China Says Ready to Deal With Fallout from U.S. Trade Row

China said it will fight back "relentlessly" the challenges imposed by trade frictions with United States.

    Apr 19, 2018 8:46 AM  PT
China Says Ready to Deal With Fallout from U.S. Trade Row
author: Reuters   

BEIJING (Reuters) - China is well-prepared to handle any negative effects from its trade dispute with the United States, the commerce ministry said on Thursday, adding that Beijing's tariff hikes on U.S. imports will not have a big impact overall on its domestic industries.

It would be a miscalculation by the United States, if its intention is to contain China's rise, ministry spokesman Feng Gao said at a regular media briefing in Beijing.

"If the U.S. 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," Gao said.

In the latest escalations in the widening trade row, the U.S. said this week it had banned American companies from selling parts to Chinese telecom equipment maker ZTE for seven years, while China on Tuesday announced hefty anti-dumping tariffs on imports of U.S. sorghum and measures on synthetic rubber imports from the U.S., EU, and Singapore on Thursday.

"We are capable of resolving the challenges created by China-U.S. trade frictions," said Gao.

Gao said Beijing hopes Washington will not underestimate China's resolve to fight back.

"We will relentlessly fight back," he said, adding that China will take any necessary measures at any time in response to the U.S. move against ZTE.

Most analysts believe the two sides will eventually reach a compromise and avoid a full-blown trade war. But so far, China and the U.S. have held no formal trade talks, Gao said.

On April 2, China slapped additional import taxes on 128 U.S. products including frozen pork and wine, in response to U.S. duties on imports of aluminum and steel.

Two days later, China warned it was considering increasing duties on an additional 106 U.S. imports, hitting back at the U.S.'s plan to levy duties on $50 billion of Chinese goods following a months-long intellectual property probe.

A full-scale trade war between the world's two economic superpowers would hurt both Chinese and U.S. exports and have a negative impact on growth in the two countries, as well as probably lead to collateral damage for other countries.

The global economy will expand this year at its fastest pace since 2010, but trade protectionism could quickly slow it down, the latest Reuters polls of over 500 economists worldwide suggest.

China's economy grew at a slightly faster-than-expected pace of 6.8 percent in the first quarter. However, a surprise move by China's central bank to cut the amount of cash that lenders must keep in reserves on the same day rattled investors who took it as a sign Beijing is worried about economic growth momentum.

Earlier on Thursday, China's foreign exchange regulator said that any potential impact on the nation's cross-border capital flows stemming from Sino-U.S. trade frictions can be controlled, and vowed to continue with plans to further open up capital markets in the world's second-biggest economy.

Alumina Traders Benefit from Sanctions on Russia

Separately, Chinese traders are preparing to export alumina to reap the profits from record prices for spot cargoes after the United States imposed sanctions on Russia's United Company Rusal, among the biggest producers of the aluminum raw material.

The Rusal sanctions have upended the aluminum supply chain, as companies cut contracts to use Rusal metal, leaving producers of cans or auto parts scrambling for supplies, which is likely to feed into higher costs for end users such as automakers, like Toyota, or beer can makers like Ball.

China is the world's biggest producer and consumer of alumina. The country said it is preparing for export.

In April, exports may remain small, but they could increase to between 120,000 to 180,000 tons for May, said Wan Ling, an analyst at metals consultancy CRU.

The Chinese companies are hoping to cash in on surging alumina prices. An alumina cargo bound for Brazil for May delivery sold at $800 per ton on Wednesday, said Wan.

This is a 45-percent increase from $550 a ton for Australian cargoes that was reported on Wednesday. A typical alumina shipment carries 30,000 tons of metal.

"We have never seen these prices before. Prices may stay strong or go higher," said Wan.

China exported nearly 56,000 tons of alumina last year, according to data from the General Administration of Customs.