China doesn't want 'trade war' with Washington

Rising tension on the Korean Peninsula may lead to conflict and must be de-escalated, Chinese Premier Li Keqiang has said after the close of China's annual parliament.

Li said he was "optimistic" about the future of China-US relations, and added that Beijing does not "want to see a trade war break out". "That wouldn't make our trade fairer".

During the next decade or two he expects the world will probably divide into major trading blocs, forcing Australia to decide between China or the USA for its economic future, and its security.

"No matter what bumps this relationship may run into, we hope this relationship will continue to move forward in a positive direction".

Beijing has ramped up pressure on South Korean companies this year, including closing many stores belonging to the Lotte conglomerate in China, banning tourist travel tours to South Korea and stopping Korean soap operas appearing on Chinese television.

Zhu Feng, a USA affairs analyst from Nanjing University, said communication between both countries had improved recently and Li's remarks showed Beijing was trying to create positive momentum for the summit.

Quoting a think-tank report, Li was quick to point out that "If there were a trade war, it would be foreign-funded companies, particularly U.S. firms, that would first bear the brunt".

"Over the past four years we have created about 13,000 urban jobs", he averred, adding that the government had prioritised creating employment, and was prepared to receive the 7.5 million students graduating from universities this year 2017, among others, urging them to be self employed and not totally dependent on seeking the government for jobs.

China has gradually opened its bond market to foreign investment and redoubled efforts to lure foreign capital, but investors have said market accessibility and concerns about the stability of the yuan currency - and capital controls enacted to protect it - could impede inflows.

Officials of the two countries are discussing a face-to-face meeting between Trump and Chinese President Xi Jinping, the premier said.

While many analysts doubt the strength and consistency of Chinese official data, even some veteran China skeptics agree that economic activity did pick up previous year, 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.

Li acknowledged there were internal and external risks to China's economy, but said talk of a sharp slowdown should stop.

Li also reiterated China's stance that the issue is a regional affair that should be "decided and resolved by the countries directly involved".

Trump threatened to upend decades of multilateralism and raised fears of a trade war with China while on the campaign trail.

"China's economy will continue to enjoy medium to high growth", he said.

The premier noted that a year ago, China was the largest recipient of foreign direct investment among all developing countries, with US$126 billion (S$178 billion).

  • Leroy Wright