China Slaps Punitive Tariffs on Japan Goods, Open to Talks With Tokyo

Japan and China dug in their heels in an escalating trade war between the giant neighbors, as China has announced to implement punitive tariffs on cars, mobile phones and airconditioners imported from Japan, beginning June 22.

However, Japan Government seems intransigient, as it shows no urgency to put an end to a war triggered by Japan's levying of excessive tariffs on three kinds of Chinese-made farm products in April.

Japanese Trade Minister Takeo Hiranuma said on June 22 that Tokyo had no intention of lifting tariffs imposed in April on those farm imports.

In retaliation against those curbs, China decided on Thursday to impose 100 percent tariffs on 60 varieties of products from a range of three classes of Japanese goods -- mobile phones, vehicles and air conditioners.

In Beijing, an official of Ministry of Foreign Trade told Reuters that Beijing was ready for a negotiated solution. "We invite Japan to take measures to resolve the problem," said the official, who declined to be identified. "We hope both sides can resolve the problem through consultations."

Nevertheless he declined to say when talks might be held.

Beijing's move to slap tariffs on goods including cars, sports utility vehicles, buses and trucks was "in response to Japan's discriminatory treatment of some Chinese export products."

Analysts have estimated the value of the goods that China is targeting at about $700 million last year. Japan's total exports to China in the year ending on March 31 were 3.51 trillion yen ($28.17 billion), up 29.2 percent from a year earlier.

IT REALLY HURTS

"It's close to a trade embargo," said one Japanese trade ministry official who declined to be identified.

Mindful of the potentially grave impact of a trade war on business ties, a Japanese business leader urged the two governments to scrap their measures.

"Japan and China should withdraw the measures and make efforts to reach a solution through diplomatic channels," said Hiroshi Okuda, chairman of the Japan Automobile Manufacturers Association and also chairman of Toyota Motor Corp.

Okuda said the tariffs effectively barred Japanese automakers from exporting vehicles to the world's most populous country. "This could develop into a major problem not just for the auto industry when we come to think of Japan's future business in China. Therefore, we are very concerned," he said.

Echoing Okuda's grim views, Mitsubishi Motors Corp, Japan's fourth-largest automobile maker, said it was "completely taken aback".

"The imposition of extra import tariffs will have a major impact on Mitsubishi Motors' business in China, both at present and in terms of lost opportunities in the future," it said.

TRADE WAR HEATS UP

The two have been locked in a festering trade row since April. Japan says its April decision to impose temporary "safeguard" curbs under World Trade Organisation rules, which preclude retaliation, on Chinese shiitake mushrooms, leeks and rushes for tatami mats was to protect its own farmers from cheap imports.

China disputes that, calling the move trade protectionism.

Japan has stood firm, saying it would consider more import curbs on items from China if requested by domestic industries. Japanese makers of bicycles, chopsticks, towels, neckties and socks have complained of competition from cheap Chinese products.

Analysts said the tit-for-tat penalties appeared to show the two countries positioning for a solution.

"What normally happens is those punitively high tariffs don't last very long. They bring people to the negotiating table and a kind of copromise gets reached," Richard Margolis of Merrill Lynch in Hong Kong told Reuters Television.

Indeed, Hiranuma stressed the move would not affect Japanese support for China's entry to the World Trade Organisation. "We are sticking to the principle that China's WTO entry is vital for the world's free trade. We will not suddenly change our stance on this just because China decided to implement the punitive measures," he said.

The trade dispute comes as diplomatic tensions have flared over Prime Minister Junichiro Koizumi's plans to visit a controversial war shrine, a move that has drawn criticism from China and both South and North Korea.

Beijing has warned Koizumi repeatedly not to pay homage at Tokyo's Yasukuni Shrine, which is dedicated to Japan's 2.6 million war dead since the 19th century, including Class-A war criminals such as wartime prime minister Hideki Tojo.

Koizumi has said he will visit the shrine on August 15, the day Japan surrendered in World War Two.

Tokyo's approval of history textbooks, which critics say whitewash its wartime atrocities, has also strained ties with China as well as South Korea.

People's Daily Online --- http://english.peopledaily.com.cn/