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September 26, 2018 10:45 AM, EDT

China Announces Tariff Cut, Stays Silent on US Technology Complaints

Chinese trade report A government officer distributes copies of a report on "the Facts and China's Position on China-U.S. Trade Friction" to journalists during a press conference Sept. 25. (Andy Wong/ Associated Press)

BEIJING — China announced more tariff cuts Sept. 26 on construction machinery and other goods but no action on U.S. complaints about its technology policy that are fueling an escalating trade battle.

The announcement reflected Beijing’s effort to stick to reform plans aimed at making its economy more competitive while rejecting pressure to roll back state-led industry development. It gave no indication the reductions would apply to U.S. goods on which Beijing has imposed additional taxes of 5-25 %.

The tariff cut, effective Nov. 1, applies to 1,585 types of goods including construction equipment, industrial machinery, paper products and building materials. It is the second reduction in less than a year after a cut last November for food and consumer goods.

President Xi Jinping’s government has announced a series of market-opening measures this year but none addresses U.S. complaints that Beijing steals or pressures companies into handing over technology.

The United States, Europe and other trading partners say initiatives such as “Made in China 2025,” which calls for state-led creation of champions in robotics and other fields, violate Beijing’s market-opening obligations. American officials worry they might erode U.S. industrial leadership.

U.S. President Donald Trump went ahead with a tariff increase on $200 billion of Chinese goods Sept. 26. Beijing responded by imposing penalties on $60 billion of American products. That was on top of an earlier duty increase by both sides on $50 billion of each other’s goods.

Negotiations were impossible while Washington “holds a knife” to Beijing’s neck by imposing tariff hikes, Chinese Deputy Commerce Minister Wang Shouwen said Sept. 26.

A Chinese government report Sept. 24 accused Trump of bullying other countries and destroying “mutual trust” required for international relations. That dampened hopes for a settlement and prompted suggestions Beijing might go so far as waiting for Trump to leave office instead of negotiating.

In research published Sept. 26, economists at the European Central Bank said they simulated a wide-ranging global trade war and found it would hurt the United States economy significantly, making households poorer and destroying jobs, while China would not suffer as much. The researchers concluded that stock and bond markets could be hurt by a general loss of confidence in the economy and that “an escalation of trade tensions could have significant adverse global effects” on growth.

The Asian Development Bank updated its regional economic outlook report Sept. 25, saying that trade conflicts, rising debt and the potential impact from rising interest rates in the United States likely will `dampen growth in the coming year.

The Manila, Philippines-based regional lender said it expects economic growth in Asia to remain at a robust 6.0 % in 2018 but to slip to 5.8 % next year. China’s economy is expected to expand at a 6.6 % annual pace this year but slow to 6.3 % in 2019, it said.

Chinese Communist leaders have tried to deflect foreign frustration over their industry plans by highlighting China’s growth as an import market, better protection of foreign patents and copyrights and other gains.

They see initiatives such as “Made in China 2025” as a path to prosperity and global influence.

Under the latest changes, tariffs on electronic equipment and other industrial products will be cut from 12.2 % to 8.8 %, according to a Cabinet statement. It said charges on textiles and building materials will fall from 11.5 % to 8.4 % and those on paper and other resource products from 6.6 % to 5.4 %.

The charges are aimed at improving “industrial upgrading” and “consumption by the masses,” the statement said.

China faces a “complex domestic and international situation” and needs to “maintain stable and healthy economic development,” the statement said. To do that, it said, China needs to “expand domestic demand and unswervingly expand opening up.”

It promised to create a “more fair, convenient, predictable and attractive” investment environment.

China’s overall import tariffs have been cut to an average of 7.5 % from 9.8 % a year ago, according to the Cabinet statement.