Ready to deal with any fallout from trade row with US, says China

The commerce ministry of China says that the country is well prepared to handle any negative effects from its trade dispute with US. It also said that the Beijing’s tariff hikes on US imports will not have a large impact on its domestic industries.

“If the US intends to contain China’s rise, then it would be a mere miscalculation from their side,” said ministry spokesman Gao Feng at a regular media briefing in Beijing. “If the US attempts to use protectionist trade policies to contain China’s development and force China to make concessions even at the costs of companies’ interests, it has taken a miscalculated step,” he said.

The US said this week that it had banned American companies from selling parts to Chinese telecom equipment maker ZTE for seven years.  On the other hand, China announced hefty anti-dumping tariffs on imports of US sorghum on Tuesday. It also announced measures on synthetic rubber imports from the US, EU and Singapore on Thursday. “We are capable of resolving the challenges created by China-US trade frictions,” said Gao Feng.

“Beijing hopes that the Washington will not underestimate China’s resolve to fight back,” Gao said while responding to a Reuter’s question, “We will relentlessly fight back,” he added. “China will take any necessary measures at any time in response to the US move against ZTE,” he further said.

Analysts believe that the two sides will avoid a full-blown trade war by reaching to a compromise of sorts. But so far, both the countries have held no formal trade talks, Gao said.

China slapped additional import taxes on 128 US products on second April, including frozen pork and wine, in response to US duties on imports of aluminium and steel. After two days, China warned it was considering increasing duties on an additional 106 US imports, hitting back at the US’s plan to levy duties on $50 billion of Chinese goods. A full-fledged trade war between the two countries would hurt both Chinese and US exports, having a negative impact on growth of two countries.

The latest Reuters polls of over 500 economists suggest that the global economy will expand this year at its fastest pace since 2010. However, the trade protectionism could quickly slow it down. In the first quarter, China’s economy grew at a slightly faster-than-expected pace of 6.8 percent. But, the investors were rattled by a surprise move of China’s central bank to cut the amount of cash that lenders must keep in reserves.

Any potential impact on the nation’s cross-border capital flows stemming from Sino-US trade frictions can be controlled, said China’s foreign exchange regulator on Thursday. It vowed to continue with plans to further open up capital markets in the world’s second-biggest economy.