Posts Tagged ‘China’

Boeing works to avert US-China trade war escalation

July 16, 2018
Chief notes ‘tough’ global trade challenges but reaffirms UK investments

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Boeing’s chief has said the company is ‘engaged with the US government and with the Chinese government . . . I’m hopeful we’ll come to a good resolution’ © Bloomberg

By Peggy Hollinger and Patti Waldmeir

Boeing is working actively behind the scenes to avert an escalation of the bitter US-China trade war, amid concerns about the risks for a company that is the top US exporter.
Dennis Muilenburg, Boeing chairman and chief executive, said he was hopeful that the trade war would be resolved despite US proposals last week for tariffs on a further $200bn worth of Chinese imports.

Speaking ahead of the Farnborough air show in the UK, which opens on Monday, he told the Financial Times: “Our voice is being heard. We are engaged with the US government and with the Chinese government . . . I’m hopeful we’ll come to a good resolution.”

Although Mr Muilenburg said Boeing had not felt any impact from the US-China tariffs, nor from the new US duties on aluminium and steel imports, a person with knowledge of the situation said that its executives are meeting regularly with high-ranking administration officials.

Analysts estimate that roughly 20-25 per cent of the orders in Boeing’s backlog are for Chinese customers, supporting thousands of US jobs. “The president is well aware of Boeing’s position,” the person said.

Concerns are growing that the trade dispute between the world’s two biggest economies, along with a separate US offensive against aluminium and steel imports from the EU, Mexico and Canada, will hit global growth.

Mr Muilenburg noted the “tough challenges to be resolved” in global trade. These included the framework for the UK’s departure from the EU. Referring to the UK government’s Brexit proposals, published last week, Mr Muilenburg said: “Being able to move goods around the world is fundamental to success in the aerospace sector.” However he said Boeing’s investments into the UK “are going to happen, regardless of where we end up on Brexit and discussions around trade deals.”

Earlier this month, Washington imposed duties on $34bn worth of Chinese imports, while Beijing responded with equivalent tariffs on imported US soyabeans, pork and other products. The Federal Reserve noted in June that US businesses were already putting investment on hold as a result of the tit-for-tat tariff war.

Beijing has so far refrained from targeting new Boeing aircraft. Nevertheless, if the dispute continues and the wider global economy is affected, this could “impact airline passenger and freight traffic, ultimately restraining demand for aircraft”, according to Cai von Rumohr of Cowen investment bank.

Mr Muilenburg dismissed suggestions that Boeing’s European rival Airbus could steal an advantage in China as a result of the trade row with the US. “You are not going to see sudden shifts in orders or delivery profiles,” he said. “That all said, we need to find productive trade solutions. That’s why we’re engaged with both governments. I’m confident that [they] understand the high value of the aerospace sector and what it means to their economic prosperity.”

Nevertheless, Boeing has had no orders from Chinese airlines yet this year, while China Aircraft Leasing Corporation has ordered 15 narrow bodies from Airbus on top of the bumper order for 50 passenger jets in December. Boeing said that the dearth of Chinese deals so far this year was because of the fact that its customers had already placed sizeable orders over the past two years.




IMF warns of rising risks to global growth amid trade tensions

July 16, 2018

The global economy is still expected to grow at a solid pace this year, but worsening trade confrontations pose serious risks to the outlook, the International Monetary Fund said Monday.

The IMF’s updated World Economic Outlook (WEO) forecast global growth of 3.9 percent this year and next, despite sharp downgrades to estimates for Germany, France and Japan.

The US economy is still seen growing by 2.9 percent this year, and the estimate for China remains 6.6 percent, with little impact expected near term from the tariffs on tens of billions of dollars in exports the countries have imposed on each other so far.

© AFP/File | The IMF’s updated World Economic Outlook (WEO) forecast global growth of 3.9 percent this year and next, despite sharp downgrades to estimates for Germany, France and Japan

“But the risk that current trade tensions escalate further — with adverse effects on confidence, asset prices, and investment — is the greatest near-term threat to global growth,” IMF Chief Economist Maurice Obstfeld said.

The fund warns growth could be cut by a half point by 2020 if tariff threats are carried out.

Although the global recovery is in its second year, growth has “plateaued” and become less balanced, and “the risk of worse outcomes has increased,” Obstfeld said in a statement.

– Addressing ‘disenchantment’ –

The report comes as US President Donald Trump has imposed steep tariffs duties on $34 billion in imports from China, with another $200 billion coming as soon as September, on top of duties on steel and aluminum from around the world including key allies.

China has matched US tariffs dollar for dollar and threatened to take other steps to retaliate, while US exports face retaliatory taxes from Canada, Mexico and the European Union.

“An escalation of trade tensions could undermine business and financial market sentiment, denting investment and trade,” the IMF report said.

In addition, “higher trade barriers would make tradable goods less affordable, disrupt global supply chains, and slow the spread of new technologies, thus lowering productivity.”

The IMF said growth prospects are below average in many countries and urged governments to take steps to ensure economic growth will continue.

The fund said global cooperation and a “rule-based trade system has a vital role to play in preserving the global expansion.”

However, without steps to “ensure the benefits are shared by all, disenchantment with existing economic arrangements could well fuel further support for growth-detracting inward-looking policies.”

– Europe, Japan slowing –

The sweeping US tax cuts approved in December will help the economy “strengthen temporarily,” but growth is expected to moderate to 2.7 percent for 2019.

And while the fiscal stimulus will boost US demand, is also will increase inflationary pressures, the WEO warned.

China’s growth also is seen slowing in 2019 to 6.4 percent.

After upgrading growth projections for the euro area in the April WEO, the IMF revised them down by two-tenths in 2018 to 2.2 percent, due to “negative surprises to activity in early 2018,” and another tenth in 2019 to 1.9 percent.

The estimates for Germany, France and Italy were cut by 0.3 points each, with Germany seen expanding by 2.2 percent this year and 2.1 percent in 2019. France’s GDP is expected to grow 1.8 percent and 1.7 percent.

Meanwhile, Britain is now forecast to grow 1.4 percent this year, 0.2 points less than the April estimate, and 1.5 percent in 2019.

Japan’s GDP is seen slowing to 1.0 percent this year, two-tenths less than previously forecast, “following a contraction in the first quarter, owing to weak private consumption and investment.” It should grow 0.9 percent the following year.

India remains a key drivers of global growth, but the GDP outlook was cut one-tenth for this year and three-tenths for next year to 7.3 percent and 7.5 percent, respectively.

Brazil saw an even sharper 0.5-point downward revisions from the April forecast, to 1.8 percent this year.


U.S. Stocks Climb as Investors Weigh Earnings

July 16, 2018

Energy shares are the weakest sector in the S&P 500 on lower oil prices

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U.S. stocks rise Oil prices fall on supply concerns Banks report strong earningsU.S. stocks rose Monday ahead of a busy week of corporate earnings results.

The Dow Jones Industrial Average climbed 27 points, or 0.1%, to 25047. The S&P 500 added less than 0.1% and the Nasdaq Composite rose 0.1%.

Before the market opened Monday, Bank of America—the second largest U.S. bank by assets—reported second-quarter earnings that beat expectations, sending shares up 1.7%. BlackRock also reported higher-than-expected earnings, but its shares fell 1% as the money manager pulled in significantly less investor cash than a year earlier.

U.S. stocks appear to have largely shrugged off trade concerns so far as investors have focused on strong U.S. economic data and positive earnings expectations. In the S&P 500, 60 companies are on tap to report this week, including Netflix after Monday’s close.

The Dow and S&P 500 have gone up all but one day since the U.S. and China imposed tariffs on $34 billion of each other’s goods starting on July 6.

“It is hard to pin something truly tangible to” recent stock market gains since many explanations have been true for months, said Simon Derrick, chief currency strategist at BNY Mellon. “You can try to create a narrative around it, but it hasn’t always worked out.”

Overall, the outlook remains positive even with trade uncertainty, said Mike Bell, global markets strategist at J.P. Morgan Asset Management.

Energy stocks were the weakest sector in the S&P 500, falling 1.3%, on lower oil prices. U.S. crude fell 2.5% amid concerns that Russia would increase output beyond what it agreed to last month.

NYSE logo at the entrance to the trading floor of the New York Stock Exchange.
NYSE logo at the entrance to the trading floor of the New York Stock Exchange. PHOTO: RICHARD DREW/ASSOCIATED PRESS

Meanwhile, Asian stocks have been hit harder by the trade disputes, with major indexes down so far this year. Shanghai stocks have shed nearly 15% since January, and economists estimate trade conflicts could cut 0.2 to 0.5 percentage point off China’s gross domestic product in the coming year.

On Monday, GDP data revealed a slowing Chinese economy in the second quarter, weighed down by government initiatives to rein in risky borrowing and lending. Growth edged down, in line with expectations, to 6.7% from a year ago, compared with 6.8% in the first quarter. The figures remain above the government’s 6.5% target, but key statistics pointed to a slowing economy.

The Shanghai Composite Index was down 0.6% Monday, following its largest one-week percentage gain since June 2016. Hong Kong’s Hang Seng was flat and South Korea’s Kospi was down 0.4%. The Tokyo market was closed for a public holiday.

In Europe, the Stoxx Europe 600 fell 0.2%. Banks outperformed in Europe as shares in Deutsche Bank added7.1% after the bank’s preliminary second-quarter results beat expectations.

The Trump Doctrine — coherent, radical and wrong

July 16, 2018
The US president’s worldview puts economics ahead of ideals and values

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Heads of state and government at last week’s Nato summit in Brussels, including Angela Merkel of Germany, left, Charles Michel, prime minister of Belgium, Jens Stoltenberg, Nato secretary-general, President Donald Trump, and Britain’s Theresa May © Getty

By Gideon Rachman 

Since the end of the second world war, there has been a remarkable consensus within the US establishment about foreign policy. Republicans and Democrats alike have supported a global network of American-led alliances and security guarantees.

Leading figures in both parties — from John Kennedy to Ronald Reagan through to the Bushes and Clintons — agreed that it was in US interests to promote free-trade and democracy around the world.

Donald Trump has taken an axe to this Washington consensus. The US president’s departure from the established principles of American foreign policy is so radical that many of his critics dismiss his ideas as simply the product of a disordered mind. But that is a mistake. There is an emerging Trump doctrine that makes internal sense. There are four broad principles underpinning this approach.

Economics first: from his inaugural address, in which he decried the “carnage” and “rusted-out factories” of the US Midwest, Mr Trump has defined making America “great again” in economic terms. To this end, he has focused on countries that he believes have excessive trade surpluses with the US.

This emphasis on trade and economics blurs the distinction between allies and adversaries — many of the nations that have a large trade surplus with America are also important security partners including Japan and Germany. That is why Mr Trump described the EU as a foe this week. His economics-first viewpoint leads him to question the value of the US’s traditional security alliances, since he sees these as essentially a subsidy to economic adversaries.

Nations not institutions: most previous US presidents have expressed frustration from time to time with international institutions, such as the UN, the World Trade Organization and the G7.

But Mr Trump has raised these objections to another level. He regards international institutions as bastions of “political correctness” on issues such as climate change. He would much prefer to deal with other nations on a one-to-one basis, where America’s size advantage can be made to tell. Multilateral institutions, where the US can be out-voted, are best avoided. The “rules-based international order”, carefully nurtured by previous presidents, is being deliberately undermined by the Trump administration.

Culture not values: all postwar American presidents, even the ultra-realist Richard Nixon, have believed that their role was to uphold certain universal values. It has been easy for US critics to point out inconsistencies, and occasional hypocrisy, in America’s promotion of democracy and human rights. But the rhetorical commitment was a central part of the US approach.

Mr Trump, by contrast, has shown very little interest in democracy promotion or human rights. His conception of the west is based not on shared values, but on culture or, even, race. This leads to his preoccupation with controlling immigration, which he believes is the real threat to the west. He reiterated this view on his current trip to Europe, arguing that immigration is “very bad for Europe, it’s changing the culture”.

Spheres of interest: Mr Trump is not a believer in universal values and rules. So it is much easier for him to accept the idea that the world could (or should) be divided up into informal “spheres of influence” in which great powers such as the US, Russia and China dominate their respective regions. The US president has never explicitly endorsed this idea. But he has hinted at it, in his suggestion that Crimea is naturally part of Russia — and in his frequent questioning of the value of America’s global alliances.

Mr Trump’s enthusiasm for dealing with strongman leaders, such as Xi Jinping of China and Vladimir Putin of Russia, may also incline him to try to settle disputes in the manner of a chief executive who divides up a market with a rival company. The question of what values the Chinese or Russians are attempting to spread in their regions is not of interest to Mr Trump.

The US foreign-policy establishment is understandably appalled by this radical departure from hallowed principles that have been upheld for decades. But there is a case for taking a fresh look at a foreign policy that was forged after 1945, under very different circumstances. Back then the cold war was raging and American economic supremacy was unquestioned.

The problem is that Mr Trump’s policies are not just radical. They are also dangerous and morally suspect. America needs allies. Undermining the US-led alliance system and promoting “spheres of influence” encourages the expansion of Chinese and Russian influence.

Even if the Trump administration’s only concern is US economic interests, that is not a good idea. Previous generations of US policymakers understood that security and economic concerns are closely entwined — not antithetical. Mr Trump also has a very simplistic view of US economic interests, in which the only thing that seems to matter is a trade surplus.

And finally, there is the moral aspect. Many people will mourn the passing of an America that aspired to be a force for good. During the cold war and its aftermath, it mattered that the world’s dominant power was a country that believed in promoting political and economic freedom. The whole world will pay a price, if that is no longer true.

Trump hopes ‘extraordinary relationship’ will result from Putin summit

July 16, 2018

President Donald Trump opened a summit with Russian President Vladimir Putin on Monday by predicting that their countries will end up having “an extraordinary relationship” but without mentioning Moscow’s meddling in the 2016 U.S. presidential election in his opening remarks.

“Our two countries, frankly, we have not been getting along well,” Trump said as he and Putin sat down at the Presidential Palace in Finland’s capital. “I really think the world wants to see us get along.”

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U.S. President Donald Trump shakes hands with Russia’s President Vladimir Putin during a meeting in Helsinki, Finland July 16, 2018. (Reuters Photo)

Putin, for his part, said he and Trump have maintained regular contact, including talking by phone and meeting at international events. Speaking through a translator, the Russian leader said “the time has come to have a thorough discussion on various international problems and sensitive issues.”

The summit got underway hours after Trump blamed the United States, and not Russian election meddling or its annexation of Crimea, for a low-point in U.S.-Russia relations. The drama was playing out against a backdrop of fraying Western alliances, a new peak in the Russia investigation and fears that Moscow’s aggression may go unchallenged.

“Our relationship with Russia has NEVER been worse thanks to many years of U.S. foolishness and stupidity and now, the Rigged Witch Hunt!” Trump tweeted.

The summit, which was being closely monitored by rattled world capitals, was condemned in advance by members of Congress from both parties after the U.S. indictment last week of 12 Russian military intelligence officers accused of hacking Democrats in the 2016 election to help Trump’s presidential campaign. Undeterred, the American president was set to go face to face with Putin, the authoritarian leader for whom he has expressed admiration.

The summit started late because Putin arrived in Helsinki about a half hour behind schedule in another display of the Russian’s leader famous lack of punctuality. Trump seemed to return the favor by waiting until Putin had arrived at the palace before leaving his hotel. Putin has been late for past meetings with the pope and British Queen, among many others.

Trump and his aides have repeatedly tried to lower expectations about what the summit will achieve. He told CBS News that he didn’t “expect anything” from Putin, while his national security adviser said the U.S. wasn’t looking for any “concrete deliverables.” Trump told reporters during a breakfast Monday with Finland’s president that he thought the summit would go “fine.”

Trump said he and Putin would discuss a range of issues, from trade to the military, along with missiles and China. They shared a brief handshake before reporters were ushered out so they could begin their one-on-one talks in the palace’s opulent Gothic Hall.

They’ll continue their discussions with an expanded group of aides and over lunch in the Hall of Mirrors, once the emperor’s throne room. The leaders will conclude by taking questions at a joint news conference.

Observers have raised concerns about the fact that the leaders will be alone during their first meeting, but for a pair of interpreters, meaning there will be no corroborating witnesses to accurately represent what was said during the conversation.

The 72-year-old brash billionaire has been president for 18 months, while the former KGB officer, 65, has run Russia for the past 18 years.

The meeting comes as questions swirl about whether Trump will sharply and publicly rebuke his Russian counterpart for the election meddling that prompted a special counsel probe that Trump has repeatedly labeled a “witch hunt.”

After the bad-tempered NATO summit and a contentious trip by Trump to Britain, anxious European leaders may be relieved if not much comes out of the Helsinki meeting.

Those leaders are already fuming over Trump’s imposition of trade tariffs on various countries, including Russia.

European Union President Donald Tusk called on the United States, China and Russia to work together to cool the global trade tensions, warning that they could spiral into violent “conflict and chaos.”

After a stormy NATO summit in Brussels last week, Trump was accused by critics of cozying up to Putin while undermining the alliance.

But, over breakfast with Finnish President Sauli Niinisto, he insisted NATO “has never been stronger” and “never been more together” thanks to his insistence on all allies paying their fair share.

Trump is also under pressure from Britain to press Putin over the nerve agent poisoning of four people in the city of Salisbury.

Many fear that Trump — in his eagerness to prove that he was right to seek the summit with Putin despite U.S. political opposition — may give up too much ground.

Ahead of the talks, Trump has refused to personally commit to the U.S. refusal to recognize Russia’s annexation of Crimea, leaving open the possibility of a climb-down linked to a promise by Putin to somehow rein in Iranian influence in Syria.

If Washington were to de facto accept Russia’s 2014 land-grab, this would break with decades of U.S. policy and send tremors through NATO’s exposed eastern flank.


China Cozies Up to EU as Trade Spat With U.S. Escalates

July 16, 2018

Chinese premier and EU officials pledge support for global trading system

European Council President Donald Tusk, Chinese Premier Li Keqiang and European Commission President Jean-Claude Juncker attend a ceremony at the Great Hall of the People in Beijing on Monday.
European Council President Donald Tusk, Chinese Premier Li Keqiang and European Commission President Jean-Claude Juncker attend a ceremony at the Great Hall of the People in Beijing on Monday. PHOTO: THOMAS PETER/REUTERS

BEIJING—China courted the European Union as an ally in its trade conflict with the U.S., offering to improve access for foreign companies and work with the EU on reforming the World Trade Organization.

At an annual summit on Monday, China gave EU leaders much of what they were looking for. Both sides committed to setting up a working group to look at a WTO revamp, made headway in reaching an investment treaty and pledged to cooperate on enforcing the Paris accord on climate change.

Chinese Premier Li Keqiang along with European Council President Donald Tusk and European Commission President Jean-Claude Juncker vowed their support for the global trading system at a joint press briefing. The two sides later released a statement enumerating their points of agreement, the first time in three years they were able to do so.

China and the EU are both battling the U.S. over tariffs the Trump administration said are needed to compensate for unfair trade policies. Monday’s summit came a day after President Donald Trump, in a CBS interview, named the EU as the U.S.’s biggest foe globally because of “what they do to us on trade.”

Even so, EU leaders are mindful that the bloc shares many of Washington’s criticisms of China’s policies they see as discriminating against foreign companies. Mr. Tusk, who on Sunday fired back at Mr. Trump saying on Twitter that “America and the EU are best friends,” on Monday cited a common responsibility to improve, not tear down the world order.

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“The architecture of the world is changing before our very eyes,” Mr. Tusk said at the appearance with Mr. Li. The EU leader mentioned Monday’s meeting with Mr. Trump and Russian President Vladimir Putin in Helsinki and urged all to work together to address shortcomings in the WTO.

“I am calling on our Chinese hosts, but also on Presidents Trump and Putin to jointly start this process for a reform of the WTO,” he said.

Mr. Tusk specifically called for new WTO rules to deal with government subsidies, protection of intellectual property and forced technology transfer—all issues that the EU and the U.S. have criticized China over.

Mr. Li said that China is ready to step up. “We feel it is necessary to improve and reform the WTO,” he said. Mr. Li reiterated pledges to “significantly raise” market access for foreign companies and cut tariffs for some goods. He didn’t provide a timeline or discuss subsidies for favored industries.

Beijing has previously said it is willing to work on revising the WTO. It has turned to the body to protest U.S. tariffs, including saying Monday that it filed a new challenge to the Trump administration’s plans to clamp tariffs on $200 billion of Chinese goods.

Analysts sensed little new in China’s offer to the EU. “Statements in favor of multilateralism are nothing new and a working group on reforming the WTO is no concession,” said Lance Noble, senior policy analyst at Gavekal Dragonomics, a research firm.

EU leaders also suggested that China could show more resolve in addressing criticisms of its trade policies.

Mr. Li, in defending China’s treatment of foreign companies, pointed to German chemical giant BASF’s announcement last week that it received approval for a $10 billion wholly owned plant in China.

The BASF deal, said Mr. Juncker, “shows if China wishes to open up, it can choose to.”

China has been actively trying to woo the EU as trade tensions between Beijing and Washington have escalated. With tariffs from the U.S. looming last month, Chinese President Xi Jinping suggested to a group of mostly European business executives that better treatment awaits companies whose countries aren’t caught in a trade fight.

In a sign of Beijing’s willingness to satisfy European priorities, China and the EU also issued a joint statement in support of the Paris climate-change accord. The two had agreed on the declaration ahead of a summit in Brussels last year following Mr. Trump’s withdrawal of the U.S. from the global agreement. But China pulled the plug on the announcement after EU officials refused Chinese entreaties on trade, particularly regarding Beijing’s bid to be recognized by Europe as a market economy.

In Europe earlier this month, Mr. Li met with leaders of Central and Eastern European countries and held a summit with German Chancellor Angela Merkel in which they also renewed a commitment to a rules-based trading system.

EU leaders refrained on Monday from criticizing China on human rights, with Mr. Tusk only saying “differences persist.” Asked if he raised China’s detention of Uighurs, a mostly Muslim ethnic group, in re-education camps in the country’s northwest, Mr. Tusk said he brought up individual human-rights cases during the summit and didn’t elaborate further.

Last week, China released Liu Xia, the widow of Nobel Peace Prize laureate Liu Xiaobo, after eight years of house arrest, and allowed her to relocate to Germany. It was widely seen as a gesture of goodwill toward Germany and the EU to help win them over against the U.S.

Write to Eva Dou at

China’s Cooling Economy Spells Trouble Ahead for Global Growth

July 16, 2018

Confirmation that China’s economy is slowing amid an escalating trade war is a worrying omen for global growth.

Data released since Friday has affirmed what’s been expected for some time: That an ongoing campaign to curtail credit is putting the brakes on the world’s second-largest economy. Given that China generates as much as a third of global growth, that’s adding to signs that the best world expansion in years is plateauing.

The International Monetary Fund, which has repeatedly warned that the trade spat between the U.S. and China will reverberate globally, is scheduled to release fresh growth forecasts later Monday. The Chinese economy grew at an expected 6.7 percent in the second quarter, its slowest pace since 2016, while key readings on investment growth and industrial output slowed in June. Retail sales held up.

Read more on the latest data on China’s economy

While the numbers point to a modest slowdown in China, the U.S.-led trade war has only just begun. U.S. President Donald Trump this month implemented tariffs on an initial $34 billion of imports from China, which retaliated in kind. Trump is expected to deliver levies on another $16 billion worth of goods and has threatened to expand the hit-list by $200 billion. China has threatened to retaliate again.

That means headwinds not just for China’s economy, but for the world’s too.

“If the U.S. and China do not resume talks in the next two months or so, the conflict will escalate further, with major economic implications for themselves and the global economy,” Louis Kuijs, head of Asia Economics at Oxford Economics in Hong Kong, wrote in a note after the data’s release.

The global tensions were clear to see at a summit between leaders of the European Union and China in Beijing. E.U. President Donald Tusk warned that trade wars can lead to “hot conflicts” while summit host, China’s Premier Li Keqiang, said nobody will win from the dispute.

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It’s the spillover effect that most worries economists, given China’s central role in a regional and global supply chain that feeds America’s economy with goods and services.

“We have not seen the worst yet,” said Iris Pang, Greater China economist at ING Bank NV in Hong Kong. “For the rest of the world it begins with a bilateral trade war between the U.S. and China but it would not end with a bilateral impact. Global supply chains, shipping companies, foreign investment hurdles from the U.S. government at the same time as China pledges to welcome more foreign investment will change global business flows.”

China’s Trade Surplus With the U.S. Just Keeps on Growing

If the U.S. goes ahead with tariffs on $250 billion worth of imports, the hit to China’s growth could mean a drag of 0.3 percentage point, according to Morgan Stanley. There’s also the risk of an indirect hit to China arising from supply chain complexities which could subtract another 0.3 percentage point from growth. Bloomberg Economics estimates that the tariffs would shave 0.5 percentage point off GDP growth.

“Not small, but still manageable in the context of an economy heading toward a government growth target of 6.5 percent for this year,” Fielding Chen and Qian Wan wrote.

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To be sure, China has the means to respond given the massive fiscal and monetary firepower available to policy makers. Economists at Australia and Banking Group Ltd. expect the government to unleash fresh spending while JPMorgan Chase & Co. expects the People’s Bank of China to cut the reserve ratio requirement by 50 basis points over the next year, among other measures.

Already, spending by China’s government jumped in June, underscoring efforts to stabilize growth.

They may need to deploy more of that firepower.

“The trade wars are going to get worse,” said Michael Every, head of financial markets research at Rabobank Group in Hong Kong. “It’s bad news for China, and for all of us.”

— With assistance by Yinan Zhao, Xiaoqing Pi, and Miao Han


Trump sits down with Putin

July 16, 2018

U.S. President Donald Trump and Russia’s Vladimir Putin arrived at the presidential palace in Finland for a long-awaited summit on Monday after Trump blamed Washington’s own past “foolishness and stupidity” for bad relations.

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US President Donald Trump meets with Russia’s President Vladimir Putin in Helsinki, Finland, July 16, 2018. Kevin Lamarque/Reuters

The Russian foreign ministry “liked” Trump’s comments on Twitter ahead of the summit, in which Trump denounced the investigation into Russian meddling in American elections as well as previous U.S. policy.

“Our relationship with Russia has NEVER been worse thanks to many years of U.S. foolishness and stupidity and now, the Rigged Witch Hunt!” wrote Trump.

The two leaders were due to start their summit in the Finland capital Helsinki with no one else in the room apart from interpreters. They were scheduled to hold a working lunch accompanied by aides later on Monday before speaking to media.

The Kremlin said it did not expect much from the meeting but hoped it would be a “first step” to resolving a crisis in ties.

“Presidents Trump and Putin respect each other and they get along well,” Kremlin spokesman Dmitry Peskov said. “There is no clear agenda. It will be determined by the heads of state themselves as they go along.”

The summit comes at a time when relations between the two superpowers are widely seen on both sides to be at their lowest point since the Cold War. Trump has repeatedly said it would be in the U.S. interest to improve those ties.

Critics and Trump’s own advisers have urged Trump to use the summit to press Putin hard about “malign” activities, from annexing Ukraine’s Crimea peninsula to interfering in Western elections, to poisoning a spy in England, which Moscow denies.

During a breakfast meeting with Finland’s president before the meeting with Putin in the Finnish capital, Trump appeared upbeat. Asked what he would say to Putin, Trump said: “We’ll do just fine, thank you.”

While Trump has been abroad since last week, the special prosecutor investigating allegations that Russia interfered to help him win the 2016 presidential election indicted 12 Russians on Friday for stealing Democratic Party documents.


Trump’s foes at home have been scathing about his apparent refusal to criticize Putin. His 2016 opponent Hillary Clinton tweeted: “Great World Cup. Question for President Trump as he meets Putin: Do you know which team you play for?”

Russia denies interfering in the U.S. presidential election. The state RIA news agency quoted a Russian source as saying Moscow was “ready to discuss, ready to undertake mutual obligations of non-intervention into internal matters”.

Trump has said he will raise the election meddling but does not expect to get anywhere. He has repeatedly noted that Putin denies it, while also saying that it is alleged to have taken place before he became president.

For Putin, that the summit is even happening despite Russia’s semi-pariah status among some Americans and U.S. allies is a geopolitical win.

The countries are expected to discuss the prospect of extending a nuclear disarmament treaty, and the war in Syria, where Russian-backed forces of President Bashar al-Assad have advanced in the south of the country in recent weeks despite a ceasefire brokered by Moscow and Washington under Trump.

The summit caps a trip abroad during which Trump sternly criticized NATO allies for failing to spend enough on their militaries and embarrassed British Prime Minister Theresa May by saying she refused to take his advice about how to negotiate Britain’s exit from the EU. He referred to the European Union itself as a “foe” in trade, and repeatedly criticized it.

In some of the strongest words yet reflecting the unease of Washington’s traditional allies, Germany’s foreign minister said on Monday Europe could not rely on Trump.

“We can no longer completely rely on the White House,” Heiko Maas told the Funke newspaper group. “To maintain our partnership with the USA we must readjust it. The first clear consequence can only be that we need to align ourselves even more closely in Europe.”

Trump has predicted he will be accused of being too soft on Putin no matter how the summit goes.

“If I was given the great city of Moscow as retribution for all of the sins and evils committed by Russia…I would return to criticism that it wasn’t good enough – that I should have gotten Saint Petersburg in addition!” he tweeted on Sunday.

Additonal reporting by Steve Holland in Helsinki and by Christian Lowe and Polina Devitt in Moscow; Writing by Andrew Osborn and Peter Graff; Editing by Angus MacSwan


Philippines: Filipinos do not want to live in a Chinese province any longer

July 16, 2018

The proliferation of “Philippines is a province of China” banners around Metro Manila is an indictment of President Rodrigo Duterte’s total embrace of China.

What he has to say on the issue must be clear in his coming State of the Nation Address before a joint session of Congress on July 23.A recent survey by Pulse Asia showed that 73 percent of Filipinos polled want the government to assert its sovereign right in the resource-rich South China Sea particularly the country’s entitlements in the West Philippine Sea which is steadily being taken over by China.

Acting Chief Justice Antonio Carpio said a wide swath of Philippine territorial waters has already been usurped by the Chinese navy. Some 150-million barrels of oil comparable to the output of Kuwait and Iraq are possibly under the SCS seabed.

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Banners declaring the Philippines a province of China appeared in various parts of Metro Manila on July 12. Nobody has claimed responsibility for the apparent prank.(Contributed photo)

This, plus methane gas and the abundant fish supply to feed China’s 1.5-billion population. Oil and methane gas, on the other hand, would advance Beijing’s military agenda in the region. This is the reason why the Chinese made artificial islands out of the shoals, reefs and protruding rocks and building military bases on them.

China is not able to retake Taiwan which it considers a renegade province because the United States strengthened Taiwan’s military arsenal, particularly its air force. Beijing then opted for the Philippines because, as one observer said, “it is a willing victim.

”While the country cannot win a war with China and its mighty People’s Liberation Army, we should at least invoke The Hague arbitration court ruling rejecting China’s nine-dash-line and its sweeping claim to nearly the entire South China Sea.

But the Duterte administration kept its silence pursuant to its pacifist approach to the problem.The tarpaulin streamers were hoisted on the second year anniversary of The Hague’s ruling in favor of the Philippines. Professor Jay Batongbacal, a political analyst said the Duterte administration wasted a landmark international court decision by allowing China to continue its militarization of the disputed South China Sea.

While the Duterte administration appears ambivalent about the issue, other claimants to parts of the South China Sea like Vietnam, Taipei and Malaysia in fact use The Hague ruling in arguing their case against China.

Former Solicitor General Florin Hilbay, speaking on “On the Record” news forum, said the government’s weak-kneed response to China’s calibrated seizure of Philippine territorial waters in the West Philippine Sea is what gave rise to the proliferation of “Welcome to the Philippines, a province of China” banners in Metro Manila.

Presidential Spokesman Harry Roque said the streamers were put up by people who hate the President. We have to agree with Roque on this one.

Because the streamers are widespread all over Metro Manila, then Roque validated that there are many in the metropolis who hate Duterte.

To prevent any untoward or violent incident during Duterte’s third Sona, the Philippine National Police will deploy 6,000 men along the road leading to and around the Batasan Pambansa complex in Quezon City.

The usual suspects of protesters like Kilusang Mayo Uno, leftist militants, labor and transport groups are expected to stage demonstrations in the vicinity of the Sona venue. These groups for sure will raise the issue of “endo” or contractualization and the government to fully address this issue. Rising prices of oil, transportation fare, inept management of the Metro Rail Transit which adds to commuter woes in getting to work on time are among the issues.

There are new ones to be raised even as the President is expected to enumerate glowing achievements of his two-year old administration. Most recently, tons of rotting rice were discovered in a warehouse in Tacloban, Leyte. Then there is the P5.9-million missing from the Philippine Charity Sweepstakes Office funds, according to the Commission on Audit.

Where did the money go?

Do Filipinos want to be a province of China, or a state of America? The answer to this query if a poll is conducted by the SWS or Pulse Asia should be interesting.


South China Sea: China’s Blocking of the Philippines Likely Costing Filipinos Billions in Unclaimed Oil, Sea Resources

July 16, 2018
China’s continued blocking of Reed Bank drilling could cost Philippine development — expert
Patricia Lourdes Viray ( – July 16, 2018 – 9:53am

MANILA, Philippines — China’s continued blocking of oil and gas drilling on Reed Bank in the West Philippine Sea may bring economic repercussions for the Philippines, a maritime law expert warned.

In 2015, the Department of Energy suspended all drilling and exploration works in the West Philippine Sea due to a territorial dispute with China.

The Reed Bank, also called Recto Bank, is being considered as a possible replacement to the nation’s main source of natural gas, the Malampaya field, which will run out in less than a decade.

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Jay Batongbacal, director of the University of the Philippines Institute for Maritime Affairs and Law of the Sea, warned that the Philippine’s plans for economic development will be affected if the Malampaya field runs out of oil and gas.

RELATED: 81% of Pinoys reject government inaction on SCS

The country is seen to lose 30 percent of its energy requirements by 2025 if this happens.

“Luzon will be the most affected. But not only that, there will also be financial effects, the side effects will be big because when you do not have power, your industry will just stop,” Batongbacal said on Vice President Leni Robredo’s radio show on Sunday.

The maritime expert added that a substitute for Malampaya would be more expensive. At least 10 years of lead time would be needed in pursuing natural gas and petroleum energy projects.

Reed Bank, which reportedly has about 21 percent more gas than the reserves in Malampaya, is one of the two areas being eyed as sites of joint exploration between the Philippines and China.

The area is within the country’s exclusive economic zone in the West Philippine Sea but it is also being claimed by China.

Last February, the Philippines and China agreed to form a panel that would draft a framework on joint oil and gas exploration in the South China Sea.

Foreign Affairs Secretary Alan Peter Cayetano earlier said that the Philippines wants a deal as good as the one on the Malampaya project, which is 65 km off Palawan.

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“We desire a contract that’s as good or better than Malampaya… If we can have a deal that is as advantageous as Malampaya or better, what’s the difference if we are dealing with China?” Cayetano said.

The Chinese government had assured the Philippines that joint development would not affect the legal position of both countries on the issue.

“Pending final settlement, China would like to conduct practical cooperation in various fields with parties concerned, including under the principle of shelving differences and seeking joint development,” Chinese Foreign Ministry spokesperson Geng Shuang said in a press briefing in April.

READ: What Cayetano missed in justifying South China Sea joint development