Published: Wed, July 11, 2018
Business | By Kate Woods

China says "fully prepared" if trade war kicks off this week

China says

They also offered a rare moment of humour in an increasingly acrimonious row between the world's top two economies. China retaliated with taxes on an equal amount of USA products, including soybeans, pork and electric cars, calling the move the start of the "biggest trade war in economic history".

He told CNBC that there may be no way to escape a trade war with China. It gave no immediate details of possible retaliation but Beijing earlier released a target list of American goods for duty increases including soybeans, electric cars and whiskey.

Technology goods like semiconductor chips assembled in China. The motorcycle company announced last month it would move production out of the U.S.to get around the EU's retaliatory tariffs.

What the USA really wants to target though are things produced under China's Made in China 2025 policy.

Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum from several countries.

Medical products; coal; petroleum (but only marginally). "But what if rhetoric becomes reality?"

Media captionWhat is Beijing planning with its "Made in China 2025" programme? "China deficit, this is a point that I think the administration misunderstands", she said.

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But the talk is turning into real barriers to trade.

Which means: expansion plans could be put on ice.

The Chinese have appealed to the rest of the world as well to join in its fight against the US' unilateralism.

The US might ultimately prevail against China - it can do more damage to China's economy than China can inflict on the US - but the US economy will be damaged, probably significantly, if the war continues to intensify.

It discussed economic threats and external risks, according to a government statement which added the country has "favourable conditions to win big risk control battles and cope with external risks".

"China and European countries are natural partners", it said. But China also believes its economy, with a greater focus on domestic demand and a reduced dependence on exports, can ride out the storm.

It is unclear whether the Trump administration appreciates how integrated the global economy has become or have properly thought through the consequences for the United States if Xi Jinping and the European Union leadership refuse to blink and subsequently cave in to the USA demands that they sell less to the U.S. and buy more from it.

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Investors also welcomed new data Friday from the government showing that US employers kept up a brisk pace of hiring last month, without having to hike wages much.

The lack of any dramatic reaction suggests many market players have already factored the escalation in trade tensions into their trading strategies.

China also will impose a 25 percent tariff on imports of USA beef on July 6, bringing the existing 12 percent duty to 37 percent.

This would inevitably push up prices for Tesla in China, making its vehicles less competitive than they already are, relative to others. Asian equities wobbled but also managed to end up.

"The U.S. has provoked this trade war".

China's government also announced it was adding this round of US tariffs to an existing complaint filed with the WTO in April shortly after Washington unveiled the threat to punish Beijing for its policies on intellectual property.

While no one is saying we're there yet, businesses are getting more concerned than they have been in the past, especially because of all the uncertainty. That conjures the image of this being a cool, calm, collected game of chess on both sides: Washington and Beijing.

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"You are no ordinary soybean!" said another. "And then you don't just beggar your neighbour, you beggar yourself".

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