China accuses Trump of 'naked economic terrorism' for provoking trade war

Beijing takes aim at US for 'chauvinism' and 'bullying', warning that there will be no winner from dispute between world's two largest economies

'This trade conflict will also have a serious negative impact on the development and revival of the global economy,' Zhang Hanhui, China’s deputy foreign minister, said (Getty)

China has accused Donald Trump’s US administration of “naked economic terrorism” as a trade war between the two nations escalates.

“We are against the trade war, but we are not afraid of it,” Zhang Hanhui, China’s deputy foreign minister, said on Thursday.

“This premeditated instigation of a trade conflict is naked economic terrorism, economic chauvinism, and economic bullying,” Mr Zhang said, at a press briefing ahead of a Chinese presidential visit to Russia next week.

“There is no winner in a trade war,” he warned. “This trade conflict will also have a serious negative impact on the development and revival of the global economy.”

A war of increasingly strong words has accompanied the ratcheting up of tariffs on hundreds of billions of dollars worth of goods.

Trade talks between the world’s two largest economies have apparently stalled after the US president blacklisted Chinese telecoms giant Huawei

This week, rare earth metals which are vital for building smartphones and other consumer electronics, became the latest battleground, with Beijing hinting that it could block exports of the minerals to the US in retaliation for attacks on Huawei.

China produces 95 per cent of the world’s rare earth elements, meaning any restriction could severely hurt US technology firms like Apple which Mr Trump has apparently been trying to protect by going after Huawei.

Mike Pompeo, the US secretary of state, said America has already “lost and suffered for decades under the current rules” and that Mr Trump's “singular focus is to push back” on China.

On Huawei, Mr Pompeo said: “If it's the case that the Chinese Communist Party wanted to get information from technology that was in the possession of Huawei, it is almost certainly the case that Huawei would provide that to them,” he told the Fox Business Network.

The latest volley of comments between the two sides has sent stock markets tumbling, with the S&P 500 more than 5 per cent down in May so far.

Asian shares were mostly lower on Thursday. Benchmarks in Australia, Japan, Hong Kong and China were all in negative territory while South Korea’s main index rose slightly.

Fears are growing that the trade war will derail global economic growth as it drags on with no sign of a resolution.

“The cracks in global equity markets threatened to grow wider still as relentless haven-buying of sovereign bonds overnight pushed key yields even lower and sent recession fears through stocks,” said Jeffrey Halley, senior market analyst at Oanda.