US President Donald Trump plans to impose tariffs on up to $US60 billion ($77 billion) in Chinese goods for what he called misappropriation of US intellectual property under Section 301 of the 1974 US Trade Act.
The escalating tension sent shivers through financial markets as investors foresaw dire consequences for the global economy if trade barriers start going up.
The White House said the planned tariffs were aimed at punishing Beijing for allegedly stealing American technology and pressuring US companies to hand it over.
In a telephone call with Mr Mnuchin, Mr Liu, a Harvard-trained economist who advises President Xi Jinping, said China still hoped both sides would remain “rational” and work together to keep trade relations stable, the official Xinhua news agency said.
The Section 301 investigation report “violates international trade rules and is beneficial to neither Chinese interests, US interests nor global interests”, Xinhua cited Mr Liu as saying.
“China has already prepared, and has the strength, to defend its national interests,” Mr Liu said, adding that China hopes both sides can work hard to protect the broad picture of generally stable Sino-US trade and business relations.
Both sides agreed to continue to communicate on the matter, the report added, without providing further details.
China ‘only just beginning to look at means to retaliate’
China showed readiness to retaliate by declaring plans to levy additional duties on up to $4 billion of US imports, including fruit and wine, in response to US import tariffs on steel and aluminium that were due to take effect on Friday.
The state-run Global Times said China was only just beginning to look at means to retaliate, following the announcement of its initial response.
“We believe it is only part of China’s countermeasures, and soybeans and other US farm products will be targeted,” the widely-read tabloid said in a Saturday editorial.
“It does not look like just a trade war, but rather the US is trying to bully China and the rest of the world in order to make China concede economic resources and development opportunities to the US and make the US forever big and strong.”
The Chinese move appeared to be warning shot aimed at increasing domestic US pressure on Mr Trump by making clear which exporters, including farm areas that voted for the president in 2016, might be hurt.
On Friday, American farmers from hog producers in Iowa to apple growers in Washington state and winemakers in California expressed deep disappointment over being put in the middle of a potential trade war with China by the president many of them helped elect.
China’s Commerce Ministry said Friday Beijing was considering a tariff increase of 25 per cent on pork and aluminium scrap, mirroring Mr Trump’s 25 per cent charge on steel.
A second list of goods, including wine, apples, ethanol and stainless steel pipe, would be charged 15 per cent, mirroring Mr Trump’s tariff hike on aluminium.
China has made great efforts to be constructive to try and deal with the trade frictions in the face of US provocation, the ruling Communist Party’s official People’s Daily wrote in a commentary.
“But Washington was determined to choose rashness and impetuousness, and the necessary effect from this was China’s follow-up actions to resolutely protect its own legitimate interests,” it said.
The United States should not underestimate China’s determination to protect itself, the paper said in an article signed “Zhong Sheng”, or “Voice of China”, used to express its views on foreign affairs.