Trade war looms as US targets Chinese goods

The United States yesterday targeted $3bn (pounds 1.9bn) of Chinese textiles, electronic goods and other products for punitive sanctions, setting in motion a potentially massive trade war between the two countries. Within minutes of the announcement in Washington, the Peking government hit back with retaliatory sanctions of its own against US exports to China.

Under measures set out by the acting US Trade Representative, Charlene Barshefsky, a host of Chinese products including $750m of silks and $500m of fax machines, cellular phones and other consumer electronic products will be hit by 100 per cent supplementary import tariffs, after a 30-day "comment period" expires on 17 June.

The move - and the instant response from Peking - will further complicate relations between the US and the increasingly assertive Peking regime, already bedevilled by a row over Chinese nuclear equipment exports to Pakistan, tensions over Taiwan and long-standing US complaints at China's human rights record.

Ms Barshefsky said the action should come as "no surprise". China had been given "every reasonable opportunity" to fulfil its 1995 undertakings to stamp out piracy of US computer software, CDs, films and other copyrighted material. But 22 months of effort had proved fruitless, and the US had no choice but to go ahead with sanctions.

She said China had been asked to act in four areas: to clamp down on pirated CDs and CD-Roms, to stiffen its anti-piracy laws, to protect US intellectual property at its borders, and to improve market access for US software, records and films.

Despite "some important steps", among them an effort to clean up the market in Shanghai, the root problem - Chinese factories which manufactured the pirated material - had not been tackled.

In Hong Kong, Latin America and elsewhere, software packages costing $10,000 in the United States could be bought for $5, Ms Barshefsky claimed. In 1995 alone, China exported 50 million pirated CDs to the rest of the world.