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Fears of a trade war between the world's No. 1 and No. 2 economies heightened last week after US President Donald Trump signed an order imposing a 25 per cent tariff on imported steel, and 10 per cent on imported aluminium.

Citing Chinese researchers, Zhong said the US has been overstating its trade deficit with China by about 20 percent every year.

However, a senior Chinese economic and financial official met with U.S. officials earlier this month and they have agreed that both countries should settle their trade disputes by cooperation rather than confrontation. He said that would only bring disaster to China and the United States and the rest of the world.

"There is no victor in a trade war", Zhong said at a news conference in Beijing last Sunday.

China can handle any challenges and will resolutely protect its interests, but the two countries will continue to talk, he said.

Zhong added that the United States trade deficit with China is overestimated by about 20 percent, citing research by a panel tasked with investigating the discrepancy between the two nations' accounts of their trade balance.

Diplomatic and US business sources say the United States has frozen a formal mechanism for talks on commercial disputes with China because it is not satisfied Beijing has met its promises to ease market restrictions.

"We have noticed that some foreign-funded businesses have complained about China's investment environment", Zhong said. The figure for February fell slightly from the previous month to US$21 billion, according to the latest data from the customs administration.

China has steadily cut such tariffs from as high as 220% in the 1980s to 25% in 2006 - the rate it has now - as part of obligations under the World Trade Organization.

Chinese leaders have threatened in the past to retaliate against raised trade barriers, but have yet to take direct action following Trump's announcement.