China vows fight over trade moves

Under the memorandum, Lighthizer will consider whether the US response should include increased tariffs on goods from China, and if so, he should publish a proposed list of products and any intended tariff increases within 15 days of the memorandum. A final list would be published to implement any tariffs after a period of notice and comment.

At Thursday's hearing, Lighthizer indicated that Chinese products and industries in the "Made in China 2025" strategy will be the primary targets.

The memorandum directs Mnuchin to address concerns about Chinese FDI in the US and report the progress within 60 days of the memorandum.

Foreign Ministry Spokeswoman Hua Chunying said the two countries have remained in close communication on trade issues at various levels.

Constructively resolving differences and friction, and safeguarding the healthy and stable growth of bilateral trade are the consensus of both countries' leaders, she said on Thursday.

US export restrictions on China are a factor in the trade imbalance, she said, adding that a complete trade balance is unrealistic and unreasonable, and it's not fair to accuse only China.

"I hope both sides sit down to conduct constructive dialogue and consultation and pursue mutual benefits and win-win results based on equality and mutual respect," she said, adding that China and the US can be positive role models in maintaining the stability of the global economy.

Trump also said that he views China as a friend.

"I have tremendous respect for President Xi," he said. "We have a great relationship. They're helping us a lot in North Korea.

"But we have a trade deficit ... there are many different ways of looking at it, but no matter which way you look at it, it is the largest trade deficit of any country in the history of the world," Trump said.

Zhang Monan, a researcher at the China Center for International Economic Exchanges, said the Trump administration needs a way to attract votes for the midterm elections in November.

"It is unwise to stop effective official talks," Zhang said. "The current situation certainly needs constructive talks to resolve issues."

Tu Xinquan, a professor of international trade at the University of International Business and Economics in Beijing, said a trade war could push China to seek more technology partners from Europe to the detriment of US firms.

The memorandum was signed just a day before the Section 232 steel and aluminium tariffs are expected to be imposed.

But Lighthizer said on Thursday that in addition to the exemptions for Mexico and Canada, the tariffs on countries in the European Union, Brazil and Argentina — all major steel exporters to the US — will be put on pause. Japan, however, remains on the list.

Jing Shuiyu and Zhong Nan contributed to this story.

Contact the writers at chenweihua@chinadailyusa.com