China’s breaches of World Trade Organisation (WTO) rules are detrimental to the US and there are worrying signs that the world’s second-largest economy is moving backward, the US consul general of Hong Kong and Macau said on Tuesday.

Kurt Tong was speaking at the Foreign Correspondents’ Club amid escalating tensions after China and the US threatened each other with tens of billions of dollars in tariffs, fanning worries of a full-blown trade war.

“From the US perspective, China’s WTO commitments reflect somewhat of a broken contract,” Tong told a packed audience of business professionals and media. “Perhaps most worrisome, actually, is the sense we have in the US that China’s forward progress on economic reform and opening in recent years has stalled... in fact, depending on the issue under consideration, there are some worrisome signs that things may actually be moving backward.”

Tong hailed the contributions that Chinese leaders such as Deng Xiaoping and Zhu Rongji had made to China’s progress, although he said their work was far from finished.

Worries of a trade war have rattled investors and created uncertainty in global supply chains and among business leaders contemplating investment plans.

US President Donald Trump’s move earlier this month to threaten China with tariffs on $50 billion in Chinese goods was aimed at forcing Beijing to address what Washington says is deeply entrenched theft of US intellectual property and forced technology transfers from US companies.

Beijing charges that Washington is the aggressor and spurring global protectionism.

The US consul general said China’s size and international economic success had fostered the idea that it was acceptable for the country to ignore global trading rules.

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