Published: Mon, January 07, 2019
Markets | By Otis Pena

China Lodges ‘Stern' Warning Over US Warship in S China Sea

China Lodges ‘Stern' Warning Over US Warship in S China Sea

The statement comes as trade talks between China and the United States are underway in Beijing, the first round of face-to-face discussions since both sides agreed to a 90-day truce in a trade war that has roiled worldwide markets.

China insisted this morning that it had "firm confidence" in its economy after President Trump claimed that its weakness had forced officials to the negotiating table.

Envoys will have "positive and constructive discussions" during meetings Monday and Tuesday, said Chinese Foreign Ministry spokesman Lu Kang.

China says it is ready to buy more USA goods, but it is resisting U.S. demands for tougher action on technology transfers, and less state support for strategic industries like robotics and computer chips.

Talks in Switzerland would follow a meeting due to start in Beijing on Monday between USA and Chinese officials, the first formal gathering between the two sides since Trump and Chinese President Xi Jinping agreed to a 90-day tariff truce in December, following a widely-anticipated dinner at the Group of 20 meeting in Buenos Aires. "Their economy's not doing very well", he told reporters on Sunday.

Chinese officials have said new measures will combat intellectual property theft, indicating that Beijing may make major changes to its "Made in China 2025" initiative, which calls for state-led creation of champions in robotics, artificial intelligence and other fields.

"I think that gives them a great incentive to negotiate".

The U.S. action is seen as part of the Pentagon's "freedom of navigation" operation in the South China Sea being conducted in an apparent move to challenge Beijing's claims and activities in the contested waters.

Trump imposed import tariffs on hundreds of billions of dollars of Chinese goods to pressure Beijing to change its practices on issues ranging from industrial subsidies to hacking.

Chinese rover 'Jade Rabbit' drives on far side of the moon
Congress has banned NASA from working with China on space exploration because of national security concerns. The Chinese rover has six powered wheels, allowing it to continue to operate even if one wheel fails.

The standoff also reflects American anxiety about China's rise as a potential competitor in telecommunications and other technology.

China's stridently nationalist Global Times tabloid said in an editorial late on Sunday that statements from both sides that they hoped to reach a deal were cause for optimism, but that Beijing would not cave in to USA demands.

That may not, however, be sufficient for the more hawkish figures in the Trump administration, led by Gerrish's boss, US Trade Representative Robert Lighthizer, who want to demolish China's model of centrally-planned and state-funded - and subsidised - state-owned enterprises. Lighthizer is deeply skeptical of Beijing and has warned Trump that the U.S. may need to exert more pressure through "additional tariffs" to win "true" concessions, The New York Times has reported.

"Top administration officials are confident they have enough leverage to win significant changes", NPR's Shanghai correspondent Rob Schmitz reports, "including an end to China's practice of forcing United States companies to hand over key technology in return for gaining access to China's market, and an agreement to buy more products from the U.S".

"If China was going to raise the white flag, it would have done it already", the paper said.

However, signs are emerging of an increasing toll on U.S. industry as well.

Chinese growth fell to a post-global crisis low of 6.5 percent in the quarter ending in September. "I think the two sides need some kind of agreement for now", Tu said.

UBS said on Friday that 37 percent of 200 manufacturers surveyed by the bank have shifted out of China over the past 12 months.

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