Trade is skewed in favour of China at a trade surplus of $63 billion.
The United States has started a trade war and China will defend itself, Chinese Vice Minister of Commerce Wang Shouwen said on Thursday, urging the United States to "take the gun" of tariffs away to smooth the way for talks.
Over the first six months of the year the surplus climbed to US$133.8 billion, up 13.8 percent from last year, as total two-way trade continued to expand despite the face-off.
The conflict with Washington, coupled with weaker global demand, adds to challenges for Beijing as economic growth cools after regulators tightened controls on bank lending starting previous year to rein in surging debt.
So far, the two powers have only imposed tariffs on $34 billion (29 billion euros) worth of each others goods.
"The Dow Jones Industrial Average fell 219 points, or 0.88%, to 24,700, the S&P 500 slid 0.71 percent and the Nasdaq was down 0.55 percent", reports TheStreet.com, while the Financial Times said (paywall), "U.S. futures slid" and "industrial stocks were back under fire again" after the new tariff announcements: "Boeing is down 1.2 percent, Caterpillar dropped 1.5 percent and Deere shed 2 percent".
Strategy 3 (controlled retaliation): China could continue its hawkish line but actually retaliate on a controlled and selective basis (assuming that the Trump administration goes ahead with the tariffs on US$200 billion plus US$300 billion imports) without fully matching US' measures in scale or intensity. China retaliated with higher duties on a similar amount of American goods. Beijing criticized the measure but has yet to say how it might respond. Foreign firms doing business in China or competing with Chinese rivals faced deeper and broader obstacles, he said, adding that Beijing was providing "massive, market-distorting subsidies" and "skewing the playing field... in myriad ways".
A man waits for the goods to be load on his tricycle at a dealer selling imported seafoods at the Jingshen seafood market in Beijing, Thursday, July 12, 2018. Its politically volatile trade surplus with the United States widened by 14.2 percent to $29 billion.
China is trying to step up pressure on Washington in a growing tariff war by suggesting US companies lobby American leaders.
Beijing has stepped up efforts, so far without success, to recruit governments including Germany and France as allies.
"To defend the core interests of the nation and the fundamental interests of the people, the Chinese government will, as always, be forced to take necessary countermeasures", a spokesperson for China's Ministry of Commerce said, according to Xinhua. They criticize President Donald Trump's tactics but share USA complaints about Beijing's industrial policy and market barriers. "Weaker than forecast imports, will on the margin, add to the narrative about slowing Chinese growth".