China rejected US accusations of backtracking in trade talks and warned it would not "capitulate to any pressure" as the two sides head into make-or-break negotiations on Thursday.
After months of seemingly collegial talks, Chinese trade envoy Liu He returns to the bargaining table in the US capital under a tense atmosphere after US negotiators accused Beijing of reneging on previously agreed commitments.
The United States has raised the stakes with plans to increase tariffs on $200 billion in Chinese goods from 10 to 25 percent on Friday, prompting Beijing to vow to hit back with "necessary countermeasures".
"The US has assigned a lot of labels, such as backtracking, going back on one's word, and so on. Lots of promises have been foisted on China," Chinese commerce ministry spokesman Gao Feng told reporters in Beijing.
"The Chinese side has kept its promises and this has never changed," he added, without specifying what measures Beijing would take but warning that it "has already prepared for all possible situations."
"China will not capitulate to any pressure, and we have the determination and ability to defend our own interests," Gao said.
President Donald Trump tweeted Wednesday that Liu still wanted to "make a deal", but the US leader boasted about tariffs that were "not good for China".
"By the way, do you see the tariffs we're doing? Because they broke the deal! They broke the deal!" Trump said at a rally in Florida on Wednesday.
"So they are flying in — the vice premier tomorrow is flying in. Good man. But they broke the deal. They can't do that. So they'll be paying if we don't make the deal."
The sudden rupture has roiled global stock markets this week and unnerved exporters caught off guard after negotiators on both sides had previously touted progress in the negotiations.
Markets in Europe and Asia sank again on Thursday.
American officials this week accused their Chinese counterparts of retreating from major planks of an agreement they had been working toward since early in the year that aims to resolve Washington's grievances of industrial theft, massive state intervention in markets and a yawning trade deficit.
"It turns out the Chinese had pulled out an eraser and started taking back things that they had offered," said Scott Kennedy, a China trade and economics expert at the Center for Strategic and International Studies.
"They didn't realize when they pulled their concessions off the table that the administration would have the reaction that it did," he told AFP.
Kennedy warned that the "possibilities for miscalculation on both sides is pretty high."
– 'There's a lot of pressure' –
Since last year, the two sides have exchanged tariffs on more than $360 billion in two-way trade, gutting US agricultural exports to China and weighing on both countries' manufacturing sectors.
US Trade Representative Robert Lighthizer released an official notice on Wednesday making the tariff increase a virtual fait accompli.
Punitive duties on a vast array of Chinese-made goods, from electrical equipment to machinery to seafood to furniture, will jump to 25 percent at midnight Thursday (0400 GMT Friday).
Chinese producers of the impacted goods this week said the abrupt tariff hike had wreaked havoc on operations and would bring high costs, layoffs and further shifts of production to Southeast Asia.
"If the tariffs go up to 25 percent, costs will go up, customers so far have suspended orders, I don't know what will happen," said Emily Wang of Hainan Zhongyi Frozen Food, which exports tilapia.
Washington has demanded far-reaching changes to the Chinese economy, such as submitting state enterprises to market principles, reducing massive subsidies and ending the alleged theft of US technology.
Analysts say China will be reluctant to make many of these changes, which could undermine the Communist Party's political power.
Each side possibly believes it is better positioned than the other to survive the dispute, according to Kennedy.
"We'll increase tariffs on China. We won't back down until China stops cheating our workers and stealing our jobs," Trump told the Florida crowd.
"The era of economic surrender is over."
– 'Please the Grand Poobah' –
While US companies complain of lost export markets, disrupted supply chains and higher costs, the US continues to see steady growth and falling unemployment.
Anthony Nieves, who heads a survey of the services sector by the Institute for Supply Management, said the tariffs were hitting China "a lot more than what we're feeling over here in the states. There's a lot of pressure on them."
Various media accounts indicated the Chinese side had balked at US demands that Beijing codify the seven-chapter agreement in Chinese law and publish the text of the deal, or sought to water it down.
Mary Lovely, an economist at Syracuse University, said the Chinese objected foremost to enacting a law to ratify the agreement, given that the text of any accord was likely to be "vague."
She doubted the Chinese side had simply miscalculated the potential American reaction, adding that Liu likely still believed he could offer enough concessions to ensure a deal.
"They're bringing enough gifts to please the Grand Poobah in the White House," she said. "Otherwise, I don't think Liu would be coming."
More than a year of US-China trade tensions
Paris (AFP) May 9, 2019 –
The United States and China have been locked for more than a year in a tit-for-tat trade dispute after President Donald Trump announced hefty taxes on steel and aluminium imports.
With negotiations due to resume in Washington Thursday, here is a recap.
– Tax on steel, aluminium –
On March 8, 2018 Trump announces tariffs of 25 percent on steel imports and 10 percent on aluminium in a bid to slash the US trade deficit.
China, the world's biggest producer of the two products, supplies two percent of US steel imports and nearly 10 percent of its aluminium.
– No exemption for China –
On the eve of the application of the tariffs, Trump suspends them on March 22 for several countries but not China.
Beijing responds with a list of 128 US products, including pork and fruit, on which it says it will impose customs duties of 15-25 percent if negotiations with Washington fail.
On April 3 Washington issues a list of $50 billion in Chinese imports set to be targeted by US tariffs — including as electronics, aircraft parts and medicine — as a response to alleged theft of US intellectual property.
Beijing riposts with plans to hit imports of the same value, including soya, cars and aircraft.
– Signs of appeasement –
On May 19 the countries announce a draft deal under which Beijing agrees to reduce its trade surplus "significantly".
It says it will reduce from July customs duties on imports of cars, clothing, household goods, cosmetics and fish.
On June 6 Beijing offers to buy nearly $70 billion of extra US goods if Washington drops its threat of tariffs on $50 billion of Chinese goods.
– Trade war –
The United States nonetheless goes ahead and implements on July 6 duties of 25 percent on about $34 billion in Chinese machinery, electronics and high-tech equipment.
Beijing in turn imposes tariffs of equal size and scope, including on farm produce, cars and marine products.
It complains to the World Trade Organization (WTO) about the "largest trade war" in economic history.
On July 16 Washington goes to the WTO over the Chinese measures.
– Escalation –
On August 23 the United States imposes tariffs on another $16 billion of Chinese goods.
China applies 25 percent tariffs on $16 billion of US goods, including Harley-Davidson motorcycles, bourbon and orange juice.
On September 24 Washington slaps 10 percent taxes on $200 billion of Chinese imports. Beijing puts customs duties on $60 billion of US goods.
– Truce –
On December 1 Trump and China leader Xi Jinping agree a ceasefire to the trade war. Washington suspends for three months a tariff increase from 10 to 25 percent due to begin January 1 on $200 billion of Chinese goods.
China agrees to purchase a "very substantial" amount of US products.
Relations tense again with the arrest on December 1 in Canada, at the US's request, of a top executive at Chinese telecom giant Huawei, Meng Wanzhoum, accused of violating US sanctions on Iran.
But on December 14 China says it will suspend extra tariffs added to US-made cars and auto parts for three months starting on January 1.
On December 28 it allows imports of American rice.
In January and February 2019 Beijing and Washington hold several rounds of trade negotiations.
On February 25 Trump puts off a customs duties hike planned for March 1, citing "progress".
– US ups pressure –
On May 5, days before the new trade talks open, Trump announces that tariffs on $200 billion in Chinese merchandise will be more than doubled to 25 percent.
The US accuses China of backtracking on commitments in trade talks, which Beijing rejects, warning it will not capitulate to pressure ahead of negotiations starting Thursday.
