BIARRITZ, FRANCE (BLOOMBERG) – United States President Donald Trump said China has asked to re-start trade talks, hours after Beijing’s top negotiator publicly called for calm in response to a weekend of tit-for-tat tariff increases that sent global stocks plunging.

“China called last night our trade people and said let’s get back to the table,” Mr Trump said on the sidelines of the Group of Seven (G-7) meeting in Biarritz, France. “They understand how life works.”

Mr Trump said US officials received two “very productive” calls from the Chinese but declined to say whether he had spoken directly to Chinese President Xi Jinping.

“They want to make a deal,” he said, adding: “We’re going to start very shortly and negotiate and see what happens but I think we’re going to make a deal.”

Asked by reporters about Mr Trump’s remarks shortly after the American president spoke, Mr Geng Shuang, a spokesman for the Foreign Ministry in Beijing, said that he wasn’t aware of any weekend US-China phone calls.

He repeated China’s position that the trade war should be settled through negotiation.

S&P 500 futures reversed losses after Mr Trump’s comments. Shares in Asia dropped on Monday in all major markets, led by Hong Kong’s 2.3 per cent decline.

Earlier, China’s top trade negotiator, Vice-Premier Liu He, had used an appearance in China to call for a de-escalation in tensions.

“We are willing to solve the problem through consultation and cooperation with a calm attitude,” Mr Liu said at the opening ceremony of 2019 Smart China Expo in Chongqing, Caixin reported on Monday.

“We firmly oppose the escalation of the trade war,” he said, adding that it “is not conducive to China, the US and the interests of people all over the world”.

The world’s two largest economies traded further blows over the weekend, with Beijing’s retaliation on an earlier tariff increase by the US meeting yet another increase from Mr Trump, who said that existing 25 per cent tariffs on some US$250 billion (S$346 billion) in imports from China would rise to 30 per cent come Oct 1, the 70th anniversary of the founding of the People’s Republic.

Economists are warning that a global recession could result from the spiral of trade measures.

China welcomes all foreign investors, including those from the US, Mr Liu said, adding that policymakers will keep building a favorable environment and protecting property rights.

He stressed that China has ample macro-policy tools to ensure the country’s economic fundamentals have “good momentum.”

S&P 500 futures stabilised after Mr Liu’s comments and a stronger-than-anticipated yuan fixing suggested that traders don’t need to worry about an immediate counter punch from China after a tumultuous weekend.

China last Friday threatened to impose more tariffs on US$75 billion of American goods, prompting Mr Trump to announce even higher tariffs on Chinese goods and call for American companies to pull out of Asia’s largest economy.

Mr Liu spoke at an event focused on high-tech industries such as big data, artificial intelligence, semi-conductors and 5G. He said China opposes technology blockades and protectionism, and is trying hard to maintain the completeness of supply chains.

China will follow through with retaliatory measures announced last Friday and fight the trade war to the end, after the US failed to keep its promises, the Communist Party flagship newspaper People’s Daily wrote in a Saturday editorial.

Later, the editor-in-chief of the nationalist Global Times, Mr Hu Xijin, said on Twitter that the US is “starting to lose China”.

Taoran Notes, a blog run by the state Economic Daily, said on Monday that Mr Liu’s remarks showed that China is not being “taken hostage by emotions”. At the same time, the blog said that this stance didn’t preclude fighting back.

“If someone continues to misread China’s rational and calm attitude, and holds the illusion that they can continue maximum pressure and China won’t fight back, then China has no other option but to retaliate as in the past.”

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