BEIJING -- China on Monday promised to retaliate if President Donald Trump escalates the tariff battle, raising the risk of China targeting operations of American companies as it runs out of imports for penalties.
The threat came after Trump said Friday that he's ready to tax all Chinese imports "at short notice," extending penalties to an additional $267 billion of Chinese products in their dispute over China's technology policy. That would be on top of $50 billion of goods already hit by 25 percent duties and another $200 billion on which Washington is poised to raise tariffs.
"If the United States insists on imposing another round of tariffs on Chinese products, China will definitely take countermeasures to safeguard its legitimate rights and interests," Foreign Ministry spokesman Geng Shuang said.
Geng gave no details, but the government said in June that it would impose unspecified "comprehensive measures" if necessary. That left American companies on edge about whether China might use its control over the heavily regulated economy to disrupt their operations by withholding licenses or initiating tax, anti-monopoly or other investigations.
China matched the U.S.' first round of tariff increases on $50 billion of its goods, but their lopsided trade balance means Beijing is running out of imports for retaliation. After Trump's threat to target another $200 billion of goods in a second round of increases, China issued a list of only $60 billion of American products for possible retaliation.
The United States imported $3 of Chinese goods last year for every $1 of American goods bought by China.
Chinese leaders agreed in May to narrow that trade gap by purchasing more American soybeans and other products.
But they reject Trump's demand to roll back official industry plans such as "Made in China 2025," which calls for state-led creation of global champions in robotics, artificial intelligence and other technologies.
The U.S., Europe and other trading partners argue that such plans violate China's market-opening pledges. American officials also worry they might erode U.S. industrial dominance. But China's Communist Party leaders see such plans as a path to prosperity and global influence.
China's exports to the United States have been unexpectedly resilient, rising by double digits in July and August despite the U.S. tariff increases.
Exports to the United States in August rose 13.4 percent to $44.4 billion, ticking up from July's 13.3 percent growth. Chinese imports of U.S. goods rose 11.1 percent to $13.3 billion.
In August, China's trade surplus with the United States widened to a record $31 billion.
China's imports from the United States last year totaled $153.9 billion.
After the earlier tariffs targeting $50 billion of U.S. goods, that leaves barely $100 billion for retaliation, or half of Trump's $200 billion list of goods for the second round of tariffs.
Chinese regulators have so far targeted farm goods and other items from states that supported Trump in the 2016 election.
They have tried to minimize the blow to China's economy by picking U.S. goods for which alternatives are available elsewhere, such as soybeans from Brazil, natural gas from Russia or pork from Germany.
Chinese regulators in the past have shown their willingness to attack foreign companies in disputes with other governments.
Last year, the government destroyed South Korean retailer Lotte's business in China after the company sold a golf course in South Korea to that nation's government so it could be used as the site of a missile-defense system opposed by Chinese leaders.
Officials closed most of Lotte's 99 supermarkets and other outlets in China. South Korea and China later mended relations, but Lotte gave up and sold its China operations.
China's entirely state-controlled media also have encouraged consumer boycotts against products from Japan, South Korea and other nations during disputes with those governments.
The chairman of the China's second-biggest bank said Monday that China and the U.S. will eventually find a solution to the escalating trade dispute.
"There's room for negotiation," China Construction Bank Corp.'s Tian Guoli told reporters in Tokyo, where he's attending an Asian Financial Cooperation Association forum.
"They should have the wisdom to find a way to solve this problem."
Despite the trade data released Saturday, showing that China's surplus with the U.S. rose to a record in August, Tian signaled that the roles could reverse over time.
"Today, you are selling more of our products. Tomorrow, I will be selling more of yours," he said. "The U.S. needs to be patient."
But the dispute may dampen market sentiment even if the direct economic effect is limited, former People's Bank of China Gov. Zhou Xiaochuan said in a Bloomberg Television interview.
And rising inflation in China could complicate the government's efforts to prop up a slowing economy and navigate the trade war.
Chinese officials said Monday that an index of consumer prices rose in August for the third consecutive month. The increases are not particularly sharp, and Chinese economists point to a number of temporary factors pushing up prices, such as floods that have damaged crops and a swine flu epidemic that led farmers to cull pigs.
Higher prices could cause problems for Xi Jinping, the country's leader. They would force China's leaders to be careful as they seek ways to bolster slowing growth, lest their efforts drive up prices still further.
The trade war with the United States could also lead to higher prices for Chinese consumers and companies, with tariffs raising the cost of imported goods.
For now, Chinese economists generally say there is little cause for alarm. "Disasters like the swine flu and disasters like the flood are not a very big impact on China as a whole and are not a turning point," said Li Xuesong, deputy director of the National Academy of Economic Strategy in Beijing.
China's official inflation figures have been tame, but people inside and outside the country widely disbelieve them.
Western experts contend that the country's consumer price index broadly understates the effects of ever-rising housing costs.
The index also understates a large number of lesser trends, including the shrinking size of meal portions in restaurants and changing fashions in clothing, they say.
Officially, consumer prices were up 2.3 percent in August from a year before, the country's National Bureau of Statistics said Monday. Although marginally higher than economists' expectations of 2.2 percent, that is still modest. But it represented a gradual acceleration from recent months.
Information for this article was contributed by Joe McDonald of The Associated Press, Gareth Allan and Alfred Liu of Bloomberg News and Keith Bradsher of The New York Times.
A Section on 09/11/2018