Peking set to defy US ultimatum over trade

Hong Kong and Taiwan, the biggest investors in China, yesterday voiced fears that their economies would be caught in a trade war between Washington and Peking after President Bill Clinton's administration gave China a three-week ultimatum to stop unfair trading practices or face retaliation.

Peking said it would impose similar sanctions on US goods to defend its "sovereignty and national dignity". Yesterday's People's Daily, China's official mouthpiece, warned that "pressure and reprisals are worthless".

The stage was set for an eleventh-hour round of bargaining to avert a trade war after the failure of nearly 20 months of negotiations between American and Chinese officials.But, if talks fail on 26 February, China will face a doubling of tariffs on more than $1bn (£.650m) of Chinese goods exported annually to the US, the toughest retaliatory trade sanctions that Washington has ever imposed.

"We are drawing the line right here today," said Mickey Kantor, the US Trade Representative. "We cannot stand by while the interests of our fastest growing, most competitive industries are sacrificed in China." Referring to demands for Peking to shut to down factories producing pirated goods, Mr Kantor added: "The Chinese know what they have to do."

One hour later, China carried out its threat to "counter-retaliate". The Ministry of Foreign Trade and Economic Co-operation (Moftec) issued a list of US imports to China that would carry 100 per cent tariffs, also from 26 February. The statement said the country felt both "great regre...and strong resentment" over the US move.

The US wants enforcement of existing Chinese laws protecting copyrights, patents and trademarks. US exporters are losing hundreds of millions of dollars of business because Chinese manufacturers pirate US video films, pharmaceutical products and compact discs and, according to US officials, sell them in China and in the Far East. The US wants China to clamp down on 29 factories that produce 75 million counterfeit compact discs and laser discs a year.

The key question is whether the two sides re-open a dialogue. "At the moment, it is more a war of nerves than a trade war," said one observer in Peking. Mr Kantor stressed that the invitation remained open for further talks over the next three weeks.

Chinese negotiators have a history of waiting until the eleventh hour before reaching an agreement. The difficulty for Peking is that many of the factories that Washington wants closed are owned by or linked to local governments in the south, which increasingly ignore edicts from Peking.

Chinese leaders have presented the copyright row as an issue of sovereignty. Nationalism is a powerful unifying force and the leadership may feel that a foreign adversary will shift the focus from domestic economic problems. As Chinese leaders jockey forposition ahead of the death of Deng Xiaoping, no one wants to appear to give in to US threats.

A fully-fledged trade war would have a serious impact on Chinese-US relations and both sides would bear the economic consquences. The Chinese exports that would be affected are a small fraction of China's estimated $30bn trade surplus with the US. Products under threat include picture frames, baseball card-holders, answering machines, cellular phones and sports goods. Mr Kantor said he chose products which were not used to make goods in the US.

He said Chinese toys had been excluded from the list. An unnamed Clinton administration official told the New York Times that domestic political considerations had come into play, saying: "It didn't take a political genius to see that we would be blamed for taking toys out of the hands of little kids."

Increased tariffs on the listed goods could affect US consumers as well as Chinese exporters. But, the Clinton administration's initiative won immediate support from US business circles and congressional Republicans. Newt Gingrich, Republican Speaker of the House of Representatives, said he backed the administration "in being very direct and very tough with the Chinese because there seems to be a massive level of pirating of US rights".

Trade "cannot be a one-way street", Mr Gingrich said. "They can't cheat us and expect us to have our markets open".

Leading article, page 14

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
The Queen and the letter sent to Charlie
Arts and Entertainment
Eurovision Song Contest 2015
EurovisionGoogle marks the 2015 show
Two lesbians hold hands at a gay pride parade.
peopleIrish journalist shares moving story on day of referendum
Arts and Entertainment
<b>Kathryn Williams</b>
When I was supporting Ray La Montagne I was six months pregnant. He had been touring for a year and he was exhausted and full of the cold. I was feeling motherly, so I would leave presents for him and his band: Tunnock's Tea Cakes, cold remedies and proper tea. Ray seemed painfully shy. He hardly spoke, hardly looked at you in the face. I felt like a dick speaking to him, but said "hi" every day. </p>
He was being courted by the same record company who had signed me and subsequently let me go, and I wanted him to know that there were people around who didn't want anything from him. At the Shepherds Bush Empire in London, on the last night of the tour, Ray stopped in his set to thank me for doing the support. He said I was a really good songwriter and people should buy my stuff. I was taken aback and felt emotionally overwhelmed. Later that year, just before I had my boy Louis, I was l asleep in bed with Radio 4 on when Louis moved around in my belly and woke me up. Ray was doing a session on the World Service. </p>
I really believe that Louis recognised the music from the tour, and when I gave birth to him at home I played Ray's record as something that he would recognise to come into the world with. </p>
booksKathryn Williams explores the works and influences of Sylvia Plath
Liz Kendall played a key role in the introduction of the smoking ban
newsLiz Kendall: profile
Life and Style
techPatent specifies 'anthropomorphic device' to control media devices
The PM proposed 'commonsense restrictions' on migrant benefits
voicesAndrew Grice: Prime Minister can talk 'one nation Conservatism' but putting it into action will be tougher
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?