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story.lead_photo.caption Li Keqiang, China's premier, speaks during a news conference following the closing of the First Session of the 13th National People's Congress (NPC) at the Great Hall of the People in Beijing, China, on Tuesday, March 20, 2018.

BEIJING -- China responded to the threat of a huge package of tariffs from the United States by vowing to further open its own markets to foreign trade and investment, while warning that a trade war between the two nations would hurt both sides.

President Donald Trump is preparing to impose a package of $60 billion in annual tariffs against Chinese products, a move he says will punish China for intellectual property theft and create more U.S. jobs, administration officials say. He is determined to bring down the U.S. trade deficit with China, which reached $375 billion last year.

Earlier this month, citing a rarely used national security provision in U.S. trade law, the president imposed tariffs on imported steel and aluminum. Though billed as a response to excess Chinese production, that action angered U.S. allies in Europe and Asia, which are major U.S. sources of the industrial metals.

China's premier, Li Keqiang, said the issue should be solved through dialogue and negotiation.

"No one will emerge a winner from a trade war," Li told a news conference at the conclusion of China's annual parliamentary meeting. "What we hope is for us to act rationally instead of being led by emotions."

The new tariff package, which Trump plans to unveil by Friday, could be applied to more than 100 products that the president argues were developed using trade secrets that China stole from U.S. companies or forced them to hand over in exchange for access to its huge market.

The proposed tariffs, coupled with the president's rejection last week of Broadcom's proposed $117 billion takeover of Qualcomm as a threat to national security -- reflects a rethinking of the U.S. economic relationship with China.

In Washington, there is mounting bipartisan alarm over China's state-backed drive to overtake the U.S. in artificial intelligence, semiconductors, quantum computing and other digital pillars of economic and military power. For instance, Qualcomm, which got 65 percent of its annual revenue from China last year, had teamed with China's largest semiconductor maker and Huawei, a telecommunications vendor that the U.S. government says has hidden links to the Chinese government, in a venture aimed at improving China's chip-making abilities.

China argues that trade benefits both countries, but Li did acknowledge U.S. concerns.

"A large trade deficit is not something we want to see," he said. "What we want to see is balanced trade, otherwise this kind of trade will not be sustainable."

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Li reiterated a pledge made at the opening of the parliamentary session two weeks ago to further open up China's markets to foreign companies, something he argued was in Beijing's own interests. And he also vowed stronger protection for foreign companies' intellectual property.

"With its economy so integrated into the international economy, closing its own door will only block China's way," he said. "Moreover there is still broad room for us to further open up."

The U.S. business community argues that China does not treat foreign companies fairly and has failed to follow through in recent years on pledges to open its doors more widely. Despite China's recent rhetorical attempt to portray itself as a defender of free trade, the reality is that U.S. markets remain far more open than Chinese ones, diplomats and experts say.

The American Chamber of Commerce in China reacted somewhat warily, saying it was pleased to hear Li's pledges to grant greater market access and to better protect intellectual property, but adding it would have to "wait and see" what reforms are put in place by China and how effective they will be.

It also gave qualified support to Trump's tough stance.

In his remarks, Li pledged to slash tariffs for "day-to-day" consumer goods, phase in zero tariffs for imported drugs especially cancer drugs, and even relax access to service sectors such as elderly care, health care, education and finance.

"We believe these [steps] will bring opportunities for American companies, too," he said, while also reiterating a long-standing Chinese request for the United States to ease restrictions on high-tech exports to China.

Li said there would be "no mandatory requirements for technology transfer," a key complaint from foreign investors in the past.

China's aim, he said, is that both Chinese and foreign companies can compete on level terms, but he also warned that further opening up "will naturally be a step-by-step process." But he also suggested China would not make unilateral concessions.

Last week, a coalition of U.S. business and trade lobby groups urged Trump not to impose tariffs on China, warning it would be "particularly harmful" to the U.S. economy and consumers.

But the AFL-CIO union federation argues that tariffs are sometimes necessary to counter unfair trade practices, especially if they put American workers at a disadvantage.

Many analysts, however, fear that Trump's strategy is poorly designed to change China's predatory behavior and preserve America's innovation edge.

While there is broad support in the corporate community for a tougher U.S. stance toward China, Trump's critics say that he erred by first tackling other trade issues.

"By going with steel first, we've alienated all of our allies we needed to go with us on China's treatment of intellectual property rights," said Jeff Moon, a former U.S. assistant trade representative.

Information for this article was contributed by David J. Lynch of The Washington Post.

A Section on 03/21/2018

Print Headline: Trade war to damage both sides, China says

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