China spruiks ‘huge’ LNG export potential, notes negotiations can’t progress with ‘knife to throat’

China has spruiked the “huge potential” for Australian LNG exporters as it nixes prospect of trade talks given tariff “knife”.

A liquefied natural gas tanker ship at a Chinese terminal. Growing demand for LNG and unexpectedly fast growth in China in particular have been a boon for U.S. producers. PHOTO: -/AGENCE FRANCE-PRESSE/GETTY IMAGES

China is prepared to open up more markets for Australian LNG sales as a result of its trade war with the US, a senior trade official in Beijing said today.

“The US is a major supplier of LNG to China, but because of its trade restriction measures, China is compelled to adopt counter measures,” China’s vice minister of commerce and deputy international trade representative, Mr Wang Shouwen, said at a briefing today on China’s latest position paper on its trade war with the US.

“Australia is an important source of China’s LNG.

“The trading between China and Australia in LNG is pretty sizeable and there is huge potential,” he said.

“China is a huge market. It is ready to expand the market.

He said there would be “even more opportunities” for LNG producers from countries which were not involved in the trade war with China.

China has imposed tariffs of 10 per cent on US imports of LNG in response to President Trump’s escalating trade war against China.

Australia has become a major exporter of LNG to China which is pushing to expand its use of LNG as a way of lowering pollution.

The higher tariffs on LNG from the US will give Australian suppliers such as Woodside a stronger price edge in the world’s fastest growing market for LNG.

But growing anger within China at America’s aggressive trade tactics could also encourage Chinese buyers to shift to non-US suppliers.

Mr Wang said the trade war with the US had already “damaged the global value chain.”

He said sales of agricultural products from countries such as Australia and Brazil to China have already been increasing this year in the lead up to the trade war.

He said America’s trade war had not delivered any gains to the US and was allowing foreign suppliers of goods including those from Australia to increase their sales to the China market.

Mr Wang was one of a group of senior Chinese officials arguing China’s case in its increasingly bitter trade war with the US.

In a 90-minute presentation, they sought to argue China’s case that it had open markets and that both the US and China had benefited from their increasing trade ties.

Mr Wang said China felt like the US was “putting a gun to its head.”

He said that there had been four rounds of high level negotiations between the US and China in a bid to solve the situation.

He said the negotiating teams had “reached a level of understanding” but the US had then “reneged” on its agreement.

The vice commerce minister also said China is open to negotiations but that the two sides must treat each other “equally and with respect”.

“Now that the US has adopted this type of large-scale trade restrictions, they’re holding a knife to someone’s throat. Under these circumstances, how can negotiations proceed?” Wang told a news conference.

Wang met US officials in Washington in August but there have been no high-level meetings for months.

Wang said Tuesday the US measures “have made it impossible for the negotiations to proceed”.

Mr Wang said previous rounds of trade talks weren’t useless, but the lack of sincerity from the US side stalled the process.

At the same briefing Tuesday, a deputy head of China’s state planner said China is capable of offsetting impacts from the trade conflict with the US by increasing domestic demand and improving companies’ competitiveness.

Lian Weiliang, a deputy head of the National Development and Reform Commission, said the Chinese economy is resilient in the face of shocks and domestic demand is robust.

Mr Lian said China would further cut tax burdens and improve business environments for both Chinese and foreign companies.

He also said China would expand co-operation with the European Union, Japan, Russia, Southeast Asian countries and Africa to diversify its export markets.

In a lengthy position paper released on Monday, China accused President Trump of using “bullying” tactics on trade and warned that his actions in launching a trade war pose a “grave threat to the multilateral trading system.”

The paper was released as US tariffs of 10 per cent on another $US200 billion ($275bn) of China’s exports went into place.

The paper attacked the Trump administration’s “America First” policy and its trade war tactics as using “extreme pressure” and “intimidation” by attempting impose its own interests on China.

It said the Trump Administration had “brazenly preached unilateralism, protectionism and economic hegemony” and had made false accusations against many countries, including China.

It had also been “intimidating other countries” by economic measures including imposing new tariffs on exports.

It expresses concern at the sharp deterioration of relations with the US in recent times, which, it says, “poses a grave threat to the multilateral trading system and the principle of free trade.”

The paper reflects the worsening political ties between China and the US as President Trump has continued to escalate the trade war with China by imposing higher tariff on a total of $US250bn worth of Chinese imports in the past few months.

Trump has also threatened to impose tariffs on another $US267bn worth of Chinese exports to the US, covering the almost the entire span of Chinese exports.

But, while China has retaliated with higher tariffs against a total of $US110bn in US imports, its scope to hit back with tariffs is limited as it only imports around $US130bn in goods from the US, while the US imports more than $US500bn worth of goods from China.

It cancelled plans for a senior economic envoy, vice premier Liu He, to visit Washington this week for further talks to try to resolve the situation after Trump’s moves last week to significantly escalate the situation.

with AFP, Dow Jones