China shifts tone: 'We’ll fight til the end’ with the U.S.

China may be ready to play the nationalism card in its trade war with the U.S. — a rhetoric it has refrained from using since trade negotiations began last May.

The nation’s most-watched news program Xinwen Lianbo on the state-run China Central Television (CCTV) network addressed the trade tension in a rare hawkish tone in an editorial segment on Monday. The shift came after President Donald Trump raised tariffs to 25% on $200 billion worth of imported goods from China and the latest round of trade talks in Washington, which many had expected to close the deal, ended with little progress.

“For the trade war initiated by the U.S, China has long indicated its attitude: we’re unwilling to fight, but we’re not afraid to fight,” the broadcaster said. “If the U.S. wants to talk, the door is open; if they want to fight, we’ll fight til the end.”

A similar message was first communicated by China’s Vice Commerce Minister Wang Shouwen last April, following Trump’s first round of tariffs. But China soon walked back and stated “no trade war is a China-US consensus” as both sides came to the negotiation table. Since then, China has been censoring domestic media’s coverage of Trump’s tariffs and tempering down hostile sentiments towards the U.S. on social media. The latest message on Monday suggests the year-long negotiations have hit a dead end and China feels the need to engage its people.

“It makes some sense to appeal to more nationalistic view if the state expects that a tough period for the economy and the country could be coming. Appealing to sticking together and ‘defending the nation’,” said Allan von Mehren, chief analyst and China economist at Danske Bank.

U.S.-imposed trade war is ‘no big deal’

The aired program on Monday also tracked China’s history and characterized U.S.’s latest trade moves as a way to contain China’s development, resembling many historical battles with foreign countries it has fought before.

“After in the all the 5,000 years of ups and downs of the Chinese nation, what kind of battle haven’t we seen?! In the great process of realizing national rejuvenation, there will inevitably be difficulties, obstacles and even storms. The US-imposed trade war with China is just a hurdle in China's development process. It is no big deal. China will surely strengthen its confidence, overcome difficulties, turn crisis into opportunity, and fight for a new world,” said the broadcaster.

The hostility towards the U.S. has been circulated on social media but it’s rare to see a state-run media like CCTV to convey such a strong message. Beijing has always been wary of stirring up nationalist sentiments, in fear that it could backfire, since one of its top focus is social stability. News about Trump’s tariffs have been largely censored by domestic media outlets, unless they report on responses from the Chinese government.

Monday’s message has been resonated by many users on Weibo, China’s Twitter-like social media, where the video has been viewed over 450 million times and received 1.5 million likes.

It also emphasized China is fully prepared. “For the next step, whether the U.S. wants to talk, fight or to take other actions, China has prepared a policy toolbox and is ready to respond comprehensively.”

What’s next in the trade war

On Monday, three days following the U.S.’s additional tariffs, China announced retaliatory tariffs on another $60 billion worth of U.S. goods, effective June 1, including 25% on agricultural products such as honey, vegetables, coffee and meat. Societe Generale says the latest round of tariffs could lower China's GDP by 0.5% and the U.S. by 0.25%.

“Xi is preparing the Chinese people for an all-out economic war with the United States,” said Gary Hufbauer, a China expert at the Peterson Institute for International Economics. He pointed out the chances of a global recession could sharply increase if Trump adds another round of tariffs on $300 billion worth of Chinese goods. “But if need be, Chinese leaders are willing to endure a downturn sparked by the trade conflict.”

Write to Krystal Hu via krystalh@yahoofinance.com or follow her on Twitter.

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