China targets tariffs to protect home industries

CH23.jpg

China will keep hitting back at Washington as more US trade tariffs are imposed, but its counter-strikes will remain as targeted as possible to avoid harming Chinese or foreign businesses in China, Finance Minister Liu Kun has said.

For now the impact of the China-US "trade frictions" on the Chinese economy has been small, but Mr Liu, 61, said he is concerned about potential job losses.

In his first interview since taking up the position in March, he said that the Chinese government will increase its spending to support workers and the unemployed who are hurt by the trade conflict. He also predicted bond issuance by local governments to support infrastructure investment this year will pick up and break one trillion yuan.

The trade conflict escalated on Thursday as the United States and China heaped more tariffs on each other's goods. Since early July, the world's two largest economies have slapped each other with tariffs on a combined $100bn (€86bn) of goods.

"China doesn't wish to engage in a trade war, but we will resolutely respond to the unreasonable measures taken by the United States," Mr Liu said. "If the United States persists with these measures, we will correspondingly take action to protect our interests."

So far, China has either imposed or proposed tariffs on $110bn of US goods, representing most of its US imports. Crude oil and large aircraft are key US goods that are still not targeted for penalties. Talks between mid-level officials ended on Thursday without progress.

When asked if China would consider increasing tariffs on US goods that are already facing higher taxes, Mr Liu said China will respond with precision.

"We're responding in a precise way. Of course, the value of US imports of Chinese goods isn't the same as the value of Chinese imports of US goods. We'll take tariff measures in accordance to this situation," he said, without elaborating.

But China is conscious of the potential for bystanders to be caught in the line of fire, he said.

"When we take measures, we try our hardest not to harm the interests of foreign businesses in China. That's why our tariff measures are targeted to avoid affecting them as much as we can," said Mr Liu.

Some American businesses and industry lobbies, including the US Chamber of Commerce, have criticised US President Donald Trump's imposition of punitive tariffs on Chinese goods, saying the Chinese retaliation it is triggering will hurt businesses that already face greater competition from local rivals in China. US fast food, beverages and coffee chains including Starbucks and Yum China's KFC brand are ubiquitous in Chinese cities. US-branded infant formula, apparel, cars and phones are also popular.

The US tariffs have hit China's economic growth - albeit modestly - and their impact will become even more pronounced if frictions persist, Mr Liu said.

Mr Liu spent more than two decades in the Guangdong provincial government, taking on various roles including the head of its finance bureau. He became the vice governor of the export-oriented southern province in 2010.

He said he is very concerned about the Chinese jobs that could be lost. "From my perspective, I'd pay more attention to the impact that the China-US trade frictions has on jobs in China. After all, some firms will be affected, exports will be reduced and production will be cut," he said.