Trade war will hurt United States firms first, China says

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China has no plans to devalue its yuan to boost exports and will keep its exchange rate stable, the country's top economic official said yesterday.

"So what we hope is that all the parties concerned will work together to de-escalate the situation, get issues back on the track of dialogue and work together to find proper solutions", Li said at his annual news conference held on the final day of the annual legislative session.

In a January speech at the World Economic Forum in Davos, Chinese President Xi Jinping cautioned against protectionism amid worries that the rising tide of anti-globalisation in the West could be further entrenched.

"As for the projected target of GDP growth this year at about 6.5 percent, I have read some foreign media describing it as a move by the Chinese government for moderate downward adjustment of GDP growth", Li said. But if the US were to impose punitive tariffs on Chinese imports, USA agriculture and aerospace might be early targets for retaliation, since China imports American farm products and airplanes that could be supplied by other countries.

"Almost every year I have heard a prediction of the Chinese economy having a hard landing", he said.

While many analysts doubt the strength and consistency of Chinese official data, even some veteran China sceptics agree that economic activity did pick up a year ago, buoyed by heavy government stimulus in the form of record bank lending and billions in government infrastructure spending, as well as a speculative housing boom.

Last year, the United States' deficit in trade in goods with China reached Dollars 347 million and Trump has promised to close that gap, which he has also attributed to what he calls China's rigged currency exchange policies. "China's financial system is generally stable and there are no systemic risks. We still have a good reserve of policy options and instruments at our disposal".

China takes an open attitude toward regional free trade arrangements that concern it and where the conditions are in place, Premier Li Keqiang said on Wednesday.

"China will continue to open to the outside world", the premier said.

He added that China would "continue to be a strong driving force in the face of a sluggish global economy recovery". "We welcome other partners to share with us in the development opportunities of China".

"We hope the USA and China can together expand our common interests, which the members of the Association of Southeast Asian nations can benefit from", Li said.

Last year, China attracted US$126 billion in foreign direct investment, remaining the largest recipient among developing countries, figures showed.

Efforts from all countries are needed in supporting free trade, he added.

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