China Doesn't Want Trade War, But Will Fight Back - Ambassador To New Zealand

Friday, 11 April 2025, 6:33 pm
Article: RNZ

Morning Report

The ambassador of China to New Zealand says China does not seek a tariff war, but will take resolute measures to defend its interest if such a war is imposed on it.

The United States tariff on Chinese imports now stands at 145 percent.

China is charging an 85 percent levy on US goods imported there.

Dr Wang Xiaolong told Morning Report China had always had the door open for negotiations, but they would need to take place from a position of "mutual respect and equality".

The unprecedented tariff the US had imposed on China was not reciprocal but rather "unilateral" and "protectionist", he said.

He rejected that the trade war had come about because China had not played fair in trade and had large trade surpluses to the detriment of the US.

Dr Wang said many economists indicated it was quite clear why there was such a large trade deficit in the US and it was simply because there was a gap between what was produced and what was consumed in the US.

The US was one of China's significant trading partners and pushing tariffs beyond 100 percent "then that'll certainly wipe out a significant chunk of bilateral trade between the two countries", he said.

"That'll increase the head wind for the Chinese economy, there's no doubt about that."

The US now accounted for about 13 percent of China's overall export market and about 3 percent of China's overall economy, he said.

Even if the entire US export market was wiped out China was better prepared to withstand that, he said.

"We have other drivers for economic growth, we're boosting domestic consumption, we're taking financial and monetary measures to maintain macro economic stability, we're boosting some of the long term drivers like innovation."

In terms of China's ongoing relationship with New Zealand, he said the two countries were mutually important trading partners and China would continue to develop this relationship.

China and New Zealand shared common interests in terms of what was happening in the US, he said.

"Both New Zealand and China support a rules-based multi-lateral trading system centred on the WTO, and both of us would hope this multi-lateral trading system would continue to function.

"The United States, because they took the lead in building this system up but with the pressing of a few social media set buttons, I think they're tearing this system down which is against the interests of the countries around the world, including the United States itself."

There was room for countries like New Zealand and China to defend the multi-lateral trading system, as well as developing mechanisms for global trade and growth to continue, he said.

"Remember, the United States is not the entire world, it represents only about 13 percent of global trade and it's only one country."

There was a lot of room for the remaining countries to work together to make sure that trade continued to grow, he said.

Chinese economic downturn could impact its trading position with NZ - English

A former trade commissioner for New Zealand in China said the 145 percent tariff the US was imposing on imports of Chinese goods would likely see an economic downturn in both countries, and could have some impact on New Zealand.

Pat English said the action the US had been taking was not good for anybody and "the firing from the hip thing" was not working.

"The instability which is really unhelpful - businesses, sectors, companies, markets - they need to have a certain amount of stability and confidence that certain things are going to happen."

China had a diversified trade portfolio and was the number one trading partner for around 120-130 countries, he said.

Although the US market was "incredibly important" to China, China did have some "strong alternatives", he said.

English said it had been reported that Xi Jing Ping was already out talking to leaders in Asia, South East Asia and the European Union, so China was looking to diversify its markets to offset what was happening with the US.

New Zealand was taking a neutral position and it had a good relationship with China which was the country's largest trading partner, he said.

"I don't think that's going to change other than the fact that if this carries through as it's shaping now there is going to be a downturn in the Chinese economy and the US economy."

The impact of the tariffs on China's economy could impact its trading position with New Zealand, he said.

So where does that leave New Zealand?

John McKinnon is chair of the New Zealand China Council and former Ambassador to China and he said there were a number of ways that a trade war could hit New Zealand.

"In terms of our own position we find it very troubling to have two of our largest markets and two of the biggest economies in the world engaging in this tit-for-tat tariff war.

"What we would like to see is for those two countries to sit down and negotiate if they have issues which they need to address."

McKinnon said he could not see that happening in the short-term but it was probably how it had to be resolved.

It could be possible to establish a rules-based trade system within the CPTTP trade agreement, but that would take time, he said.

"From New Zealand's point of view we benefited hugely from having a multi-lateral rules based trading system and that's what we would like to see continue to be reinstated."

There is a risk that the Chinese economy would not grow as fast as expected which would probably also reduce demand for New Zealand goods and services, he said.

The tariffs could also mean that some other countries decide to divert their produce to China, rather than say North America, he said.

"And also of course there are ... New Zealand controlled businesses in China which export to the United States and they're going to have obviously dealing with the consequences of that as well."

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