Business|China Strikes Defiant Stance on Trade Against Trump
BEIJING — China struck a defiant stance on Sunday in response to President Trump’s growing pressure on trade, blaming the United States for a breakdown in negotiations and saying it must withdraw its latest round of tariffs before a deal can be reached.
In a white paper released Sunday morning, Chinese officials showed little indication that they would back down, sending a signal that confrontation is the government’s formal approach to its trade dispute with Washington. The white paper came less than two days after the Chinese government threatened to put American companies and individuals on a blacklist if they stopped supplying their Chinese partners, without citing specifics.
“China will never give in on major issues of principle,” the white paper said. “China isn’t willing to fight a trade war, but it isn’t afraid to fight and will fight if necessary. That attitude has not changed.”
The white paper was released at a hastily arranged news conference on Sunday morning featuring Wang Shouwen, the Chinese vice minister of commerce and deputy China international trade representative.
“When you give them an inch, the U.S. wants a yard,” Mr. Wang said, adding that the United States insisted on “unreasonably high demands” that crossed over into the area of “intervening with China’s sovereignty.”
The Trump administration’s latest efforts to ramp up pressure on China “show very clearly who should take responsibility” for the current state of relations, he added.
While the white paper did not list any specific new threats, it showed an “alarming” amount of defiance, said Diana Choyleva, chief economist at Enodo Economics.
“It’s not necessarily an escalation as such, but a confirmation that China is now digging its heels in and preparing for a drawn-out conflict,” Ms. Choyleva said. “There won’t be any papering over the cracks as any potential trade deal would have been.”
China uses white papers to detail and formalize its response to often contentious issues, indicating that the government holds a singular and unified view on the matter.
The paper was released less than a month after Mr. Trump raised tariffs on Chinese-made products and threatened to impose still more after accusing China of backing away from its earlier commitments. It also follows the announcement three weeks ago that the Trump administration would restrict Huawei, a Chinese telecommunications company that the United States considers a security threat, from access to essential American-made technology like chips and software.
Mr. Wang called the Huawei move a “severe setback” for negotiations between the two countries, saying it had “unduly escalated trade frictions.”
Beyond its own retaliatory tariffs, China has made no specific threats about how it might respond. Still, through official appearances and commentaries in the state-run news media, Beijing has suggested that it could target American companies that source key components in their supply chain from China, like the minerals known as the rare earths that are used to power batteries and smartphones.
Stressing the point, Mr. Wang told reporters on Sunday that while China “has the biggest reserves of rare-earth metals, and we would like to meet the justified demands,” it would be “unacceptable” for other countries to use the minerals to contain China’s development.
In apparent retaliation for the ban on selling American technology to Huawei, the Chinese Ministry of Commerce said on Friday that it was putting together a list of foreign companies, individuals and organizations that it considered “unreliable,” without providing any details of which companies or entities the list would include or what the punishment would be.
The announcement sent many American companies scrambling to determine whether they might be considered for the list and what the ramifications would be.
Some American companies are already feeling official pressure. Over the weekend, the Chinese state news media reported that the government was investigating FedEx over what the reports said were “wrongful delivery of packages.” The issue is a sensitive one because American intelligence officials have hacked Huawei equipment in the past, leading to concerns among Chinese officials that Chinese-made equipment could be intercepted.
The report by Xinhua, China’s state-run news agency, added that this had “severely harmed clients’ legitimate rights and interests and violated China’s delivery industry regulations,” using the same language as the Ministry of Commerce in its announcement of the list.
Last week, FedEx acknowledged that some packages with paperwork sent by Huawei had been “misrouted in error.”
“FedEx will fully cooperate with any regulatory investigation into how we serve our customers,” the company said on Saturday.
Retaliating against American companies is a risky strategy for China. Many American companies are already reconsidering their dependence on Chinese manufacturing. Aggressive moves could only hasten that process, depriving China of a source of investment and jobs.
“While it’s unlikely that foreign firms will start pulling out of China en masse, they are definitely rethinking the deployment of future capital and investments,” said Jude Blanchette, an expert on Chinese policymaking at Crumpton Group in Virginia, which advises companies on investments. “It would make no sense for a large American firm to break ground on a new facility in China right now, given that there’s so much political and regulatory uncertainty swirling around.”
Mr. Wang said that China’s threat to make its own list had suffered from “some overinterpretations” and that China would continue to protect the rights of foreign and Chinese companies equally. Still, he said, China has little choice but to respond to the rising pressure from Mr. Trump.
“if the U.S. wants to use extreme pressuring and all kinds of ways to escalate trade frictions to force China to capitulate, this is impossible,” Mr. Wang said on Sunday.