China trade battle kicks off; markets take it in stride

China won't give in to

China won't give in to"blackmail on trade vows the commerce ministry

It is now the "largest trade war in economic history". America is the world's largest exporter of soy beans, and China is the world's largest consumer of them.

China has said it will not "fire the first shot" in a trade war with the United States, but its customs agency made clear on Thursday that Chinese tariffs on American goods would take effect immediately after USA duties on Chinese goods are put in place.

Ahead of the tariffs, Chinese state media published a series of editorials criticising the USA and emphasising the country's readiness for a trade war. Chinese companies and investors girded for the worst, while economists cautioned any impact on the economy would be minimal.

While Chinese state media have slammed Trump's trade policies and on Friday likened his administration to a "gang of hoodlums", the simmering conflict has gained little traction on China's tightly controlled social media, not cracking the 50 top-searched topics on the Twitter-like Weibo platform.

It said the U.S. had violated World Trade Organization rules by imposing the tariffs, and indicated China would raise the issue with the regulatory body in time.

Hours after Washington introduced 25 percent trade tariffs on $34 billion worth of Chinese goods, Beijing retaliated with mirror measures against American imports.

Still, Chinese investors and companies were anxious. The Shanghai Composite index fell 1.1 per cent, after reaching more than a two-year low this week, while USA indices are expected to follow suit when they open later today. Chinese manufacturers have already been hit by a strengthening yuan that has made exports more expensive.

Husco International, a Wisconson-based manufacturing company that makes parts for companies like Ford, Caterpillar and John Deere, now faces the 25 percent increase on parts imported from China, The New York Times reported. "A deficit is actually a good thing for the USA because we're the world's biggest economic power, and other countries are willing to hold our debt", said Hsu.

According to propaganda instructions leaked to China Digital Times, news organisations were ordered "to prepare well for protracted conflict".

"If we can seize our own market, we will be less affected by the trade war", said a spokesperson for Topsun, a furniture manufacturer in Zhejiang province.

Another $16bn of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550bn, a figure that exceeds all of United States goods imports from China in 2017. He told reporters aboard Air Force One on Thursday, "You have another 16 (billion dollars) in two weeks, and then, as you know, we have $200bn in abeyance and then after the $200bn, we have $300bn in abeyance. Ok?"

"They are a vital trading partner, and we need to continue to do business with China without the sting of these tariffs", Heisdorffer said.

Syracuse University economics professor Mary Lovely and researcher Yang Liang found 87% of electronics products to be levied by USA tariffs came from multinationals and joint ventures rather than Chinese firms.

China has vowed to fight back to protect its economy.

The US tariffs announced so far would affect the equivalent of 0.6 percent of global trade and account for 0.1 percent of global GDP, according to Morgan Stanley.

The first round targets Chinese industrial goods, not consumer products, in an attempt to limit the impact on US households, but companies that rely on Chinese-made machinery or components may eventually have to pass along increased costs to customers. China's tariffs on major U.S. exports like soybeans, sorghum, and autos, target Republican areas ahead of United States midterm elections.

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