Picture: ISTOCK
Picture: ISTOCK

Beijing — China could hit back at US firms listed on the Dow Jones industrial average if US President Donald Trump keeps exacerbating tensions with China over trade, state-controlled Chinese tabloid The Global Times said on Thursday.

Trump threatened on Monday to hit $200bn of Chinese imports with 10% tariffs if China follows through with retaliation against his previous targeting of $50bn in imports.

The Dow, which counts Boeing, Apple and Nike among its constituents, ended down 0.17% on Wednesday. The 30-stock share index has declined 0.25% year-to-date.

"If Trump continues to escalate trade tensions with China, we cannot rule out the possibility that China will strike back by adopting a hard-line approach targeting Dow Jones index giants," the Global Times said in a commentary.

The world’s two biggest economies seemed increasingly headed towards open trade conflict. Three rounds of high-level talks since early May have failed to reach a compromise on US complaints about Chinese trade practices and a $375bn trade deficit with China.

Despite taking steps in self-defence, China will not stray from its path of deepening reform and opening up, said the tabloid, which is run by the People’s Daily.

"Beijing will further open up China’s financial markets to the world, a move that may draw funds from US stock markets as global investors increasingly add Chinese stocks to their portfolios," it said.

"Those measures may further knock down US stock prices."