for a press conference at the Great Hall of the People in Beijing on March 4.   © AP

China said the amendments are "conducive" to the modernization of its socialist model, to mirror the charters of the Communist Party and the People's Liberation Army, both also headed by Xi.

Xi's consolidation of power appears to make an impression on Trump. "He's now president for life. No, he's great," Trump said in a closed-door meeting, according to CNN on Saturday. "And look, he was able to do that. I think it's great. Maybe we'll have to give that a shot someday."

Over the next two weeks, some 3,000 lawmakers will adopt a government budget and ratify key appointments and reform measures to strengthen financial regulations. A new national anti-graft body will be officially added to the cabinet, giving further momentum to Xi's fight against corruption.

One key budget to watch will be that of the military. Defense spending has been on the rise in recent years. Zhang said China's military budget is still lower than that of other major countries but in contrast to the usual practice for the pre-legislative briefing, did not give any figures. He added that the country's stance is defensive in nature and will not pose any threat to others. 

Under Xi's new political doctrine of building a moderately prosperous society, the key theme for the legislative session's work, China aims to be stronger politically and economically while facing down risks emerging from financial instability and mounting corporate debt.

China also defended its Belt and Road Initiative, saying that criticism equating efforts to expand trade and investment globally with a geopolitical tool of Beijing is a "misinterpretation." Far from it, Zhang said Belt and Road was created five years ago to share economic growth and prosperity with others, in particular developing countries.

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