Trade war has no winners, Chinese vice premier warns, as Trump threatens tariffs

BEIJING — Chinese Vice Premier Ding Xuexiang has warned there are “no winners” in a trade war, as the world’s second-largest economy faces the possibility of imposing tariffs under newly inaugurated administration of Donald Trump.

“Protectionism is going nowhere. (A) trade war has no winners,” Ding said Tuesday, according to an official English translation. He was speaking at the World Economic Forum in Davos, Switzerland.

The deputy prime minister began his speech by heavily referencing Chinese President Xi Jinping’s speech in Davos in 2017, which took place just days before Trump visited the White House to begin his first term.

At the time, Xi said that “pursuing protectionism is like locking yourself in a dark room. The wind and rain can stay outside, but so can the light and air.”

After his second inauguration on Monday, Trump said the United States could impose tariffs on Mexico and Canada as early as February. As for China, the returning US president indicated that tariffs could be a way to pressure the country to force Beijing-based ByteDance to sell TikTok, whose future availability in the US is now in question in question.

“If we wanted to do a deal with TikTok, and it was a good deal, and China didn’t approve of it, then I think ultimately they would approve of it, because we would impose tariffs. customs to China,” Trump said. “I’m not saying I would, but you definitely could.”

Trump said he and Xi discussed TikTok and trade during a call Friday. The Chinese reading of the exchange does not mention the social media app. Neither leader was present at Davos this year.

Ding, who said he was attending Davos for the second time, is one of China’s four vice prime ministers. China’s economy is struggling with sluggish consumption and a collapse in real estate. Despite this, the country’s GDP officially grew by 5% last year after a wave of stimulus announcements starting in late September.

In his speech on Tuesday, Ding attributed China’s economic challenges to the external environment and “temporary pains caused by our own economic restructuring.” He stressed that the country was trying to move away from real estate as a pillar of growth and towards new drivers such as high-end technology.

China’s technological achievements are the result of “open cooperation”, Ding added in a later discussion with World Economic Forum founder Klaus Schwab. The Chinese official stressed that Beijing is developing artificial intelligence for the “intelligent transformation” of its economy and has institutions capable of controlling the emerging technology.

Under former President Joe Biden’s administration, the United States said it was competing with China and imposed drastic restrictions that prevent Chinese companies from purchasing high-end semiconductors used to the training of artificial intelligence systems.

“When it comes to global AI governance, it’s a difficult issue,” Ding said. “If we allow this cutthroat competition between countries to continue, then we will see a gray rhino, what can we do about it?”

He called for global coordination on AI governance through the United Nations, similar to nuclear or biological risks.

Ding widely warned of “unimaginable consequences” if the world were to split into different systems, including the worst-case scenario of a “relapse into confrontation.”

“This would be a situation (in which) no country can remain immune,” Ding said.

— CNBC’s Jeff Cox contributed to this report.