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Tuesday, May 07, 2019, 14:09
China urges US to meet halfway for win-win deal
By Jing Shuiyu, Zhong Nan and Chai Hua
Tuesday, May 07, 2019, 14:09 By Jing Shuiyu, Zhong Nan and Chai Hua

File photo taken on Nov 23, 2016 shows the national flags of the United States and China during the 27th Session of the China-US Joint Commission on Commerce and Trade (JCCT) in Washington DC, capital of the United States. (YIN BOGU / XINHUA)

The Foreign Ministry urged on Monday that the United States and China make joint efforts to meet each other halfway and strive to achieve a mutually beneficial trade agreement on the basis of respecting each other.

Following the new US threat to increase tariffs on Chinese imports, the ministry said on Monday that the Chinese team is preparing to visit the US for further economic and trade consultations.

Given uncertainties brought about by the trade frictions, foreign small and medium-sized enterprises in China will face more difficulties, Vincent Chan said

READ MORE: China prepares for next round of trade talks with US

US President Donald Trump tweeted on Sunday he would hike tariffs on Chinese goods beginning Friday.

Beijing has maintained a cool head when it responded to the fresh tariff threat by Washington, and the two countries should work to avoid the escalation of trade tensions, analysts said.

They also called on the two largest economies in the world to shelve their differences and come to a resolution in a timely manner.

"We are all already worried about the China-US trade dispute. I think the whole world is worried about it because it's a dispute between the number one and number two economies. As a result, all the other countries will have a problem," said Joe Kaeser, CEO of Siemens AG.

The global economy is showing signs of a slowdown. Major international organizations such as the International Monetary Fund have warned that global growth may slow this year because of headwinds and uncertainties caused by trade tensions.

Immediately after Trump's Twitter announcement on the tariff hike threat, David French, senior vice-president for government relations at the National Retail Federation, said: "Tariffs are taxes paid by US businesses and consumers, not by China.

"A sudden tariff increase with less than a week's notice would severely disrupt US businesses, especially small companies that have limited resources to mitigate the impact," French said.

If the administration follows through on this threat, US consumers will face higher prices and US jobs will be lost, French added.

Vincent Chan, head of China Equity Strategy Research at Credit Suisse, said he hopes the two nations can reach an agreement as soon as possible. Otherwise the shock to the world economy would be huge, Chan added.

"In order to reach such an agreement, both parties may have to make some compromises, or some issues, which are unable to be solved now, should be postponed. Any agreement is better than no agreement at all," according to Chan.

ALSO READ: China welcomes US decision to suspend tariff hike

Given uncertainties brought about by the trade frictions, foreign small and medium-sized enterprises in China will face more difficulties, Chan said.

Ma Yu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, said any escalation in trade tensions would hurt the global economic recovery, especially when it comes to foreign direct investment.

Ma said many manufacturers, particularly original equipment manufacturers, as well as small and medium-sized enterprises, will suffer heavily, not only this year, but over the long run, because they don't have branding power and their market channels are limited.

Globally, stock markets were generally down on Monday. Hong Kong's benchmark Hang Seng Index slumped 2.9 percent and Japan's Nikkei 225 Index edged down 0.22 percent.

The Shanghai Composite Index slumped 5.58 percent and the Shenzhen Component Index plunged 7.56 percent. In Europe, France's CAC 40 Index dropped 1.8 percent in early Monday trading.

According to analysts, the US administration should bear in mind that a full-blown trade war will not damage China alone. It will also affect US industries and workers, as well as the world economy as a whole.

Despite the short-term pain, the Chinese economy will show more resilience in the long run, thanks to its huge domestic market, said Wang Bin, deputy director-general of the Commerce Ministry's Department of Market Operation and Consumption Promotion.

If the US further raises tariffs on Chinese goods as Trump has threatened, the global economy, especially the US economy, will suffer to a large extent in response because China will not sit idly by and allow its interests to be trodden upon, said Lu Xiang, an expert on Sino-US relations at the Chinese Academy of Social Sciences.

China has shown more signs of stabilization as its first-quarter GDP growth came in at 6.4 percent, halting recent slides. The purchasing managers index, a leading barometer of economic prospects, also performed well in the past two months, adding to the possibility that the economy may be in the process of recovery.

Zhao Huanxin in Washington and Shi Jing in Shanghai contributed to this story.

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