China talks tough but treads warily in tackling Donald Trump’s trade threats
Beijing is likely to retaliate in a ‘targeted’ way with measures including excluding US firms from policies to open up, according to analysts
Beijing is talking tough in the face of trade threats from US President Donald Trump, but its options for retaliation could be limited as it seeks to avoid an all-out trade war with America, analysts say.
Both Chinese and US officials are making last-ditch efforts to prevent a raft of tariffs from taking effect early next month, and Beijing has refrained from announcing any specific measures to retaliate against Trump’s latest threats this week.
The Chinese government does not want to show any weakness as it comes under pressure from the United States, its biggest geopolitical rival, and much of the rhetoric coming from the leadership and state media is about China fighting a trade war “to the end”.
Yet a tit-for-tat approach with the US could escalate tensions into an economic “cold war” between the world’s two biggest economies, and it could spill over into areas beyond trade, potentially derailing growth and undermining social stability in China, observers say.
“The recklessness of Trump is a new challenge for China ... he is dismantling a globalised trade system that has been running for three decades,” said Sun Lijian, an international finance professor at Fudan University in Shanghai.