Both countries have engaged in a series of retaliatory moves, imposing 25 per cent tariffs on US$50 billion worth of each other's imports.
A war of words broke out at the World Economic Forum conference in Tianjin, northeastern China, on Wednesday, when two US Republican congressmen called out China's commitments to free and fair trade just minutes after Chinese Premier Li Keqiang's keynote speech.
The trade war between the United States and China deepened when President Donald Trump announced he would push ahead with tariffs on $200 billion in Chinese goods AFP/Paul J. The tariffs will start at 10 per cent, then rise to 25 per cent on January 1.
And as trade tensions with the United States heat up, Li said Chinese policy makers have plenty of tools at their disposal to offset any negative effects from USA tariffs.
The Trump administration's duties on $200 billion spared smartwatches and Bluetooth devices, bicycle helmets, high chairs, children's vehicle seats and playpens.
"We believe we need to uphold the basic global rules and at the same time make improvements to those that need to keep pace with the times", Li said. "China will be forced to take synchronous counter-measures to safeguard our legitimate rights.as well as the global free trade order", a spokesperson said. But auto, pharmaceutical and other foreign companies are required to operate in China through local state-owned partners, which obliges them to share know-how with potential competitors.
European stocks only briefly turned lower after China retaliated to the latest US sanctions, while Wall Street stocks spent the entire day in the green, viewing the latest escalation of the US-China trade war as less consequential than feared.
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India to wait and watch While India has also been subject to U.S. tariffs of 25% on steel and 10% on aluminium exports, it has reportedly made a decision to postpone levying its own set of retaliatory tariffs on certain USA goods it had planned earlier this year. "We really went item-by-item trying to figure out what would accomplish the punitive goal on China and yet with the least disruption in the U.S".
US officials say the World Trade Organization, the global trade regulator, is antiquated and unable to deal with complaints about Chinese-style industrial policies.
"It's not only China that is trying to understand what the American president is trying to do", she said.
The trade war between the US and China is reaching a boiling point.
The latest United States duties spared smart watches from Apple and Fitbit and other consumer products such as baby auto seats.
USA stock markets opened higher and the Nasdaq index was up 1 over 1 percent by mid-morning. The issues include Chinese companies' theft of US intellectual property and a widening trade gap as USA consumers have become more dependent on comparatively cheap Chinese imports. The administration is targeting a bewildering variety of goods - from sockeye salmon to baseball gloves to bamboo mats - forcing USA companies to scramble for suppliers outside China, absorb the import taxes or pass along the cost to their customers.
Oil prices, usually a good indicator of the market health, traded near flat in the afternoon session in Asia, with USA crude up 0.09 percent at $69.91 a barrel.