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China tells state media not to inflame trade war

China tells state media not to inflame trade war

China has urged its state media to keep calm amid escalating trade tensions with the United States due to worries that unrestrained reporting could have a negative impact on its financial markets.

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12.07.2018 11:14 PM

China has urged its state media to keep calm amid escalating trade tensions with the United States due to worries that unrestrained reporting could have a negative impact on its financial markets, which have already shown signs of instability and jittery investor sentiment.

China’s commerce ministry branded the Trump administration's proposal of further tariffs on an additional $200bn of Chinese goods as “completely unacceptable” on Wednesday, but sources within the country’s state are wary of inflaming conflict even further as the two powers continue their standoff.

“When exposing and criticizing American words and actions, be careful not to link it to Trump and instead to aim it at the US government,” a memo circulated to reporters in China and seen by news site Reuters is believed to have said. The memo is based on directives that have been put forward by government officials.

The memo also said that key figures in the media must do their best to “stabilize the economy, growth, employment, stabilize foreign trade, investment, finance, stabilize the stock market, the foreign exchange market, the housing market and basically stabilize the peoples’ thinking, hearts and expectations”.

The new rules surfaced last week prior to the onset of the trade conflict, which is now in full swing and shows no signs of coming to an end soon. A person working for a news website said that the rules are the strictest that they have ever seen and highlight the desire in the East to play down the severity of the conflict, at least to the general public.

“They know the seriousness of the situation and the possible consequences, and they don’t want the media coverage to bring any kind of extra damage,” Li Xigen, a City University of Hong Kong professor in the Department of Media and Communications, said.

He added: “Later, as the situation gets worse, if the people are actually affected with their jobs, with prices... that may become real anger, and if the media do anything to stir up that kind of anger, it will cause some kind of very bad consequences. 

China Investment Corp (CIC) President Tu Guangshao said at a financial conference in Paris on Wednesday that a full-scale trade war now appears to be “unavoidable”. He added that while no one wants escalating conflict, it is likely to result in negative consequences for the sovereign wealth fund moving forward, especially in terms of investment.

The sentiment in China appears to be dismay at the lengths that the US is willing to go to. In an official statement released midweek, the commerce ministry said that it is “shocked” and confirmed that it will take the issue to the World Trade Organization in the coming days. It stopped short of outlining an immediate response, but retaliation is all but certain.

The trade tensions have been a trending topic on China’s social media platforms this week, with media sources claiming that authorities have been censoring content that they deem to be objectionable to reduce the chances of a possible backlash from the public against US brands. 

China’s next move will be a crucial one, and Wang Jiangyu, a trade expert at the National University of Singapore, believes that any attack on US enterprises has the potential to backfire, as the US contributes a lot to the economy domestically.

He said: “China might need to restrict the market access of American companies. But to purge American companies that are already operating in China might be a very bad idea. Those companies generate jobs and revenue for China. Most Apple products are made in China. To do something to harm American firms that are already operating in China would be very stupid.”

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