Chinese stocks slumped overnight as trade war tensions escalated after Wilbur Ross said there’s more pain ahead unless China changes its economic system, as Beijing repeated it will never surrender to U.S. trade threats.
“We have to create a situation where it’s more painful for them to continue their bad practices than it is to reform,” Commerce Secretary Wilbur Ross said in an interview on Fox Business Network late on Thursday. As a result, Trump will keep turning up the pressure on China for as long as the country refuses to level the economic playing field, Ross said.
Pointing out the obvious, Ross said that “the reason for the tariffs to begin with was to try and convince the Chinese to modify their behavior. Instead they have been retaliating. So the president now feels that it’s potentially time to put more pressure on, in order to modify their behavior.“
As for the impacts on the US economy, Ross noted that a 25% levy on $200bn is $50bn per year on a $18 trillion economy, so even if the levy was passed, “it’s not something that’s going to be cataclysmic”.
Elsewhere Bloomberg cited unnamed US officials who noted that the US is open to new formal talks with China, but Beijing must agree to open its market to more competition and stop retaliatory measures.
Ross’ comments follow a statement by China’s Ministry of Commerce which noted that “China is fully prepared and will have to retaliate to defend the nation’s dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries,” China’s Ministry of Commerce said in a statement Thursday on its website. The “carrot-and-stick” tactic won’t work, it said.
Elsewhere, a member of its State Council Wang Yi said “we hope that those directly involved in the US trade policies can calm down…”
Indeed, along with its pledge to fight back, China also left the door open for a resumption of negotiations. “China has consistently advocated resolving differences through dialogue, but only on the condition that we treat each other equally and honor our words,” the ministry said.
Trump said last month that he’s willing to impose tariffs on every good imported from China, which totaled more than $500 billion last year. American companies, industry and consumer groups have pleaded with the administration to avoid tariffs, saying they could raise their costs and eventually lead to price hikes for consumers.
So, as DB’s Jim Reid notes, “lots bubbling along till the end of the public comments period in the US on 5th September.”
via RSS https://ift.tt/2O6JJ9S Tyler Durden