BEIJING: Beijing hinted Thursday it may break the cycle of retaliation in the trade war with the United States, as the punishing tariff battle threatens global economic growth.

Last week China and the US exchanged the latest blows in the year-long trade dispute, with Beijing announcing it would hit $75 billion worth of US goods in retaliation for Washington taking aim at about $300 million of its goods.

US President Donald Trump lashed out immediately in return by increasing existing and planned tariffs on a total of $550 billion in Chinese products.

"China has sufficient means to take counter-measures, but under the current situation, we believe that the issue that should really be discussed is cancelling further tariffs on $550 billion of Chinese goods, and preventing the trade war from continuing to escalate," said commerce ministry spokesman Gao Feng.

China has lodged a diplomatic protest with the US over it, Gao said.

In earlier rounds of escalation, Beijing had pledged to hit back at any US tariff hike.

"The escalation of the trade war is not beneficial to China, and it is not beneficial to the United States," said Gao.

Trump has blown hot and cold this month, thundering last week that US companies should withdraw from China but then optimistically predicted a deal on Monday.

Trump's recent, more moderate tone helped stanch bleeding on Wall Street but was quickly met with scepticism by investors, since Beijing did not seem to share that optimism.

Gao stopped short of confirming face-to-face trade talks next month, saying "the two sides are discussing this issue".

"The most important thing at the moment is that the two sides create conditions for the continuation of consultations," Gao said.