The world's top two economies edged towards an all-out trade war as China on Wednesday, rejected the US' demand to cut down trade deficit by $100 billion as "unviable" and announced plans to impose retaliatory tariffs worth $50 billion on 106 American products, including soybeans, cars and small aircraft.
The move comes after President Donald Trump's administration on Tuesday, published a list of about 1,300 Chinese exports worth $50 billion that could be hit by US tariffs because of Beijing's alleged theft of intellectual property and technology.
The Chinese Customs Tariff Commission of the central cabinet, in a retaliatory measure, decided to impose additional tariff of 25 per cent on 106 products under 14 categories worth $50 billion, the Ministry of Finance said in a statement.
Affected products will include a wide variety of agricultural products such as soybeans, corn, beef, orange juice and tobacco. A range of chemicals and automobiles, as well as aircraft with unladen weight between 15 tonnes and 45 tonnes, will also be subject to the tariffs.
However, it did not announce a date for their implementation.
"The date of implementation will depend on when the US government imposes the tariffs on Chinese products," it said.
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The Ministry of Commerce (MOC) in a statement said that the US' move was "an evident violation" of rules of the World Trade Organisation (WTO).
The US move "severely infringed on the legitimate rights and interests that China enjoys in accordance with the WTO rules, and threatened China's economic interests and security," the MOC said.
New tariffs China decided to impose on US products were a reaction to the "emergency" caused by the US violation of international obligations, it added. The economies of China and the US are highly complementary, and "cooperation is the only right choice for the two countries," the MOC said.
The MOC said China's decision was taken in retaliation to the US' proposed list of products subjects to additional tariffs, which covers Chinese exports worth USD 50 billion with a suggested tariff rate of 25 per cent.
The US plans to apply the tariffs to about $50 billion worth of goods to punish China for its alleged theft of trade secrets, including software, patents and other technology.
Trump is demanding China to cut down $375 billion trade deficit by $100 billion in about a month. His move sparked concerns over a trade war between the two largest economies of the world.
China has already slapped tariffs on 128 US products, including wine and pork, totalling to $3 billion in retaliation to Trump's move to impose tariffs on steel and aluminium.
China, which enjoys $375 billion surplus for the first time directly rejected US President Donald Trump's demand to cut down the deficit by USD 100 billion.
"The Chinese government cannot artificially intervene in the number of deficit of surplus. That is not viable," Chinese Vice Commerce Minister Wang Shouwen told media briefing here today when asked about Trump's demand.
"It is unacceptable to ask China alone to cut the deficit by $100 billion as the trade gap is determined by market forces and the overall economic policies and structure of the US."
"We cannot dictate change in trade deficit or surplus. Cutting deficit requires efforts from both the sides. China alone cannot make that happen," he said, adding that the US do not want to sell what China wants to buy.
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"We hope the US can relax the restrictions of export of high-tech products to China," he said. "The US boasts many advantageous industries but is self-restricted in terms of exports to China. Fewer exports resulted in the big trade deficit," Wang said.
"We hope the US will actively respond to China's efforts to expand imports, Wang said, inviting American businesses to attend the first China International Import Expo in November and show their products and services to Chinese consumers.
"We are glad to see that President Trump has eased restrictions on exports of energy products, crude oil and liquefied natural gas to China after taking office, which used to be banned," Wang said, pointing out that such measures will help tackle the trade imbalance. Wang said the trade gap is not as big as the US claims. "Taking into account transit trade and service trade, the real gap is only a third of the figure released by the US government."
According to US Census Bureau data, the trade deficit with China ran to a record $375 billion in 2017. Vice Finance Minister Zhu Guangyao, who also addressed the media, dismissed the idea that political motives were behind China targeting US soybean imports to hurt American farmers to ramp up pressure on Trump.
"Business is business. We should analyse the challenge we face and the way we deal with it from the perspective of the economy," he said. "We are forced to bring forward the product list, and there are grounds for the specific items and their order on the list," Zhu said.
US soybeans sold to China account for 62 per cent of its total soybean exports, with 32.85 million tonnes of soybeans exported to China last year, or 34.4 per cent of China's total imports, Zhu said.
While US farmers can benefit from healthy Sino-US economic ties, the export amount to China was too big, he said.