China’s exports to the U.S. grew 5.4 percent in the first half, 13.9 percentage points lower than for the same period last year, according to the General Administration of Customs. | Greg Baker/AFP/Getty Images South China Morning Post China tries to ease retaliation fears with pledges to help foreign businesses weather trade war

This story is being published for POLITICO as part of a content partnership with the South China Morning Post. It originally appeared on scmp.com on July 5, 2018.

The Chinese government has said it will protect the “legitimate interests” of foreign businesses in China and lessen the fallout from a China-U.S. trade war, in an apparent attempt to ease fears that Beijing could single out U.S. businesses for retaliation.


Asked on Thursday whether China would target U.S.-funded businesses in China to counter U.S. restrictions on Chinese products, Chinese Ministry of Commerce spokesman Gao Feng said it was not part of Beijing’s plan and, instead, China might compensate foreign businesses for losses from a trade war.

“As for possible impacts on businesses from the trade war initiated by the United States, we will keep assessing the situation and make efforts to help [foreign] businesses to mitigate any possible impacts,” Gao said.

“In the past few decades, China has always been one of the most popular markets for foreign investors. It is not only because of China’s large market size, but it is also because the Chinese market is stable, rational and committed to the rule of law.”

The comments come a day before Washington and Beijing plan to implement tariffs against each others’ goods in an escalating trade conflict that has rippled out to financial markets.

Gao said China would not bow to threats or blackmail and would have to fight back if the U.S. went ahead and imposed the tariffs.

China’s customs agency said Chinese tariffs on U.S. goods would take effect immediately after the U.S. duties on Chinese goods kicked in, although Beijing has said it will not be the first to pull the trigger.

Apart from a 25 percent tariff on $34 billion worth of U.S. products as a tit-for-tat response to the U.S. move, Gao did not specify what “qualitative measures” China would take if President Donald Trump followed through on threats to impose tariffs on another $200 billion worth of Chinese products.

China’s imports from the U.S. were just $130 billion last year and so Beijing does not have the capacity to hit back in kind, raising speculation it could respond by creating administrative headaches for companies in China.

The Washington Post reported on Wednesday that U.S. companies had already felt Beijing’s sting “in the form of stalled product approvals, worker visas and licensing applications.” The newspaper quoted observers as saying there was “anecdotal evidence” of a build-up in sanctions against U.S. businesses.

Foreign firms operating in China have complained in the past of being singled out for antitrust and pricing investigations. In addition, they face new hurdles in the form of security and cyber laws.

U.S. companies had $256 billion in investment in China by the end of last year, exceeding China’s $140 billion in the United States, according to a report by the National Committee of U.S.-China Relations and Rhodium Group in April.

At the same time, China is trying to present a friendly face to foreign businesses, including American players.

In recent weeks, Beijing has opened more sectors to foreign investment by shortening its “negative list,” which deems which sectors are off limits.

Gao also said U.S. business interests would suffer from the first set of tariffs, with about $20 billion of the targeted goods, or 59 percent, produced by foreign firms, including U.S. ones.

“The U.S. measures are essentially attacking global supply and value chains,” Gao said. “To put it simply, the U.S. is opening fire on the entire world, including itself.”

China’s exports to the U.S. grew 5.4 percent in the first half, 13.9 percentage points lower than for the same period last year, according to the General Administration of Customs.

Additional reporting by Reuters