China urges U.S. to make 'wise choice' ahead of tariffs decision

By Michael Martina and David Lawder

BEIJING/WASHINGTON (Reuters) - China urged the United States on Thursday to make a "wise decision" on trade, saying it was ready to respond in case Washington chose confrontation, as U.S. President Donald prepares to decide whether to activate tariffs on Chinese goods.

Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods on Friday. People familiar with the revisions said the list would be slightly smaller than the original, with some goods deleted and others added, particularly in the technology sector.

Another administration official said a draft document showed the new list would still be close to $50 billion, with about 1,300 product categories, but both the dollar amount and quantity of products were still subject to change.

Speaking to reporters in Beijing, with U.S. Secretary of State Mike Pompeo at his side, the Chinese government's top diplomat, State Councillor Wang Yi, said there were two choices when it came to the trade issue.

"The first choice is cooperation and mutual benefit. The other choice is confrontation and mutual loss. China chooses the first," Wang said. "We hope the U.S. side can also make the same wise choice. Of course, we have also made preparations to respond to the second kind of choice."

The move toward activating U.S. tariffs on Chinese goods follows negotiations between U.S. and Chinese officials centred on increased purchases by Beijing of American farm and energy commodities and cutting the U.S. trade deficit with China.

Commerce Secretary Wilbur Ross this month met Chinese officials in Beijing and brought back a Chinese proposal to buy around $70 billion worth of additional commodities and manufactured goods. But that offer has not been accepted by Trump, people familiar with the matter said.

Wang said a basic consensus reached by the two countries during the recent talks was a pact to use "constructive means" to handle disagreements.

"We hope the U.S. side can meet China halfway and earnestly implement this important consensus, and promote the appropriate resolution of the relevant issue through a win-win and not lose-lose manner," he said.

"In this process, we hope the U.S. side does not unilaterally take any non-constructive actions, and does not create new obstacles for the next phase of consultations."

Pompeo said the U.S. deficit with China was still too high, but that they had had good talks.

"I stressed how important it is for President Trump to rectify that situation so that trade becomes more balanced, more reciprocal and more fair, with the opportunity to have American workers be treated fairly. We had good and constructive discussions."

Pompeo struck a warm tone with Chinese President Xi Jinping, at a meeting later in the evening, including wishing him a happy birthday for Friday - eliciting a chuckle and a "thank you" from Xi.

"President Trump asked me to send his regards. I have watched your interactions. He truly values the relationship personally between the two of you and the relationship between our two countries," Pompeo said.

MOVE COULD COME FRIDAY

It remains unclear when Trump would activate the tariffs, if he decides to do so. Several industry lobbyists told Reuters they expected the move to come as early as Friday, with publication of a Federal Register notice, or it could be put off until next week.

If Washington adopts tariffs, Beijing is expected to hit back with its own duties on U.S. imports, including soybeans, cars, chemicals and planes, according to a list it released in early April.

Under the 1974 trade law that Trump invoked to pursue a tariff investigation into China's intellectual property practices, he could delay the activation by 30 days. He can also delay the tariffs by another 180 days if the U.S. Trade Representative's office finds negotiations with China are yielding progress.

"The president's trade team has recommended tariffs. If there are not tariffs, it will be because the president has decided that he's not ready to implement tariffs," a person familiar with the administration's deliberations told Reuters.

But that recommendation came prior to Trump's trip late last week to Canada for the G7 leaders' summit and to Singapore for talks with North Korean leader Kim Jong Un to defuse a nuclear standoff on the Korean peninsula.

Trump returned to Washington early on Wednesday morning. In an interview aired on Wednesday, Trump told Fox News that he was "very strongly clamping down on trade" with China.

Asked how strong, Trump said: "Well, I think very strongly. I mean you'll see over the next couple of weeks. They understand what we are doing."

Trump did not specifically mention the tariffs and added that he had "a very good relationship with President Xi (Jinping) of China".

The administration's trade hawks, including U.S. Trade Representative Robert Lighthizer and White House trade and manufacturing adviser Peter Navarro, have advocated a tougher approach to address U.S. allegations that China has misappropriated American intellectual property through joint venture requirements, state-backed acquisitions of U.S. technology firms and outright theft.

Amid the rising trade tension, China's Commerce Ministry spokesman Gao Feng said Chinese exporters have been front-loading their shipments due to changes in the international trade environment.

(Additional reporting by David Shepardson in WASHINGTON; Writing by Ben Blanchard; Editing by Clarence Fernandez and Alison Williams)