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China urges US to fix 'wrong practices'

Tugboats guide a container ship at the Yangshan Deepwater Port in Shanghai on May 10.

China blamed Washington for wrecking trade talks and insisted the U.S. must alter its "wrong practices" before negotiations can resume, leaving the next move to President Donald Trump as financial markets slump amid prospects for a prolonged dispute.

"China's stance on the talks has been clear -- if the U.S. wants to resume talks, they should show sincerity and correct their wrong practices," ministry spokesman Gao Feng said in Beijing on Thursday, May 23. "Only on a basis of equality and mutual respect can the talks continue."

The comments are the latest sign that China has no intention of making concessions to the U.S. to restart talks, which collapsed earlier this month. The U.S. blames China for backing out on parts of the deal which were already agreed, while China blames the U.S. for escalating the trade war by announcing further tariffs.

U.S. equity futures and European stocks tracked a slide in Asian shares as investors increasingly anticipate a full-blown trade war between the world's two largest economies. Safe assets were in demand, with gold and the yen gaining alongside the dollar and Treasuries.

Gao didn't respond to a question about whether the two sides were still in communication, or if there were plans for the U.S. delegation to come to Beijing. He also declined to say what specific signs of sincerity China required from the U.S. to restart talks.

"The U.S. unilaterally escalated trade tensions, and has taken many actions which seriously hurts the China-U.S. trade talks," he said. "There are principles for cooperation, and there are bottom lines in negotiations. China won't make concessions on matters of principle."

Economists at some of the biggest financial institutions are growing increasingly pessimistic that the two sides will resolve the trade dispute. Goldman Sachs, Nomura Holdings and JPMorgan Chase are among those that have rewritten their forecasts as Trump threatens to impose a 25% tariffs on around $300 billion of additional Chinese imports.