WRAPUP 3-China signals tough trade stance as U.S. officials push negotiations

(Adds Trump, investor comments)

BEIJING/WASHINGTON, April 5 (Reuters) - China would win any trade war with the United States, the country's state media said on Thursday, as U.S. officials sought to ease market jitters over escalating tensions between the world's two biggest economies.

After Washington and Beijing targeted each other with planned steep tariffs, Chinese state media declared that the country never surrendered to external pressure and would prevail in any tit-for-tat on trade.

In Washington, U.S. officials emphasized a desire for negotiations as a way to ease or avert punishing tariffs and get the two countries off a trade war footing.

The dispute has roiled global markets, but stocks rose on Thursday as investors responded to comments from U.S. officials seeking to soothe concerns about a trade war.

"As part of this deal - and I think we are going to get a deal over a period of time - yes, I think these barriers will come down on both sides," Larry Kudlow, director of the White House National Economic Council, told reporters on Thursday.

U.S. President Donald Trump understands that economies do better when trade barriers are reduced rather than raised, Kudlow said, and that tit-for-tat tariffs do not work for the economy in the long term.

"It's all part of the, you know, fairly delicate, broad-based negotiation that's long overdue if it fixes things, it could have a great ending," Kudlow said.

Later in the day, Trump continued his tough talk, however, although providing few details about the current dynamic between the two nations.

"You probably saw that, for many years, no president wanted to go against China economically," he told a crowd at an event in White Sulphur Springs, West Virginia.

"We can't be taken advantage of any longer," Trump said. "We're at a point where we had to do this."


Even as U.S. markets remained stable on Thursday, investors struggled to make sense of the signals coming from the administration.

"I don't think anybody really knows what's going on. That's why you've seen the volatility we've seen," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

"Investors aren't dealing with it well. What we're trying to figure out is how he handles policy and negotiation. We're still learning what to expect from his negotiating style."

Trump has wedded much of his economic message to the performance of the stock market, and White House aides insisted this week that any downturn as a result of the trade standoff would be momentary.

On Wednesday, China's ambassador to the United States, Cui Tiankai, told reporters in Washington that Beijing preferred to resolve the trade dispute through negotiations, but China's state media took a tougher stance.

The ruling Communist Party's People's Daily said Beijing's quick counter-move after Washington announced new tariffs this week had caught the Americans off guard.

"Within 24 hours of the U.S. publishing its list, China drew its sword, and with the same strength and to the same scale, counterattacked quickly, fiercely and with determination," the newspaper said in a commentary on Thursday.

"The confidence to know that (China) will win the trade war comes from the scale of (China's) consumer market," it said, noting that China's market potential was incomparable to that of other economies.

Late on Wednesday, the official Xinhua news agency said the U.S. tariffs proposal would cost the United States "dearly."

"China will not be afraid or back down if a trade war is unavoidable. The country has never surrendered to external pressure, and it will not surrender this time either," Xinhua said.


Many American consumer product and industrial companies see the Chinese market as a big source for future growth given the continued rise in the number of people joining both the middle class and the wealthier levels of Chinese society.

The United States' proposed list of $50 billion in duties on Chinese goods is aimed at forcing Beijing to address what Washington says is deeply entrenched theft of U.S. intellectual property and forced technology transfer from American companies.

China's threatened tariffs on U.S. imports include soybeans, planes, cars, whiskey and chemicals.

Some of Trump's fellow Republicans in Congress have expressed worry the tariffs will hurt states that export farm products. White House trade adviser Peter Navarro said the Trump administration would help American farmers who could take an economic hit in the trade moves.

"We have the backs of farmers in this administration," Navarro told CNBC in an interview.

Neither of the tariff lists issued by the two countries has gone into effect yet. Washington will hold public comment period expected to last around two months, and Chinese officials have said its implementation will depend on U.S. action.

(Reporting by Michael Martina in Beijing and Susan Heavey in Washington; Additional reporting by Engen Tham in Shanghai, David Lawder, Doina Chiacu, Makini Brice, and James Oliphant in Washington, Sinead Carew in New York and Jeff Mason in White Sulphur Springs, W.Va.; Editing by Frances Kerry and Peter Cooney)