Minister says trade war would bring ‘disaster to global economy’

China’s trade minister Zhong Shan warned that a trade war with the U.S. would bring disaster to the global economy, but said his nation won’t start one and that talks with the Trump administration continue.

“There is no winner in a trade war,” Zhong said at a press conference in Beijing yesterday. “A trade war will only bring disaster to China, U.S. and the global economy. China doesn’t want a trade war, and will not start a trade war first. But we can handle any challenge, and will firmly defend the interests of our nation and our people.”

Zhong added that the U.S. trade deficit with China is overestimated by about 20 percent, citing research by a panel tasked with investigating the discrepancy between the two nations’ accounts of their trade balance. The deficit could be reduced by 35 percent if the U.S. eased export controls on high-technology products to China, he said, citing unspecified U.S. research.

Trade tensions between the world’s two biggest economies intensified last week as President Donald Trump signed orders for stiff tariffs on steel and aluminum and indicated more actions are potentially on the way. The U.S. administration asked China for a plan to cut the annual U.S. trade deficit with the nation by $100 billion, a White House official said Friday.

As China’s exports surged in February its monthly surplus with the U.S. widened from a year earlier to $20.96 billion, according to data from the customs bureau. The U.S. trade shortfall in goods with China surged 8.1 percent during the first year of Trump’s presidency, reaching a record $375 billion, according to Commerce Department data released last month.

The main channel of dialogue on trade between the two nations, the Comprehensive Economic Dialogue, has been put on hold over U.S. frustration over a lack of progress. But Zhong said communications have not been completely broken off.

“We are still in talks, and we are sure that both sides will keep talking for the next step,” he said. Bloomberg