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China threatens 'countermeasures' on trade, without saying more

Key Points
  • "If the U.S. obstinately clings to its own way, China has no choice but to take corresponding countermeasures," Ministry of Commerce Spokesman Gao Feng said Thursday in Mandarin, according to a CNBC translation.
  • Gao also declined to provide specifics on an "unreliable entities list" or whether it would be used as a countermeasure to U.S. actions on trade.
Chinese President Xi Jinping and President Donald Trump at the G-20 Summit in Osaka on June 29, 2019.
Brendan Smialowsi | AFP | Getty Images

BEIJING — China is still short on details on how it will respond to new U.S. tariffs on Chinese goods.

"If the U.S. obstinately clings to its own way, China has no choice but to take corresponding countermeasures," Ministry of Commerce Spokesman Gao Feng said Thursday in Mandarin, according to a CNBC translation. "The U.S. should change its wrong actions."

He did not elaborate on what those measures might entail, but emphasized the need for fairness in trade negotiations.

The U.S. and China have been embroiled in a trade dispute for more than a year. 

President Donald Trump threatened earlier this month to raise tariffs on the remaining $300 billion worth of Chinese goods not yet subject to duties. His administration later delayed the effective date for some of the new tariffs from Sept. 1 to Dec. 15, ostensibly to reduce the impact on the holiday shopping season.

Gao's wording echoed the little official commentary that has come out on the U.S. tariffs. The Ministry of Finance said last week on its website, citing a person from the Customs Tariff Commission of the State Council, that China will have to take "necessary countermeasures," according to a CNBC translation.

China's 'unreliable entities' list

On Thursday, Gao declined to provide specifics on an "unreliable entities list" or whether it would be used as a countermeasure to U.S. actions on trade. China has threatened that foreign companies, organizations and individuals could be added to the list, which was announced in late May. Few details have emerged since.

Beijing's list came after the Trump administration said it would add Chinese telecommunications giant Huawei to a blacklist that essentially prevents it from doing business with its U.S. suppliers.

The trade war has shifted from focus on America's large trade deficit with China to technological competition, and has touched on a range of issues such as rare earths and agricultural products.

China has previously threatened to use the country's dominance in the global production of rare earths — used in many consumer electronics — as a tool in the trade war. Another point of leverage is China's position as one of the largest buyers of U.S. agricultural products.

On the other hand, the U.S. has been a primary market for Chinese goods. But trade between the two countries has moderated amid escalating tensions. Chinese exports to the U.S. have fallen for eight straight months, according to China Customs data from Wind Information.

Nick Marro, global trade lead at The Economist Intelligence Unit said in an email Thursday that while China will likely counter with new duties, most imported U.S. goods are already subject to tariffs.

Instead, he expects Beijing's approach will emphasize tightening of administrative and regulatory measures against foreign firms, and could enact the unreliable entities list by the end of the year.

"This (approach) includes an enhancement of environmental, cybersecurity or anti-trust investigations against certain companies - which China is in its rights to do, based on its existing policy framework," Marro said. "That, in turn, makes it difficult for U.S. companies to explicitly judge this as trade war retaliation, as China could claim that it's simply enforcing its laws."

The U.S. and Chinese trade delegations held a high-level phone call on Aug. 13 and agreed to speak again in the next two weeks.