China Vows Strong Response to New U.S. Tariffs Amid Trade Tensions
China has pledged to respond decisively to new tariffs imposed by the U.S., with a spokesperson affirming their commitment to protect national interests. Recent tariffs announced by President Trump, which include an additional 10% levy, surprised Chinese officials and have resulted in significant market declines in China. Economic analysts predict the need for stimulus measures to counter potential growth impacts, underscoring the importance of maintaining dialogue between the two nations amid rising tensions.
China has announced its determination to respond strongly to the recent tariffs imposed by the United States, which President Trump revealed would include an additional 10% tariff on Chinese imports starting March 4. A spokesperson from the Chinese Ministry of Commerce declared, “If the US insists on having its own way, China will counter with all necessary measures to defend its legitimate rights and interests.” This announcement follows a previous implementation of a 10% duty just earlier this month.
Market reactions to these trade tensions have been significant, with Chinese shares listed in Hong Kong experiencing a fall of up to 3.9%, heading for their largest single-day decline since October. The onshore CSI 300 Index also dropped as much as 1.9%, indicating the potential for the first weekly loss in a month due to the increased tariffs and associated economic uncertainties.
According to Chang Shu, chief Asia economist for Bloomberg Economics, this situation could intensify as China’s currently restrained response might shift towards a more forceful counteraction. In particular, she highlighted that a more robust retaliatory strategy could lead to a deeply damaging trade conflict between the two economies.
Trump’s tariff measures were unexpected for Chinese officials and are scheduled to take effect just before China’s National People’s Congress, where key economic strategies for 2025 will be discussed. Although these tariffs are not anticipated to directly alter growth targets or fiscal policies, they may adversely affect market sentiment and confidence.
During a recent Politburo meeting, President Xi Jinping stressed the importance of maintaining a calm approach in light of escalating tensions. He has yet to engage in direct conversation with President Trump since the latter’s inauguration, despite expectations for dialogue this month. Both nations are reportedly looking to prevent a deterioration in their relationship; a conversation occurred recently between Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent.
China hopes to resolve these trade discrepancies through discussion, a sentiment conveyed in their response to the tariffs. Historically, China has retaliated against tariffs only after they are implemented, evidenced by their previous swift countermeasures. Without an agreement, further retaliatory actions may mirror past initiatives, adding to the current trade tensions.
As a response to the newly announced tariffs, the Chinese government may need to implement substantial stimulus measures estimated at 500 billion to 700 billion yuan to uphold growth targets. Economic analysts argue that while the immediate impact on GDP growth appears marginal, offsets through increased domestic consumption and investments in technology could bolster the economy. Overall, the effect of the tariffs on the Chinese economy is considered manageable but requires careful evaluation and planning.
In light of the escalating trade tensions, China has vowed to implement all necessary measures to counter the new tariffs imposed by the United States. The immediate impact on the Chinese market has been significant, with notable declines in share indexes. While the situation remains tense, both nations appear motivated to continue dialogue to prevent further exacerbation of their economic relationship. Moving forward, strategic responses and potential stimulus measures will be critical in addressing the economic implications of these tariffs.
Original Source: www.business-standard.com
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