Published: Mon, March 20, 2017
World | By Carl Welch

Trade war will hurt U.S. firms first, China says

Trade war will hurt U.S. firms first, China says

China's prime minister, Li Keqiang, took a conciliatory tone towards Donald Trump's administration on Wednesday, saying that Beijing does not want a trade war with the United States but is seeking a "positive direction" for relations.

The premier made the remarks when asked whether China is filling the United States' place to lead the Trans-Pacific Partnership, and his opinion about the current global trade map at a news conference after the close of the annual session of the National People's Congress in Beijing.

Foreign firms have complained in recent years about a worsening business environment in China, claiming government policies favor local firms, though Li said China will quicken the pace that it opens its economy to foreign investors.

During the election campaign, he had threatened to label China a currency manipulator and impose huge tariffs on imports of Chinese goods.

His comments followed fresh reports that Beijing had started new construction work on islands in disputed South China Sea waters, amid tensions between Beijing, rival claimants and Washington.

Mr Li also said that Beijing has no plans to devalue its yuan to boost exports and will keep its exchange rate "generally stable".

Last year, yuan depreciated by about 6.6 per cent. Li said the depreciation was quite modest. The North conducted two nuclear tests and 24 ballistic missile tests past year, deepening concern in Washington that it could soon develop a nuclear-tipped missile capable of reaching the US mainland.

Li noted that China-U.S. ties have been going forward despite various twists and turns, but said he feels optimistic about future China-U.S. relations, because "after several decades of growth of bilateral relations, the two countries now share a wide range of common interests".

Last year, China attracted US$126 billion in foreign direct investment, remaining the largest recipient among developing countries, figures showed.

"I should point out that 6.5 percent growth is not low speed and will not be easy for us to meet".

Last year, the United States' deficit in trade in goods with China reached Dollars 347 million and Trump has promised to close that gap, which he has also attributed to what he calls China's rigged currency exchange policies. Many already believe that a massive bank bailout may be inevitable.

"We need to take very seriously the risks we are facing on the domestic front, especially in the financial sector".

Li said China will look to cut taxes and fees on companies by 1 trillion yuan ($144.67 billion) this year, while adding that the government has enough policy tools to handle any risks.

The RMB has solid presence in the worldwide currency system and the RMB exchange rate will remain generally stable, he added.

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