Beijing: Don't be "penny wise and pound foolish" in pressing ahead with a trade war, China warned America on Friday as it unveiled plans to impose higher tariffs on 128 US products worth about USD 3 billion, while keeping "powder dry" by sparing big-ticket items for a future date.
The Commerce and Foreign Ministries today unleashed a war of words to counter US President Donald Trump's moves to impose tariffs up to USD 60 billion in Chinese imports and limit the country's investment in the US in retaliation for years of alleged intellectual property theft.
US should "pause on the brink of a precipice" and make prudent decisions so as not to put bilateral trade relations in jeopardy, the Chinese Commerce Ministry warned.
China will not sit idly watching its legitimate rights and interests being damaged under any circumstance, a spokesperson of the Commerce Ministry said.
"We are fully prepared to firmly defend our interests," he said.
Foreign Ministry spokesperson Hu Chunying breathed fire at a briefing saying Trump's move is in total disregard to WTO rules amounted to "unilateral protectionist action".
"Certain people from US obviously misjudged the situation and little bit arrogant and totally underestimated China's resolve and capability to protect its interests as well as the cost US has to pay for its reckless action," she said replying to a volley of questions.
"We have made full preparations to protect our legitimate interests. China is not afraid to fight a trade war. We have the capability to address any challenges," she asserted.
Hua also justified China's USD 375 billion trade surplus saying the Chinese products boosted consumer confidence in US and prevented inflations.
Trade war will harm consumer interest and financial market interests, she said, pointing out the big plunge in the stock market, which said is a "big vote of no confidence in US actions".
"We hope US can take seriously China's position and decide in rational manner. Don't be penny wise and pound foolish. That will harm US itself as well as others," she warned.
Earlier, the commerce ministry said it was considering suspension of tariff concessions on 128 items of US products worth about USD 3 billion, a move aimed at countering the US decision to impose 25 per cent tariffs on steel imports and 10 per cent on aluminium, with initial exemptions for Canada and Mexico.
The measures, or the suspension of tariff concessions, will target 128 items of US products, including pork, wines and seamless steel tubes, it said.
According to the ministry, the measures will include a 15-per cent tariff on products including fruits, nuts, wines and seamless steel tubes, and a 25-per cent tariff on pork and recycled aluminium products.
The measures will be implemented in two stages.
In the first stage, the 15-per cent tariff will be imposed if the two countries could not reach an agreement on trade issues within scheduled time. In the second stage, the 25-per cent import tax will be imposed after evaluating the impact caused by the US policies, state-run Xinhua news agency quoted the ministry as saying.
But conspicuously missing are the big-ticket items from soybeans, sorghum and Boeing airplanes.
One Chinese official told the media that China is "keeping its power dry by not touching the big-ticket imports from US".
Since he took over power, Trump has been pressuring China to step-up measures to reduce trade deficit and expand US exports and investments. China signed major trade deals worth about USD 250 billion including buying 300 planes from Boeing during Trump's visit here last year.
China also opened its markets to import soya beans, beef and oil from US.
Earlier, China rushed its top diplomat Yang Jiechi followed by President Xi Jinping's economic advisor Liu He to the US to pacify the Trump administration to avert a trade war between the world's two largest economies but the US president went ahead with his plan.
Trump yesterday signed a memorandum that could impose tariffs on up to USD 60 billion of imports from China and restrictions on Chinese investment in the US. He also asked China to immediately cut trade deficit by USD 100 billion.
The memorandum is based on the Section 301 investigation into alleged Chinese intellectual property and technology transfer practices, launched by the Trump administration in August 2017.
Before signing the measure, Trump lamented the US' multi-hundred billion dollar trade deficit with China and said the action would be "the first of many."
The US also launched a complaint against China at the World Trade Organisation (WTO) today.
Its statement said: "China appears to be breaking WTO rules by denying foreign patent holders, including US companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends."
"China also appears to be breaking WTO rules by imposing mandatory adverse contract terms that discriminate against and are less favourable for imported foreign technology," the statement added.
There is considerable concern in Beijing as Trump's move to press China to reduce trade deficit comes just days after President Xi got re-elected for a second-five-year term. A constitutional amendment abolished the two-term limit for the president, paving the way for Xi's life long rule.