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China on Wednesday announced further tariff cuts on imports of construction machinery and other goods, but took no action to respond to US complaints about its technology policy, which is fueling a growing trade battle.
This decision reflects the Chinese government's desire to stick to projects aimed at making the economy more competitive and further industrial development. This gives no indication that the reductions would apply to US goods, on which Beijing has imposed additional taxes of 5 to 25%.
The tariff reduction, which came into effect on November 1, applies to 1,585 types of goods, including construction equipment, industrial machinery, paper products and building materials. This is the second reduction in less than a year after a reduction last November for food products and consumer goods.
The administration of President Xi Jinping announced this year a series of measures to open the Chinese market to external competition, but none respond to the complaints of the United States that the government steals or forces foreign companies to transfer technology .
The United States, Europe and other trading partners claim that initiatives such as "Made in China 2025", calling for the creation of robotics champions and other fields, violate Beijing's obligation to open its market to foreign companies. US officials are worried that they could erode US industrial leadership.
US President Donald Trump made progress on Monday with a $ 200 billion tariff increase on Chinese products. Beijing reacted by imposing penalties on $ 60 billion of US products. This was in addition to a $ 50 billion increase in tariffs on both sides.
Negotiations were impossible as Washington "holds up" to Beijing's neck by imposing tariff increases, Chinese Vice Minister of Commerce Wang Shouwen said Tuesday.
A report from the Chinese government Monday accused Trump of intimidating other countries and destroying the "mutual trust" required for international relations. This has dampened hopes for settlement and prompted China to wait for Trump to step down instead of negotiating.
Meanwhile, experts are trying to understand the economic impact of the trade war.
In a study released on Wednesday, economists at the European Central Bank said they were simulating a major trade war and would hurt the US economy, impoverish households and destroy jobs. China would not suffer as much. The researchers concluded that stock and bond markets could be affected by a general loss of confidence in the economy and that "escalating trade tensions could have significant negative global effects" on growth.
The Asian Development Bank said Wednesday that trade disputes, rising debt and the potential impact of rising interest rates in the US could dampen growth in the coming year.
The regional lender based in Manila, Philippines, said it expects economic growth in Asia to remain at a robust 6.0% in 2018, but at 5.8% next year. The Chinese economy is expected to grow at an annual rate of 6.6% this year but slow to 6.3% in 2019.
Chinese Communist leaders have tried to divert foreign frustration from their industrial projects by pointing to China's growth as an import market, better protection of foreign patents and copyrights and other gains.
They see initiatives such as "Made in China 2025" as a path to prosperity and global influence.
According to the latest changes, tariffs on electronic equipment and other industrial products will increase from 12.2% to 8.8%, according to a Cabinet press release. He said that textile and building materials costs would rise from 11.5% to 8.4% and those on paper and other products from 6.6% to 5.4%.
The charges are aimed at improving "industrial modernization" and "consumption by the masses," the statement said.
China faces a "complex domestic and international situation" and must "maintain stable and healthy economic development," the statement said. To do this, he said, China must "increase domestic demand and expand its openness indefectibly."
He promised to create an investment environment "more fair, practical, predictable and attractive".
China's import tariffs have been reduced to an average of 7.5 percent, up from 9.8 percent a year ago, according to the cabinet press release.
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Elaine Kurtenbach in Bangkok and David McHugh in Frankfurt, Germany contributed to this report.
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