US-China trade war
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Chinese President Xi Jinping next to a Chinese flag at the Great Hall of the People in May. Photo: Getty Images

‘Arrogant demands’ by US ‘invade’ China’s economic sovereignty, state news agency says

  • Attempts to restrict the development of state-owned enterprises seen as ‘forcing China to change its development path’
  • Xinhua says negotiations are now touching China’s fundamental economic system

The United States has called on China to curb the development of its state-owned enterprises (SOEs), a demand that China sees as an “invasion” on its economic sovereignty, Chinese state news agency Xinhua said on Saturday.

Trade tensions between Washington and Beijing escalated sharply earlier this month after the Trump administration accused China of having “reneged” on its previous promises to make structural changes to its economic practices.

Washington later slapped additional tariffs of up to 25 per cent on US$200 billion of Chinese goods, prompting Beijing to retaliate.

As trade talks stalled, both sides have appeared to be digging in. China has denied it had walked back on its promises but reiterated it would not make concessions to “matters of principles” to defend its core interests, although no full details were given.

US President Donald Trump during an event with American farmers and ranchers in the Roosevelt Room of the White House in Washington, D.C., this month. Photo: Bloomberg

“At the negotiating table, the US government presented a number of arrogant demands to China, including restricting the development of state-owned enterprises,” Xinhua said in a commentary.

SOEs in China enjoy not only explicit subsidies but also hidden benefits such as implicit government guarantees for debts and lower interest for bank loans, analysts and trade groups say.

“Obviously, this is beyond the scope of trade negotiations and touches on China’s fundamental economic system,” Xinhua said.

“This shows that behind the United States’ trade war against China, it is trying to invade China’s economic sovereignty and force China to damage its core interests.”

The commentary added the United States has made unfounded accusations including that Beijing had forced technology transfers from foreign firms operating in China, saying this is all evidence that the U.S side is “forcing China to change its development path.”

This article appeared in the South China Morning Post print edition as: China says US demands are ‘sovereignty on its state-owned enterprises is 'invasion’