China readies to exert ‘maximum pain’ on US

By Wang Cong Source:Global Times Published: 2018/4/7 20:28:39

China is ready to strike back at the US with a comprehensive set of countermeasures that are designed to exert maximum pain on the US economy, if the Trump administration follows through with what has widely been described in China as extortionist efforts to gain leverage over China in trade negotiations, Chinese experts warned on Saturday.

Tensions between the world's two largest economies further escalated on Thursday after US President Donald Trump threatened to slap tariffs on Chinese products worth $100 billion, leading Chinese officials to vow to fight back "at any cost."

While many experts believe that the two countries will ultimately solve the trade spat through negotiations, it is necessary for China to be ready to hit the US where it hurts the most in order to pressure the US to negotiate.

"We should be cautious and always leave room for negotiations but the latest escalation means that we need to be prepared to exert the maximum pain on the US. Only then the two sides can drop their tit-for-tat threats and have real negotiations," Huo Jianguo, a senior research fellow at the Center for China and Globalization, told the Global Times on Saturday.

In a statement released on Friday, the Chinese Ministry of Commerce (MOFCOM) said that if the US continues on its unilateral and protectionist path, "the Chinese side will fight to the end… and will take comprehensive countermeasures at any cost to firmly defend the interest of our country and people."

Asked about specific countermeasures at a press briefing on Friday night, MOFCOM spokesperson Gao Feng said that "we will not rule out any option."

Many cards

"There is no shortage of cards for China to play," said Huo, adding that China could target more US products or raise tariffs on products on a previous list made in response to US tariffs on $50 billion worth of Chinese goods.

"Though China has a trade surplus with the US, it can certainly match the $100 billion proposed by Trump," Huo said.

Bai Ming, deputy director of the International Market Research Institute under the MOFCOM, said that the MOFCOM remarks suggest that China could consider measures beyond tariffs on US goods in many other areas.

"Comprehensive measures mean China will not only look at trade in goods but also services, investment, finance, global governance and others," Bai told the Global Times on Saturday.

Bai said that China could target additional US products such as crude oil, US financial services, and US businesses operating in China.

"The US has a trade deficit with China, but it makes a lot of money through other means and we could do something in those areas," he said.

According to US official data, China was the second largest buyer of US crude oil in 2017 after Canada, importing 20 percent of US total export, and despite the overall trade deficit, the US has a $38 billion surplus in services trade with China.

Meanwhile, US companies sells about $300 billion worth of goods each year in China through their branches, according to media estimates.

Huo also added that China could start selling part of its massive holding in US Treasuries.

"For example, if we sell $200 billion US debts, that would definitely put significant pressure on the US financial market," he said.

Newspaper headline: Beijing has many cards to play, nothing off limit: experts

Posted in: ECONOMY

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