Cargo Ships are docked at the Mumbai Port in India. (Photographer: Amit Bhargava/Bloomberg News)

U.S. Tariffs Won't Force China to Back Down, Trade Minister Says

(Bloomberg) -- The U.S. shouldn’t believe that ever higher tariffs can induce China’s government to capitulate to American demands in the escalating trade dispute between the world’s biggest economies, according to Chinese Commerce Minister Zhong Shan.

"There is a view in the U.S. that so long as the U.S. keeps increasing tariffs, China will back down,” Zhong said in a written statement to Bloomberg. “The U.S. should not underestimate China’s resolve and will.”

U.S. Tariffs Won't Force China to Back Down, Trade Minister Says

Zhong’s statement comes after the two countries imposed more tariffs last month. With both sides now attacking each other, there are no signs that either side will back down, and the conflict is now expected to cut global growth this year.

"This unyielding nation suffered foreign bullying for many times in history, but never succumbed to it even in most difficult conditions," Zhong wrote in response to questions from Bloomberg. "China doesn’t want a trade war, but would rise up to it should it break out."

The ongoing clash would have a "negative influence" on China’s economy, but Zhong argued that the victims of the U.S.’s tariffs on Chinese products include American companies and consumers. The U.S. is attacking its own exports, he said, stressing that China is confident and capable that it can ensure stable and healthy development.

China’s Meager Profits

Trade has benefited both countries, Zhong emphasized, rejecting the claim of President Donald Trump that China has taken advantage of the U.S. In making that point, he said that the majority of Chinese industry are at the bottom of the curve, only making meager profits.

That echoes earlier comments from Fu Ziying, the Ministry of Commerce’s international trade negotiator, who argued last month that while the U.S. has a trade deficit with China, Chinese companies have a profit deficit with the U.S.

Zhong’s comments are the latest in China’s public efforts to make its case, including an 81-page white paper, a paid supplement in Iowa’s largest newspaper highlighting the trade war’s impact on local farmers, and senior officials facing the media. The Iowa advertisement seemed to have contributed to Trump’s accusation that China was attempting to interfere in the 2018 U.S. midterm congressional elections.

Accusation of Election Meddling

The Chinese foreign ministry denied that allegation last month, with spokesman Geng Shuang saying, “we urge the U.S. to stop smearing and accusing China.”

Zhong addressed accusations that China’s growth has been made possible by stealing intellectual property and forcing foreign companies to transfer their technology. In denying those allegations, he said China’s laws and regulations do not contain any requirement for technology transfer. Zhong attributed China’s technological progress to the country’s reform and opening and the work of its citizens.

He added that China will continue to open up, no matter the trade war. In explaining why, Zhong cited Xi saying that "openness leads to progress while seclusion leaves one behind". "Going forward China will unswervingly open up at a preset pace," he said.

To contact Bloomberg News staff for this story: John Liu in Beijing at jliu42@bloomberg.net

©2018 Bloomberg L.P.

With assistance from Editorial Board