BEIJING: China will keep hitting back at Washington as more US trade tariffs are imposed, but its counter-strikes will remain as targeted as possible to avoid harming businesses in China - whether Chinese or foreign, Finance Minister Liu Kun said.

For now the impact of the China-US “trade frictions” on the Chinese economy has been small, but he is concerned about potential job losses and lost livelihoods, Liu, 61, told Reuters on Thursday in an interview at the finance ministry, his first with the media since taking up the position in March.

He said that the Chinese government will increase its spending to support workers and the unemployed who are hurt by the trade conflict, and also predicted bond issuance by local governments to support infrastructure investment this year will pickup and blow past 1 trillion yuan ($145.48 billion) by the end of the current quarter.

The trade conflict further escalated on Thursday as the United States and China heaped more tariffs on each other’s goods. Since early July, the world’s two largest economies have slapped each other with tariffs on a combined $100bn of goods.

“China doesn’t wish to engage in a trade war, but we will resolutely respond to the unreasonable measures taken by the United States,” Liu said. “If the United States persists with these measures, we will correspondingly take action to protect our interests.” So far, China has either imposed or proposed tariffs on $110bn of US goods, representing most of its imports of American products. Crude oil and large aircraft are key US goods that are still not targeted for penalties.

Trade talks between mid-level US and Chinese officials ended on Thursday without any sign of major progress.

Precisely targeted measures

When asked if China would consider increasing tariffs on US goods that are already facing higher taxes, Liu said China will respond with precision.

“We’re responding in a precise way. Of course, the value of US imports of Chinese goods isn’t the same as the value of Chinese imports of US goods. We’ll take tariff measures in accordance to this situation,” he said, without elaborating.

But China is conscious of the potential for bystanders to be caught in the line of fire, he said.

“When we take measures, we try our hardest not to harm the interests of foreign businesses in China. That’s why our tariff measures are targeted to avoid affecting them as much as we can,” said Liu.

Some American businesses and industry lobbies, including the US Chamber of Commerce, have criticised US President Donald Trump’s imposition of punitive tariffs on Chinese goods, saying the Chinese retaliation it is triggering will hurt businesses that already face greater competition from local rivals in China.

US fast food, beverages and coffee chains including Starbucks and Yum China’s KFC brand are ubiquitous in Chinese cities. US-branded infant formula, apparel, cars and phones are also popular.

The US tariffs have affected China’s economic growth - albeit modestly - and their impact will become even more pronounced if the trade frictions persist, Liu said.

Liu spent more than two decades in the Guangdong provincial government, taking on various roles including the head of its finance bureau. He became the vice governor of the export-oriented southern province in 2010.

Liu said he is very concerned about the Chinese jobs that could be lost.

Published in Dawn, August 25th, 2018