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China says US tariffs will not solve America's problems

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Says US, China should work to promote stable, sustainable

ties

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Apple ( AAPL ), Tesla and Starbucks ( SBUX ) praised in Chinese state media

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Commentary reminiscent of trade war during Trump's first

term

(Recasts and writes through with China commerce ministry

comment)

By Joe Cash

BEIJING, Nov 28 (Reuters) - China attacked U.S.

President-elect Donald Trump's pledge to slap additional tariffs

on Chinese goods over fentanyl flows, saying his incoming

administration was pushing the blame for America's opioid crisis

onto China.

Trump, who takes office on Jan. 20, said on Monday he

would impose a 10% tariff on Chinese goods so that Beijing does

more to stop the trafficking of Chinese-made chemicals used in

the highly addictive narcotic.

He also threatened tariffs in excess of 60% on Chinese goods

while on the campaign trail.

"China's position against unilateral tariff increases is

consistent," He Yadong, a spokesperson for China's commerce

ministry, told a regular news briefing on Thursday. "Imposing

arbitrary tariffs on trading partners will not solve America's

own problems."

He added that the U.S. should abide by World Trade

Organization rules and work with China to promote stable

economic and trade relations.

Trump's comments fired the starting gun for what analysts

expect to be a bruising four-year trade war, potentially much

worse than his first term which saw tariffs of 7%-25% levied and

global supply chains uprooted.

Indeed, Howard Lutnick, Trump's pick to run the Commerce

Department and oversee the Office of the U.S. Trade

Representative, said in a podcast interview in October that

"China is attacking America" with fentanyl and suggested Trump

might levy tariffs as high as 200% on China.

Editorials in China's state media this week have warned new

duties could drag the world's top two economies into a mutually

destructive tariff war.

DEJA VU

There was already an eerie sense of deja vu on Thursday

after China's state media praised some U.S. firms for "strong

collaboration" - commentary reminiscent of how tensions with the

U.S. were covered by the Chinese press during the previous trade

war.

Back then, U.S. corporate executives and foreign investors

would scour Chinese state media for signals as to which U.S.

firms might be in favour and which might be penalised as

tensions ratcheted up.

The state-owned Global Times late on Wednesday highlighted

Apple ( AAPL ), Tesla, Starbucks ( SBUX ) and HP

.

"U.S. politicians need to pay attention to and respect the

evident willingness of American businesses for economic and

trade cooperation by tailoring suitable policy environments for

enterprises," it said.

The China Daily also noted that Morgan Stanley ( MS )

received regulatory approval in March to expand its China

operations, citing this as evidence of foreign financial firms'

enthusiasm for investing in China.

"Neither side was good about communicating policy directly,

so business was busy looking at the tea leaves and trying to

separate signal and noise in traditional and social media," a

Beijing-based American executive said of the first trade war.

The executive was not authorised to speak to media and

declined to be identified.

The U.S.-China trade war during Trump's first term saw China

threaten to ban U.S. companies from importing, exporting and

investing in China with the creation of the "Unreliable Entity

List".

At the time, Global Times reported the list would target

U.S. companies such as Apple ( AAPL ), Cisco Systems ( CSCO ) and

Qualcomm ( QCOM ). But China never followed through on the

threat and to date the list has only included U.S. companies

involved in the sale of arms to Taiwan.

Bo Zhengyuan, a Shanghai-based partner at consultancy

Plenum, said he expected Beijing would not rush to use tools

like the Unreliable Entity List in the immediate wake of any

formal tariff announcement once Trump is in power, given the

weak state of the Chinese economy.

But Beijing could retaliate later if it felt U.S.

policymakers were harming China's commercial interests.

"There was collateral damage last time, and there will be

collateral damage this time," he added.