China 'fully prepared' for trade war with US as tariffs deadline looms

'We hope the US will provide a level-playing field for Chinese companies' investment,' said Beijing's foreign ministry

Both the US and China have pledged to hit each other with harsh trade tariffs (AP)

China has said it is “fully prepared” for a trade war with the US, with little sign of an end to mounting tensions between the world’s two biggest economies.

Hopes are dwindling that Washington and Beijing will find an amicable solution before Friday, when the US is due to start charging tariffs on $34bn (£26bn) of Chinese goods, with Beijing declaring they will retaliate in kind. The ramifications will likely be felt far beyond the borders of the two nations.

Tensions have been simmering for weeks, amid a flurry of smaller tit-for-tat measures. The latest of which involved a US Department of Commerce agency recommending that China’s largest telecoms carrier, China Mobile, should not be given operating licenses for America. The report cited national security concerns posed by the state-run firm.

China foreign minister spokesman Lu Kang said the latest move was based on “unfounded speculation and an irrational clampdown” stemming from a cold war mentality.

“We hope the US will provide a level-playing field for Chinese companies’ investment and operation in the US and do something conducive to the mutual trust,” he said.

Mr Lu said that Beijing is “fully prepared to take a package of necessary measures” to safeguard its national interests, having accused Washington of protectionism.

Starting on Friday, Washington will add up to a 25 per cent tariff on 818 Chinese products, with the potential for another 284 items to be added. China has pledged that in return it will do the same to 545 American products.

Amid the heated diplomatic exchanges, China’s government recently issued a warning to Chinese citizens travelling to the US. The warning noted the high cost of medical treatment in the US, the importance of guarding against crime and terrorist attacks and the considerable powers wielded by Immigration and Customs Enforcement agents.

Answering questions about the move and its timing, Mr Lu said the government was merely fulfilling its duty to warn travellers of “potential dangers”.

Donald Trump has accused China of unfair trade practices, but if Beijing does retaliate any measures would likely hurt members of the president’s political base.

Companies ranging from car manufacturers to soybean farms and whiskey distilleries will be hit, with China’s tariffs designed to inflict pain on US farmers and other groups important to the president.

It comes amid reports that China is pushing the EU to issue a strong joint statement against Mr Trump’s trade policies at a summit later this month.

In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including vice premier Liu He and the Chinese government’s top diplomat, state councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill.

But the EU is said to be resistant to the idea of allying with Beijing against Washington, and the summit is expected to produce a communique merely reaffirming the commitment of both sides to the multilateral trading system.

Associated Press and Reuters contributed to this report