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June 27, 2018

China should take ‘self defense measures’ in trade war: Global Times


China should take ‘self defense measures’ in trade war: Global Times
FILE PHOTO: A staff member walks past U.S. and Chinese flags placed for a joint news conference by U.S. Secretary of State Mike Pompeo and Chinese Foreign Minister Wang Yi at the Great Hall of the People in Beijing, China June 14, 2018. REUTERS/Jason Lee/File Photo

SHANGHAI (Reuters) – China should take “self defense measures” against U.S. tariffs by offering subsidies to companies and industries that may suffer losses from trade frictions, the Global Times said on Wednesday.

Chinese technology firms, in particular, could be treated unfairly and “become the victims of (U.S. President Donald) Trump’s trade war,” it said.

The state-run tabloid is run by the ruling Communist Party’s official People’s Daily, although its stance does not necessarily reflect Chinese government policy.

The comments come as Washington proposes restrictions on foreign investment in U.S. technology companies, which U.S. Treasury Secretary Steven Mnuchin said would not just be confined to China.

A government official told Reuters on Sunday that Treasury had been working on a proposal to ban acquisitions of U.S. firms with “industrially significant technology” by companies with at least 25 percent Chinese ownership.

“China can offer export subsidies to Chinese companies under the World Trade Organisation framework and provide policy support to them,” said the article in the Global Times, which carried the byline Hu Weijia.

“If China’s ZTE Corp (HK:0763) and some other enterprises become the first to bear the brunt of Trump’s trade war, they will be also the first to receive support from the Chinese government,” it said.

ZTE Corp (SZ:000063), China’s second-largest telecommunications equipment maker, ceased major operations after the United States imposed a ban on U.S. suppliers in April.

The state-owned China Daily newspaper in a separate editorial also published on Wednesday said that U.S. industries and workers could eventually “feel the pain” as Trump’s policies were affecting global supply chains.

The mounting trade frictions between the world’s two largest economies prompted a sell-off in global stock markets on Monday, including China which entered bear territory.

The U.S. House of Representatives on Tuesday overwhelmingly passed a bill to tighten foreign investment rules, spurred by bipartisan concerns about Chinese bids to acquire sophisticated U.S. technology.

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