Xi Wants Trade Deal but ‘Not Afraid’ to Fight

BEIJING (AFP) — China wants to reach a trade deal with the United States, President Xi Jinping said Friday, but is “not afraid” to fight back when necessary and will enact economic reforms at its own pace.

It is rare for Xi to speak so directly about the trade war, and his comments came two days after President Donald Trump complained that Beijing had not made sufficient concessions, making him reluctant to cut a deal.

China’s President Xi Jinping. (Kyodo News via AP)

The world’s two biggest economies have been locked in a bruising trade conflict for more than a year, hitting each other with volleys of tariffs on hundreds of billions of dollars worth of goods.

“As we always said, we don’t want to start the trade war, but we are not afraid,” Xi told former U.S. officials and other foreign dignitaries at a meeting at Beijing’s Great Hall of the People.

“When necessary we will fight back, but we have been working actively to try not to have a trade war,” he told the group, which included former Secretary of State Henry Kissinger, former Treasury Secretary Henry Paulson and Trump’s former economic adviser Gary Cohn.

Trump on Oct. 11 announced a “phase one” deal resolving U.S. grievances about Chinese trade and currency practices. But the two sides have yet to sign the deal.

The Chinese commerce ministry said top trade negotiators had “constructive” discussions on the phone Saturday.

China has insisted on a rollback of existing tariffs, which Trump said he has not agreed to. American officials want large purchases of U.S. farm exports.

The U.S. Congress approval this week of legislation supporting pro-democracy protesters in Hong Kong has cast a shadow on the negotiations.

“We want to work for a phase-one agreement on the basis of mutual respect and equality,” Xi told the foreign visitors, who were in town for the Bloomberg New Economy Forum.

Xi said the trade talks “may affect the future prospects of the world economy” and China holds a “positive attitude.”

Diana Choyleva, chief economist at Enodo Economics, an economic analysis firm specializing in China, said Xi’s comments do not mean that Beijing is about to go on the offensive, but it shows that it is “not going to budge.”

“The negotiation style and lack of trust that Trump has created … has made him (Xi) … very determined that there is no point to really give up much,” Choyleva told Agence France-Presse at the New Economy Forum.

Xi renewed China’s pledge to further reform and open up its economy, but said it has been “very cautious and rigorous” in doing so.

“We cannot afford any fundamental or drastic mistake. If a giant ship like China capsizes, it cannot be turned over,” he said.

Trump launched his trade war in March 2018, demanding that China end practices widely seen as unfair — such as intellectual property theft, forced technology transfers from U.S. firms, and massive subsidies given to Chinese firms.

China needs to advance its reforms of state-owned enterprises and protect intellectual property rights, Xi said.

“This is not something imposed on us. We are doing this out of our initiative,” he said.

Xi said he told IMF chief Kristalina Georgieva that China will continue on the path of financial reform and opening, but “the precondition is that we will ensure security of our nation’s financial sovereignty.”

Technology is a major front in the trade war, with Washington angering Beijing by imposing sanctions on telecom giant Huawei due to concerns that its equipment could be used for Chinese espionage.

Xi warned that a “technological iron curtain” would “affect the future prospect of humanity.”

Paulson, the former U.S. Treasury chief, told Xi that 5G wireless technology could be “either a potential area of conflict or cooperation for China and the U.S.”

“I believe key to minimizing conflict is if we can develop shared standards for emerging technologies,” he said.

Kissinger, who warned at the forum Thursday that the trade war could snowball into armed conflict, told Xi that “our nations have to cooperate if there is to be a prosperous international order.”

Xi also invoked his “Chinese dream” of national rejuvenation. “It is not a dream about hegemony; it is not about replacing others,” Xi said.

“We are just trying to restore our place and role in the world rather than reliving the humiliating days of the semi-colonial and semi-feudal era,” Xi said. “We will not relive those days again.”

© Agence France-Presse

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