Beijing targets FedEx as US-China trade war escalates

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China's commerce ministry announced Friday that it will establish its own list of foreign enterprises, organizations and individuals it deems to be "unreliable entities" - a possible response to the USA blacklist.

Details would be unveiled in the near future, according to ministry spokesman Gao Feng.

"We still have sufficient room for fiscal and monetary policy manoeuvre" to maintain health of the Chinese economy amid frictions, it said. Now, China's biggest tech company said it's reviewing its relationship with the US delivery service.

"This retaliation with Chinese characteristics is unlikely to sway the Trump Administration, " said Jude Blanchette, China practice lead at Crumpton Group in Arlington, Virginia, and a former Conference Board researcher in Beijing.

The US and China are embroiled in a protracted trade dispute and tariff war that began last July following complaints from Donald Trump that China steals from or pressures foreign companies to hand over technology while unfairly subsidising Chinese businesses.

China's retaliatory tariffs against USA goods will go into effect tomorrow and will impact roughly $US60 billion ($87 billion) in American exports.

Vice President Mike Pence said Huawei operating as a 5G network is a "fundamental compromise" of national security.

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China will investigate whether FedEx Corp damaged the legal rights and interests of its clients, the official Xinhua news agency said on Saturday, after Chinese telecoms giant Huawei said parcels intended for it were diverted.

The US government has moved to curb Huawei's ability to sell equipment in the US and buy parts from American suppliers, potentially crippling one of China's most successful - but controversial - global companies.

The move came as a harsh development in heightening tensions between U.S. and China's trade relations.

China's blacklist threat "sends pressure to Washington as the ban (on Chinese companies) from the U.S. side goes wider", said James Yan, a Counterpoint Research analyst.

US President Donald Trump more than doubled punitive tariffs on $200 billion in Chinese goods to 25 percent last month, and launched the process to hit almost all remaining imports from the Asian giant.

The move comes amid reports that Beijing is moving ahead with preparations to limit rare earth element exports to the United States. -China tensions over trade and technology in which Huawei has been a main target.