(Bloomberg) -- After a weekend of claims by U.S. President Donald Trump that he has the upper hand in the trade war with China, Beijing responded through state media by saying the nation is ready to endure the economic fallout.
China is prepared for a “protracted war” and doesn’t fear sacrificing short-term economic interests, according to an editorial in the nationalist Global Times on Sunday evening. “Considering the unreasonable U.S. demands, a trade war is an act that aims to crush China’s economic sovereignty, trying to force China to be a U.S. economic vassal.”
The exchange of barbs between the two sides follows the release late Friday in Beijing of a new tariff list designed to retaliate against the U.S. threat to impose new duties on $200 billion of Chinese imports. The worsening of the tension comes amid a slowing of China’s economy, declines in the currency and a bear market in stocks.
Trump told an audience of diehard supporters on Saturday that playing hardball on trade is “my thing.”
“We have really rebuilt China, and it’s time that we rebuild our own country now,” Trump said Saturday during about an hour of free-wheeling remarks at a rally outside Columbus, Ohio. China’s market declines weaken that nation’s bargaining power in the escalating trade war, he added.
Trump continued his focus on tariffs Sunday morning, tweeting that the duties are working “big time” and that imported goods should be taxed or made in the U.S. He also suggested duties will allow paying down “large amounts of the $21 trillion in debt that has been accumulated” while reducing taxes for Americans.
“Every country on earth wants to take wealth out of the U.S., always to our detriment,” Trump tweeted, “I say, as they come, Tax them.”
The yuan extended gains following a rally triggered by a surprise China central bank move to make it more expensive to bet against the currency. Asian stocks advanced Monday.
China stepped in Friday to try to cushion the yuan after a record string of weekly losses saw the currency closing in on the key milestone of 7 per dollar.
Duties ranging from 5 percent to 25 percent will be levied on 5,207 kinds of imports from America if the U.S. delivers its proposed taxes on another $200 billion of Chinese goods, the Ministry of Finance said in a statement on its website late Friday.
President Trump last week ordered officials to consider imposing a 25 percent tax on $200 billion worth of imported Chinese goods, up from an initial 10 percent rate. The move was intended to bring China back to the negotiating table for talks over U.S. demands for structural changes to the Chinese economy and a cut in the bilateral trade deficit, but China’s response suggests that tactic hasn’t worked.
“In the face of the bullying of the Donald Trump administration, Beijing must remain sober-minded and never let emotion override reason when deciding how to respond,” according to an editorial by the China Daily, the flagship state-run English newspaper. “Given China’s huge market, its systemic advantage of being able to concentrate resources on big projects, its people’s tenacity in enduring hardships and its steadiness in implementing reform and opening-up policies, the country can survive a trade war.”
To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger
©2018 Bloomberg L.P.