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New tariffs take effect as China accuses US of 'economic hegemony' in white paper

US goods being sold in China's eastern Shandong province will likely be affected by the latest round of tariffs beginning on 24 September. Photo: STR/AFP/Getty Images

The United States and China have imposed new tit-for-tat tariffs against each other's goods, the latest escalation in a heated trade war between the world's two largest economies.

US tariffs on $200bn worth of Chinese goods and retaliatory tariffs by Beijing on $60bn worth of US products took effect at 0400 GMT. The two countries already exchanged tariffs on $50bn worth of each other's goods earlier this year.

Though a senior White House official last week said the United States would continue to engage China for a "positive way forward," neither side has signaled a willingness to compromise.

The US official said on Friday that there was no date set for the next round of talks. The Wall Street Journal reported that China has cancelled upcoming trade discussions with the United States and will not send vice premier Liu He to Washington this week.

Economists have warned that a protracted dispute will eventually stunt growth not just in the United States and China but across the broader global economy. Worries about the confrontation have already rattled financial markets.

Chinese products hit with new duties include a range of consumer goods from vacuum cleaners and seafood to Internet-connected devices. Previous tariffs targeted industrial goods and components. US goods targeted by Beijing include liquefied natural gas and certain types of aircraft.

The trade tensions have cast a pall over broader relations between Beijing and Washington, with the two sides butting heads on a growing number of issues.

On Saturday, China summoned the US ambassador in Beijing and postponed joint military talks in protest against a US decision to sanction a Chinese military agency and its director for buying Russian fighter jets and a surface-to-air missile system. China also recalled its naval chief from the United States.

Rob Carnell, chief Asia economist at ING, said in a note to clients that in the absence of any incentives Beijing would likely hold off on any further negotiations for now.

"It would look weak both to the US and at home," he said, adding that there is "sufficient stimulus in the pipeline" to limit the damage of the latest tariffs on China's growth.

"The US-China trade war has no clear end in sight."

The Trump administration will levy tariffs of 10 percent on the $200bn of Chinese products, with the tariffs to go up to 25 percent by the end of 2018. Beijing's new levies will be 5-10 percent.

President Donald Trump on Saturday reiterated a threat to impose further tariffs on Chinese goods should Beijing retaliate, in line with his previous comments signaling that Washington may move to impose tariffs on virtually all imported Chinese goods if the administration does not get its way.

China imports far less from the United States, making a dollar-for-dollar match on any new US tariffs impossible.

Instead, it has warned of "qualitative" measures to retaliate. Though Beijing has not revealed what such steps might be, business executives and analysts say China could withhold exports of certain products to the United States or create more administrative red tape for American companies.

'Economic hegemony'

Soon after the new tariffs went into effect, China issued a 36,000-word white paper accusing the US of "economic hegemony" that threatens the global multilateral trading system as well as the Sino-US ties, according to the official Xinhua News Agency.

The document declared that the "America first" economic policies being pursued by the US administration and punitive tariffs on Chinese products had "greatly undermined" the bilateral economic ties and threatened the world's multilateral system of trade.

The government re-emphasized its belief in free trade and multilateralism. 'Cooperation is the only right option and only win-win cooperation can lead to a better future" for China and the United States, it added.

The white paper – titled 'Facts about the China-US trade dispute and China's stance" – marked the latest effort by Beijing to portray itself as occupying the moral high ground in the quarrel with the United States, analysts said.

Liu Weidong, a Sino-US affairs expert from the Chinese Academy of Social Sciences, said that Beijing was not intending to end the trade war with Washington via the document but was using it to show to the international community its 'sincerity and willingness to resolve the trade issues'.

The white paper also "shows the world that Beijing has really tried its best" to avoid confrontations with the United States, Liu added.

Tu Xinquan, a trade professor at the University of International Business and Economics in Beijing, said that China was trying to "show goodwill" by releasing a white paper and avoiding the term "trade war".

"China's policy is consistent but the tone is a bit softer compared with a few months ago," Tu added. "Beijing is kicking the ball back into Trump's court" by demonstrating to the audience both at home and abroad that China is willing to talk but the United States is not.

Julian Evans-Pritchard, senior China economist at Capital Economics, said taht Beijing wanted to be seen 'as a victim rather than the perpetrator" of the trade war and the white paper was part of that effort.

"They reiterate that they are liberalizing the markets, you just have to be patient [and] you will be rewarded," Evans-Pritchard said.

The US side has accused China of stealing technologies from US businesses and unfairly subsidizing Chinese state-owned enterprises.

China defended its practices in the white paper and blamed the United States for the trade tensions.

"Since the new administration took office in 2017, under the slogan of 'America first', it has brazenly preached unilateralism, protectionism and economic hegemony" and intimidated China with tariffs, according to the white paper. China has offered solutions but the US side had repeatedly "contradicted itself" and escalated trade tensions, it said.

China is always open to talks with the US but the discussions cannot be conducted under "threats of the big stick of tariffs" or at the cost of "China's rights to develop", the paper said.

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