At 12:01 am on June 6 (Washington time) the U.S. imposed tariffs of 25% on 818 Chinese import products worth USD34 billion. China immediately retaliated by imposing its own tariffs on the same amount of U.S. products it imports. This marks the official start of the long-awaited trade war between China and the U.S. The U.S. is expected to impose a second round of tariffs targeting 284 Chinese products worth USD16 billion in the coming weeks and U.S. President Donald Trump has said that if China retaliates – which it did immediately – he is considering to impose tariffs of an extra 10% on another list of Chinese imports worth USD200 billion. The main sectors hit are machinery and electronics as well as information and communications technology, according to an analysis of the tariffs by insurance company Credendo.

“The United States has ignited the largest trade war in economic history,” China’s Ministry of Commerce (MOFCOM) said. “The Chinese side, having vowed not to fire the first shot, was forced to stage counter-attacks to protect the core national interests and interests of its people.” Wei Jianguo, former Vice Minister of Commerce, said the conflict would affect the global value chain and people should not expect a swift resolution. “The trade war will last for a long time,” he said. Now Vice Chairman of the government-backed China Center for International Economic Exchanges, Wei said that China was “prepared to fight to defeat the unilateralism of the U.S.”. Beijing also said that it will file a complaint against the U.S. with the World Trade Organization (WTO). The initial impact of the tariffs may not significantly hurt China’s economy – the People’s Bank of China (PBOC) expects a decline of about 0.2% from gross domestic product growth.The current U.S. tariffs affect less than 1% of China’s total exports.

Washington’s list is heavy on tech goods, aiming in part to shift supply chains away from China, while Beijing has put politically sensitive U.S. farm goods in the firing line. “For simple products it’s going to be faster to shift production, but for more complex products it’s going to be difficult,” said Denis Depoux at consultancy Roland Berger. The quickest manufacturers would need at least a year and “won’t make the changes until they know this is real and here to stay”, he said. The Chinese government has said it will protect the “legitimate interests” of foreign businesses in China, an indication that it would not retaliate against U.S. companies with investments in China. U.S. companies had USD256 billion in investment in China by the end of last year.

Ahead of the possible imposition of tariffs by the U.S., the Chinese government had announced that it would not “fire the first shot” but only retaliate after the U.S. made the first move. Premier Li Keqiang called on the European Union to work with China amid rising unilateralism and protectionism. Li made the comment in a phone call with EU Commission President Jean-Claude Juncker, a day ahead of his visit to Bulgaria and Germany. Premier Li attended the seventh Leaders’ Meeting of China and Central and Eastern European Countries in the Bulgarian capital of Sofia. He also co-chaired the fifth China-Germany intergovernmental consultation in Berlin.

China’s General Administration of Customs released first-half and June export data days ahead of schedule as it expected the U.S. to impose the tariffs. Growth in China’s U.S.-bound shipments slowed to 5.4% in the first six months from 19.3% a year earlier. June export growth was even slower at 3.8%, down 23.8 percentage points from the same period in 2017. China’s exports of electronics and mechanical products to the U.S. grew 8% year-on-year in the first half, accounting for 62.6% of total shipments. Shipments of labor-intensive products were flat in the same period, while garment sales dropped 1.8%. ANZ Bank Chief Greater China Economist Raymond Yeung said the early release was “a sign of goodwill” from Beijing, indicating that Chinese exports to the U.S. were losing steam.

Chinese companies are expected to cancel most of the remaining soybeans they have committed to buy from the United States in the year ending August 31 as the extra tariff on U.S. imports took effect. China is the world’s top soybean buyer and has yet to take delivery of more than 1.1 million tons booked for the current marketing year. “These shipments will be either cancelled or resold if extra tariffs are imposed,” said Gao Yanbin, Investment Manager with agriculture investment firm Shanghai Shenkai Investment Co. “The tariff rate is too high which will make crushers lose money,” but some cargoes will get through because shipments destined for state reserves are free from tariffs, Gao said.

In a small sign of goodwill from the U.S., ZTE Corp has been allowed to temporarily resume business activities from July 2 to August 1. U.S. companies will also be allowed to sell their products to ZTE. But the dispute has not been settled yet as ZTE’s new Board of Directors still needs to become fully operational and two bills before the U.S. Congress including penalties on ZTE still need to be reconciled and signed by President Trump.

U.S. chipmaker Micron Technology has been slapped by the Fuzhou Intermediate People’s Court with a preliminary injunction temporarily stopping it from selling parts of its products in China amid patent disputes with rival United Microelectronics Corp (UMC).

China’s Ministry of Foreign Affairs and the China Law Society called on countries involved in the Belt and Road Initiative (BRI) to improve international rules-based systems and to establish dispute settlement mechanisms to fairly protect the rights of all parties, according to a statement from a forum on BRI legal cooperation. The parties participating in the BRI are encouraged to promote laws to enhance cooperation related to financing, taxation, transportation, intellectual property rights, labor and counter-terrorism.

The statement also proposed the establishment of treaty-based mechanisms or institutions to prevent and resolve disputes and to strengthen mutual recognition and enforcement of judgments in civil and commercial matters, and establish an online platform that provides information on foreign laws and judicial cases. Kong Xuanyou, Vice Minister of Foreign Affairs, and Chen Jiping, Executive Vice President of the China Law Society, were co-chairs of the BRI forum on legal cooperation.

Government officials and experts attending the forum said that dispute settlement mechanisms should be transparent and fair to all countries. Qu Guangqing, President of Quanzhou Normal University in Fujian Province, told the Global Times that to ensure fairness and transparency, dispute settlement mechanisms should be established and led by third-party international organizations rather than dominated by one country. The forum, jointly held by the Ministry of Foreign Affairs of China and the China Law Society, attracted more than 350 delegates from governments, international organizations and academic institutions. Nearly 90 countries and international organizations have signed Belt and Road Initiative cooperation agreements with China. China has invested USD70 billion in Belt and Road projects in other countries.

Simon Peh, Commissioner of Hong Kong’s Independent Commission Against Corruption (ICAC), has urged local investors to shun corrupt overseas business deals when joining China’s Belt and Road Initiative (BRI), warning of rampant bribery in some countries. “The corruption situation is very serious in some countries,” he said. “Bribery is everywhere. It is beyond our imagination as such practices have been rooted out of Hong Kong for a long while.” The BRI, announced five years ago, seeks to boost economic and infrastructure links across more than 60 countries in three continents, including the 10 ASEAN member-states. Peh said 13 Belt and Road countries including Bangladesh and Sri Lanka had approached the ICAC for help with training officials since last September.

China surpassed North America in attracting venture capital for the first time in the second quarter, helped by a record USD14 billion fundraising round by Alibaba Group Holding affiliate Ant Financial Services. Start-ups in China accounted for 47% of the world’s VC funding in the three months ended June, compared with a combined 35% for the U.S. and Canada, according to a report by Crunchbase, which tracks and compiles fundraising data.

The surge in China fundraising in the second quarter could be attributed to Ant Financial, which raised about USD14 billion last month. Investors, including Singapore’s GIC and Temasek Holdings, Warburg Pincus, Canada Pension Plan Investment Board and Silver Lake, took part in the fundraising, while existing shareholders supported a yuan-denominated tranche. The financing brought Ant Financial’s valuation to more than USD150 billion, which is roughly double Uber Technologies’ valuation. Excluding Ant Financial, China’s start-ups raised just slightly more than they did in the first quarter, taking up 36% of the global total, according to Crunchbase.

China has seen a surge in the number of start-ups in recent years as the government vowed to do more to implement an innovation-driven development strategy to make the country more competitive and transform itself from the factory floor of the world into a global innovation powerhouse. Venture capitalists poured billions into areas from artificial intelligence to blockchain, lured by the prospect of backing the next Alibaba, Tencent Holdings or Baidu, while start-up founders aspired to become billionaires like Jack Ma or Pony Ma, the South China Morning Post reports.

China will cut coal consumption, boost electric vehicle sales and shut more outdated steel and coke capacity in the coming three years, the State Council said in a long-awaited 2018 to 2020 pollution action plan. China is in the fifth year of a “war on pollution” aimed at reversing the damage done to the country’s environment since the economy was opened up in 1978. The new action plan will expand the fight to 82 cities across China, and confirmed that the major coal-producing provinces of Shanxi and Shaanxi have been added to the list of “key” pollution control regions. The new plan will also cover the heavily industrialized province of Henan in central China, as well as the Yangtze River Delta, which includes the provinces of Anhui, Zhejiang, Jiangsu and the region around Shanghai.

The document said the regions of Beijing, Tianjin, Hebei, Shandong and Henan will be required to cut coal consumption by 10% over the 2016 to 2020 period, while the Yangtze delta region will have to cut coal use by 5% over the period. No new capacity for steel, coke and primary aluminum production will be allowed in the regions through to 2020. Steel capacity in Hebei, the country’s largest steelmaking province, will be capped at 200 million tons by 2020, down from 286 million tons in 2013. China will also take more action to tackle small-scale “scattered” pollution sources, and will work to cut off water, electricity and raw material supplies to firms that violate rules.

To meet its politically important smog targets in northern China last year, the government curbed traffic and coal use, and also imposed “one size fits all” restrictions on industries like steel, aluminum and cement throughout 28 northern cities from October 2017 to March this year. The Chinese government said special anti-smog measures would still be introduced over autumn and winter, but each of the 82 cities would now draw up its own plan. It also said it would raise gas storage capacity to ensure supplies were sufficient during winter. The plan also set an annual production and sales target for new energy vehicles at around 2 million vehicles a year by 2020 in order to reduce road emissions. Severe challenges remain. About 70% of the country’s 338 prefecture-level and bigger cities didn’t meet national standards for PM2.5, PM10, sulfur dioxide and nitrogen dioxide last year.

China purchased 141,000 industrial robots in 2017, up 58.1% year-on-year, but foreign brands accounted for nearly three quarters of that, showing that the gap is still widening between Chinese robot makers and their foreign peers. The China International Robot Industry Summit, held in Shanghai on July 3, said sales of industrial robots hit records in 2017. Among industrial robots, 37,825 were domestically manufactured, up 29.8% year-on-year.

“As robotics is expanding into nearly every industry, Chinese robot makers should realize the gap between them and foreign brands, take advantage of China’s robotics development boom and learn from foreign experience to help China grow from the world’s largest robot market into a robot manufacturing power,” said Qu Daokui, President of China Robot Industry Alliance and CEO of Shenyang-based Siasun Robot and Automation Co. According to Qu, foreign robot makers sold 103,191 robots to China in 2017, up 71.9% from a year earlier. Although Chinese domestic suppliers have expanded their market share to 32.7% in 2016, the trend was reversed in 2017, as their share shrank to 26.8%. In his report on the Global Market of Industrial Robots, Junji Tsuda, President of the International Federation of Robotics (IFR), noted that about 387,000 industrial robots were installed in 2017 worldwide, up 31% year-on-year, creating USD50 billion in revenue, with China as one of the key drivers behind the strong growth. China has become the world’s largest industrial robot market since 2013, and currently its domestic suppliers are moving up the supplier chain by offering more high-end products in recent years.

In 2017, a majority of 64.7% of the robots sold in China were articulated robots, with their sales surging 66.6% year-on-year. Meanwhile, 42.1% of the robots sold by domestic suppliers were articulated robots, with sales rising 35.5% from 2016. Experts said there is still great potential for China’s robot market. Robot density, or the number of robots per 10,000 persons used in the manufacturing industry, reached 101 last year in China, and it is going to reach 150 by 2020,” according to Zhu Sendi, Member of the National Manufacturing Strategy Advisory Committee and Secretary General of the Strategic Emerging Industries Expert Advisory Committee, the China Daily reports.