China won’t talk if U.S. doesn’t show respect, ex-official says

China will only engage in talks with the U.S. if its leaders show respect toward Beijing, according to a former top Chinese economic official.

“If the U.S. wants China to totally accept the U.S. proposal, to accept the U.S. conditionality, I think there’s no negotiation,” Zhu Guangyao, who was China’s Vice Minister of Finance from 2010 to 2018, said in an interview in Singapore.

Zhu said while technical teams from both countries remain in contact, talks over Trump’s “reciprocal” tariffs must be based on mutual respect, peaceful co-existence and a win-win mindset. He didn’t elaborate on what specific actions that would entail.

China and the U.S. have spent the past two weeks locked in an escalating trade war, with both sides piling on new tariffs and raising barriers to trade. Chinese imports to the U.S. now face tariffs of at least 145%, while American goods headed to China are being hit with a 125% rate — levels so high they’re likely to bring trade between the two largest economies to a near standstill.

The impact is expected to hit China hard. Its economy is already under pressure from deflation, sluggish consumer demand and a prolonged property slump. Economists have been downgrading their forecasts for China’s growth this year, with UBS Group AG the most pessimistic among major banks, predicting the economy will expand just 3.4% as U.S. tariffs choke exports.

Zhu said China has “full confidence” in meeting its growth target of around 5% this year, pointing out that it’s the final year of the 14th Five-Year Plan and the country is on track to achieve the goals laid out in it.

He was also optimistic that domestic consumption will rise this year and said China has “full capacity” to ramp up spending if necessary.

Zhu served as deputy finance minister until his retirement in 2018, overseeing the Customs Tariff Department and playing a key role in U.S.-China trade negotiations. He was most recently a counselor to the State Council.

Chinese officials have repeatedly said they’re open to negotiations, but not under pressure or threats. U.S. Trade Representative Jamieson Greer said Trump expects talks “at some point,” though “we’re not there yet.” The president has said he’s waiting for China’s call and described Xi as a friend for whom he has “great respect,” highlighting his preference for negotiating leader-to-leader.

Zhu criticized the U.S. tariffs as being highly damaging to China’s national interests and said Beijing has a long-standing position of not giving in to external pressure. He added that coercion from Washington would be ineffective in resolving the dispute.

When asked if China might sell off its Treasury holdings in response to the tariffs, Zhu said the Chinese government is a “very responsible investor” that values global market stability. China, which owns about $700 billion in US debt, is the second-largest foreign creditor after Japan, raising concerns it could use those holdings as leverage.

“However, this is based on mutual understanding, mutual respect and mutual cooperation,” Zhu said, referring to China’s stance on its Treasury holdings. “I really hope US and China can, based on mutual respect, return to negotiation.”