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China Says It Will Retaliate If US Implements Trade Sanctions

By Steven Mufson
The Washington Post

China warned Thursday that it would respond to threatened U.S. trade sanctions over bootleg compact discs, videos and computer software by striking back forcefully against American business interests here.

"If the United States announces any sanctions targeting China, we'll immediately release a tit-for-tat package with even greater value involved," Zhang Yuejiao, a director general at the Ministry of Foreign Trade and Economic Cooperation, said in the official China Daily.

The warning follows President Clinton's affirmation Wednesday that the Clinton administration is prepared to impose 100 percent tariffs on $2 billion worth of Chinese exports to the United States unless China acts by May 15 to stop the alleged piracy of copyrighted music, software and other intellectual property.

A Foreign Ministry spokesman, Cui Tiankai, Thursday called the American threat "unfair" and said that if sanctions are imposed "then China will be left with no alternative but to take actions to protect its legitimate rights and interests." Cui said that "the United States will only have itself to blame for the economic losses."

The latest rattling of economic swords comes little more than a month after China and the United States faced off near the coast of Taiwan, with China carrying out menacing military exercises on the eve of Taiwan's first fully democratic presidential election and the United States sending 16 warships to monitor China's moves.

The new round of threats also suggests that copyrights have eclipsed human rights as an irritant in U.S.-China relations. The battle over intellectual property protection has upstaged the debate over China's most-favored-nation status, which in earlier years was linked to China's human rights record.

President Clinton last year decided to sever that link and this year has reaffirmed his commitment to protecting China's trade status. But he has allowed the U.S. Trade Representative to press vigorously for China to halt the piracy of music, videos and computer software.

This is not the first time that China and the United States have come perilously close to a tit-for-tat over trade issues. In February 1995, a last-minute accord on intellectual-property rights protection narrowly averted U.S. sanctions. Before that, a last-minute deal over Chinese textile exports staved off a different set of penalties.

There is still time for a last-ditch effort by both sides. Lee Sands, a negotiator for the U.S. Trade Representative, will arrive this weekend for talks with Chinese officials. Although Washington will probably publish next Wednesday the list of Chinese imports that could be subject to U.S. tariffs, sanctions would not be imposed for another month.

Meanwhile, Washington would whittle its preliminary list of $3 billion worth of goods down to $2 billion while seeking to defuse the conflict, U.S. officials said.

But many analysts say the chances of U.S. action against China are greater in an election year. Such a move by the administration would preempt any move by Senate Majority Leader Robert J. Dole, R-Kan., the likely Republican presidential nominee, to stake out a tough stance on China. And it might make a small dent in the United States' $25 billion to $35 billion trade deficit with China.