China to impose $34bn tariffs before the U.S. as trade dispute escalates

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China says 'fully prepared' if trade war kicks off this week

This is against a backdrop that Washington's first list of Chinese goods to be levied tariffs worth US$34 billion will come into effect this Friday, June 6.

Noting reports that the USA could add a tax on essentially every product shipped from China, Gao said "using the tariff stick to bully on trade runs against the trend of the times".

Concerns about the outbreak of a global trade war have, among other factors, prevented a sustained recovery in global stock markets since a violent sell-off knocked them off records highs in February.

China's counterplan calls for $34 billion in duties on such American products as beef, chicken, pork and soybeans - as well as electric and sport-utility vehicles. China's list is created to inflict pain on US farmers and other groups that are important to President Donald Trump's political base.

Foreign companies accounted for $20 billion, or 59 percent, of the $34 billion of exports from China that will be subject to new tariffs from the USA starting from Friday, with US firms accounting for a significant part of that 59 percent, Gao added.

Asked whether US companies will be targeted with "qualitative measures" in China in a trade war, Gao said the government will protect the legal rights of all foreign companies in the country.

Bloomberg news reports that talks to avoid a trade war have stalled in part over USA demands that China reduce state support for high-tech industries. But will it push the global economy into recession? Germany's exporter-heavy DAX .GDAXI fell half a percent and Britain's FTSE 100 .FTSE fell 0.3 percent.

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European officials have told Reuters that China has put pressure on the European Union to issue a strong joint statement against U.S. President Donald Trump's trade policies, but so far they have insisted on not taking sides.

Europe's tech sector.SX8P was fell 1-1/2 percent led by falls in chipmakers STMicro (STM.MI) and Infineon (IFXGn.DE), which were down by almost 8 percent and 2.5 percent respectively. Tabloid newspaper Global Times, which is owned by the Communist Party mouthpiece People's Daily, said the escalating trade dispute would create chaos around the world.

"At this point, the probabilities for both scenarios having major impacts on the technology sector in the short term are low", Garnry said.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.03 percent after declining 0.4 percent the previous day.

U.S. markets are closed for Independence Day following a move lower on Tuesday.

"Our country implements a floating exchange system consulting a basket of currencies and based on market supply and demand", Yi said.

Brent oil prices rose, driven higher by a threat from an Iranian commander and a drop in US crude inventories for the second week in a row caused by an outage at a Canadian facility.

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