China opposes escalation of conflict, welcomes investment, vice-premier says

China is willing to resolve disputes with the United States through "calm" negotiations and it resolutely opposes the escalation of trade conflicts, Vice-Premier Liu He said on Monday.

Liu, who has been leading the trade negotiations with Washington, said China has sufficient policy tools and is capable of ensuring stable and sound economic development.

The vice-premier's remarks came after the ongoing trade tension between the world's two largest economies further escalated with both sides deciding to levy more tariffs on each other's exports.

"We resolutely oppose technology blockades and trade protectionism ... and are willing to resolve problems through consultation and cooperation with a calm attitude," Liu said at the opening ceremony of the 2019 Smart China Expo in Chongqing.

"We believe that the escalation of the trade war is not beneficial to China, the US nor to the interests of people around the world," he added.

The vice-premier said that China welcomes companies from all over the world including the US to invest and operate in the country and the Chinese government will continue to create a good investment environment and protect intellectual property rights.

The latest escalation of the trade tension between China and the US has cast a shadow on the next round of trade talks scheduled to be held in the US next month.

Experts said that Liu's remarks signaled China's willingness to continue trade talks with the US while sending out the message that it is confident and capable of maintaining stable growth and is prepared for the worst-case scenario.

"They showed China's positive gesture ahead of the trade talks and that it is hoping to continue the negotiations and reach an agreement with the US," said former vice-minister of commerce Wei Jianguo, who is now vice-president of Beijing-based China Center for International Economic Exchanges, a government think tank.

"But the country is not fearful of the extreme US pressure, and it is capable of dealing with the worst results," Wei said. "They (Liu's remarks) were also a reassuring message to global companies and investors that China's market reform and opening-up will not go backward, the Chinese economy is resilient and the government is capable of shielding the economy from the negative impact of trade conflicts," he added.

On Monday, Foreign Ministry spokesman Geng Shuang said that the US administration's threat to order US companies to seek alternatives to doing business with China sounds more like a political slogan than a practical move.

"Even if it were to happen, there would be others to fill the gap. In the end, it would be the US that suffered the loss," Geng said at a news conference.

The ministry said that the US tariff hikes have dragged down international trade and global economic growth, and it strongly urged the US not to misjudge the situation and to stop the wrong moves immediately.

"If the US puts the tariff measures into action, China will absolutely take measures to safeguard its legitimate interests," Geng said.

Wang Tao, chief China economist at UBS, said that the latest tariff escalation adds more uncertainty to the US-China trade talks and bilateral economic relations.

"On the Chinese side, the unexpected US escalation in early August and the export restrictions on Huawei have likely hardened policymakers' stances ... and it does not appear likely they will yield in the face of more economic pressure," Wang said.

In response to the uncertainties surrounding the trade dispute with the US, China will continue to push more reform and market opening, she said, adding that policymakers in Beijing will likely introduce additional monetary policy easing, increase funding for infrastructure investment and provide more policy support for employment and in social welfare.