China Warns of Trade War With U.S. Over Patents, Copyrights : Economic ties: ‘Excessive’ demands may lead to higher tariffs on American commodities worth $1.2 billion, Beijing warns.

China declared Tuesday that it is prepared to engage in a trade war with the United States rather than yield to American demands on protection of intellectual property rights.

The Bush Administration said last month that it would decide by Jan. 16 whether to boost tariffs to as much as 100% on certain Chinese imports in retaliation for China’s failure to honor most U.S. patents and copyrights. The U.S. Trade Representative’s Office has released a list of items worth $1.5 billion in annual shipments that might be subject to retaliatory tariffs.

China’s Ministry of Foreign Economic Relations and Trade has responded by listing $1.2 billion worth of American commodities that may be hit by higher Chinese tariffs if the United States takes its threatened action, the official New China News Agency reported Tuesday.

“As the U.S. retaliatory date approaches, the Chinese side is also considering counter-retaliatory measures against the U.S. by levying retaliatory duties on some of the U.S. commodities, which will possibly include aircraft, cotton, corn, steel and chemicals,” the agency reported. “A total of $1.2 billion U.S. will be involved.”

Negotiators from the two sides are scheduled to hold three days of talks in Washington starting Friday. Both sides have held out hope that an agreement can be reached, but public positions still appear far apart.

The United States has especially stressed lost American sales of computer software to China because of unauthorized copying. American private-sector estimates place the annual loss in U.S. computer software sales to China because of piracy at more than $400 million.

China has enacted some copyright and patent laws, but they are weak and generally lack effective enforcement.

The United States ran a trade deficit of about $13 billion with China in 1991, according to U.S. figures. Beijing argues that American statistics overstate the size of the imbalance.

If Washington does impose retaliatory tariffs, they are expected to affect no more than half the items on the original $1.5-billion list.

One Bush Administration official familiar with the negotiations said of China’s threat to retaliate: “I think they’re gearing up for the last round of talks.”

Beijing argues that it is moving toward better copyright protection as fast as can be reasonably expected. It blames the tough Bush Administration stance on domestic politics.

The top headline in the official English-language China Daily on Sunday declared, “China Vows to Settle U.S. Trade Tiff.” But the article showed little sign of any flexibility. It paraphrased Wu Yi, head of China’s delegation to the Washington talks, declaring that “China has made widely acknowledged improvements in the protection of intellectual property rights . . . taking only 10 years to frame its laws on patents and copyrights, a process that took Western countries 80 years to accomplish.”

“China has, in fact, offered to finish drafting laws to provide (patent and copyright) protection by 1994,” the article said, paraphrasing Wu. Yet the United States “is still not satisfied.”

Wu, a vice minister of foreign economic relations and trade, was quoted as saying that the U.S. talks will end in agreement if the United States shows “just a little bit of sincerity. If the United States refuses to cooperate because of domestic political reasons, then the issue has nothing to do with China’s protection of international property rights. The U.S. demands are excessive.”

Times staff writer Jim Mann in Washington contributed to this report.