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China digs in on trade as tariffs near, economy deepens slowdown

Jun 28 2018 12:30
Bloomberg News

China reiterated its opposition to new curbs on investment in the US, as White House officials tussle over trade policy and the imposition of tariffs approaches.

Restrictions on US exports to China - of sensitive technologies that the government wants to protect - will backfire, hampering President Donald Trump’s intention to lower his nation’s trade deficit, according to Commerce Ministry spokesperson Gao Feng on Thursday.

Beijing is monitoring the impact of the proposed strengthening of the Committee on Foreign Investment in the US, after Treasury Secretary Steven Mnuchin won an internal fight to stave off an even tougher approach to curbing Chinese investment in US technology.

Even so, there’s little sign of a broader detente between the two sides, as a July 6 start-date for tariffs on $34bn of Chinese imports approaches.

“The US wants to expand its exports and narrow the trade deficit. It has huge potential in high-tech products and services trade. However, the move to restrict exports can only backfire,” Gao said.

He also argued that a protectionist US has become a major drag on global cross-border investment and economic growth, and repeated the threat that China will fight back with "quantitative and qualitative measures" should the US roll out a new tariff list.

China looks more exposed to the impact of worsening trade relations with the US than just a few months ago. Economic data for May came in below expectations, and the slide looks likely to continue in June.

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