Beijing vows reprisals as Trump prepares China trade sanctions

US President Donald Trump was poised to unveil sanctions against China on Thursday for what he called the theft of US intellectual property, fueling fears of a trade war as Beijing vowed to retaliate.

White House spokesman Raj Shah said that Trump will announce actions following an "investigation into China's state-led, market-distorting efforts to force, pressure, and steal US technologies and intellectual property."

According to his schedule, released by the White House on Wednesday evening, he will sign "a Presidential Memorandum targeting China's economic aggression."

China's warning

The Chinese commerce ministry issued a preemptive warning, saying in a statement on Thursday that Beijing "will not sit idly to see its legitimate rights damaged and must take all necessary measures to resolutely defend its legitimate rights."

It is just weeks since Trump short circuited White House deliberations and announced a raft of sanctions on foreign-produced steel and aluminum off the cuff.

That move prompted the resignation of top economic adviser Gary Cohn, a global stock market sell-off, legal disputes and threats of retaliatory measures.

On Wednesday, Federal Reserve Chairman Jerome Powell warned that the prospect of a trade war was a growing threat to the world's largest economy.

Chinese Premier Li Keqiang urged Trump on Tuesday to not act "emotionally," but the impulsive president is showing no sign of backing down.

Tariff on Chinese imports

US Trade Representative Robert Lighthizer recently put a separate proposed package of $30 billion in tariffs on Chinese imports on the president's desk.

And Trump appears to have agreed to at least that amount, as he tries to fulfil campaign promises to get tough on "cheating" by US trade partners, which he says have destroyed American jobs.

The US trade deficit with China ran to a record $375 billion last year – but US exports to the country were also at a record.

Washington has long accused Beijing of forcing US companies to turn over proprietary commercial information and intellectual property as a condition of operating in China.

Trump claims to have built up a generally good relationship with his Chinese counterpart Xi Jinping whom he has praised for his role in pressuring North Korea over its nuclear programme.

However, the trade dispute threatens to cast a pall over those relations, especially given the recent warnings from Beijing.

Chain reaction of consequences

China's Foreign Ministry spokesperson Hua Chunying told reporters that Beijing hoped the US would "refrain from taking actions that are detrimental to both sides."

Dozens of industry groups sent a letter last weekend to Trump warning that "the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliation; stifling US agriculture, goods, and services exports; and raising costs for businesses and consumers."

Trump's announcement will mark the end of a seven-month US investigation into the hardball tactics China has used to challenge US supremacy in technology, including dispatching hackers to steal commercial secrets and demanding that US companies hand over trade secrets in exchange for access to the Chinese market. 

The administration argues that years of negotiations with China have failed to produce results.