China tire row need not spark trade war: US official

A spat over US tariffs on Chinese tires need not trigger a trade war between Washington and Beijing, US Trade Representative Ron Kirk said.

"I don't believe it should or need spark any trade war," Kirk said during a visit to Brazil.

"In the short-term it could mean that we buy a lot more tires from Brazil," he added to a conference of Brazilian businessmen.

The United States last week imposed punitive tariffs of 35 percent on Chinese-made tire imports -- a move that prompted Beijing to lodge a complaint this week at the World Trade Organization.

WTO chief Pascal Lamy said Wednesday that Washington's move was a "matter of concern" that could increase the risk of a "tit-for-tat spillover."

Beijing charges that Washington's move violates WTO rules but US President Barack Obama has denied that it amounted to protectionism.

Obama and his Chinese counterpart Hu Jintao pledged to resist protectionism during a meeting in April.

The Group of 20 top developed and developing countries have also made a similar pledge.

Kirk, who argued generally against trade protectionism in his speech at the American Chamber of Commerce in Sao Paulo, defended the tariff move on Chinese tires.

He said China had agreed upon entering the WTO that certain industries in other countries could benefit from trade protection if they were threatened by cheap Chinese exports. US officials say 5,000 American jobs are threatened by the wave of cheaper Chinese tires.

China, though, on Tuesday warned that the US decision would damage trade relations.

"This act by the United States is a clear trade protectionist move that will damage the interests of both China and the United States," Vice Foreign Minister He Yafei told reporters in Beijing.

"It will do no good for the world economic recovery," he warned.

He declined to respond to a question on whether the trade flap would spoil the atmosphere for next week's G20 summit in the United States.

China's state-run media has quoted experts saying that 100,000 Chinese jobs could be lost as a result of the US tariffs.

If the row grows bigger, it could strain the symbiotic US-China relationship that accounts for a significant part of the world economy.

China notably is the biggest holder of US debt, a position reinforced with data released Wednesday that showed the Asian giant had increased its holdings of US Treasury bonds to 800.5 billion dollars in July, up from 776.4 billion in June.

Although a sell-off of the debt would hurt both China and the United States, Beijing has recently been voicing fears about the investment, given Washington's burgeoning budget deficit and the declining value of the US dollar.