Chinese finance official explains why Beijing is slapping tariffs on $50 billion in US products

  • China’s Vice Finance Minister Zhu Guangyao says the country is not to blame for rising protectionism.
  • Zhu’s comments come after China unveiled tariffs on $50 billion of U.S. goods.
  • He argues that these measures were equal to what the Trump administration said it will impose on China.

Beijing has a few messages for Washington, D.C.

On Wednesday, China unveiled additional tariffs on 106 U.S. products — a move that initially sent U.S. stocks to session lows in the morning. Equities recovered throughout the day while the White House tried to push back on the idea that a trade war was looming.

These tariffs came less than 24 hours after U.S. President Donald Trump announced a list of Chinese imports that will face greater scrutiny as part of a crackdown on what he described as unfair trade practices.

In an exclusive interview with CNBC, China’s Vice Finance Minister Zhu Guangyao laid out Beijing’s mindset behind the trade actions. The ministry said the new tariffs were designed to target up to $50 billion of American products annually.

Zhu, who oversees working group on economic issues for President Xi Jinping, explained that there are four things that he wanted to tell American businesses and investors.

#1: China will not be bullied by outsiders

For Beijing, Trump’s actions have to be interpreted through the lens of China’s domestic politics.

“You must understand in Chinese culture — and since the People’s Republic’s founding — China never yields to outside pressure,” Zhu said.

The Communist Party portrays itself as a defender of the nation’s interest. The party and Xi aim to increase China’s influence and power on the world stage. As a result, the party isn’t in a position to back down.

External pressure, Zhu argued, only emboldens China to retaliate.

#2: China sees itself as the victim

China sees itself as the victim in the growing trade tensions with the U.S. The vice minister argued that China has been a leader in globalization. Zhu said that the country has opened its economy over time and been able to successfully negotiate a lot of issues.

But there’s a question of how much responsibility China should bear over the rise in protectionism globally. Besides the U.S., many countries in Europe and Asia had already voiced frustrations with China’s business practices.

In what Trump said was the “first of many” trade actions, the White House said it would impose tariffs on up to $60 billion in Chinese imports. The administration said these measures were designed to penalize China for alleged intellectual property theft.

Zhu argued, however, that China has been making progress on this front. He explained that Beijing sees Trump’s approach as a confrontational policy.

“I think there is not any reason to blame China,” he said.

#3: China will respond with equal action

Because Beijing views itself as the victim — not the aggressor — in this situation, it sees its tariffs as an equal response to U.S. actions.

The vice minister explained that’s how China decided to include aircraft on its list of targeted products. The country was simply reciprocating because the Trump administration put Chinese aircraft on its list.

#4: China's door is still ajar

Despite all the tough talk, China is still open to working out the trade disputes.

Zhu said that China would welcome a visit from U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer further negotiations.

“We should very deeply and constructively have this dialogue and results,” he said.

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