ASIAN ANGST The ongoing angst over U.S. President Donald Trump's trade tariffs had extended the recent slide in Asian markets overnight, in particular Chinese shares which are now deep into "bear" market territory.
Asked on Thursday whether China would target US-funded businesses in China to counter USA restrictions on Chinese products, Chinese Ministry of Commerce spokesman Gao Feng said it was not part of Beijing's plan and, instead, China might compensate foreign businesses for losses from a trade war.
"The US measures are essentially attacking global supply and value chains", Gao said.
"All we can do is adjust our supply chain here depending on the size of the price increases".
Trump initially threatened to hit China with 25 per cent tariffs on a list of goods worth US$50 billion annually, over what Washington says is the rampant theft of USA technical know-how.
"China will not bow in the face of threats and blackmail", he added.
USA Today reported that a spokesman for the Chinese government said Beijing will defend itself if the Trump administration follows through on Friday with its pledge to implement tariffs on $34 billion in Chinese products.
Transit trade, which refers to goods shipped from other countries to the United States via China, which is calculated by the U.S. as imports from China, also accounts for the trade deficit figures the Trump administration cites, something it refuses to acknowledge. According to Bloomberg, President Trump will cut as much as half a percentage point from staggering growth levels of around 6.9 percent.
"China will never fire the first shot", Gao said.
Investors watching the trade tit-for-tat between the United States and China may well have reason to fear the havoc a full blown conflict between the world's two biggest economies could wreak on the global economy.
"On the US's so-called list of $34 billion in taxable products, about $20 billion or 59 percent of them, are made by foreign invested enterprises, with American companies representing a significant portion", he said.
Chinese retailers told Reuters they probably would raise prices or spurn US imports for domestic substitutes, which could eventually hurt their businesses.
Xi has vowed to guide China's rise as a modern superpower in what he calls the "great rejuvenation of the Chinese nation" based on the state-led industrial policy that is at the heart of the trade and technology disputes with Washington.
The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union.
The Chinese government has promised to respond with tariffs on equal measure soon after Trump's tariffs go into effect.
China's yuan rose sharply against the dollar on Wednesday, a day after the central bank assured markets it would keep the currency stable amid growing worries about trade friction, although stocks fell. The overall value mirrors US tariffs, which also are set to kick in on Friday.
There had been hopes that the United States and China might step away from the measures but neither side has backed down.
"The markets lack strong direction without incentives from the United States, where their markets were closed yesterday".