Posts Tagged ‘commerce secretary Wilbur Ross’

How China Skirts America’s Antidumping Tariffs on Steel

June 4, 2018

Government-backed manufacturers have avoided steep U.S. and EU levies by shutting production at home and expanding overseas

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Three years ago, the steel mill outside the small city of Smederevo, Serbia, appeared headed for the scrap heap.

The Serbian government, which owned the mill, had stopped subsidizing it after six straight years of losses. Hemorrhaging cash, it struggled to buy spare parts and raw materials such as iron ore.

“It was like trying to drive a car without tires,” says Siniša Prelić, a union leader at the factory.

Now production is hitting all-time highs under its new owner, Hesteel Group, a Chinese state-owned steel producer. Exports from the plant, which is backed by tens of millions of dollars from Chinese state banks and investment funds, are surging. And it has started shipping steel to the U.S.

As the Trump administration ramps up its fight against Chinese steel and Commerce Secretary Wilbur Ross ended trade talks with Beijing over the weekend without a settlement, U.S. officials are confronting a strategic shift from China’s state-backed manufacturers. For the past several years, they have been shutting production at home and expanding overseas, fueled by tens of billions of dollars from Chinese state-owned lenders and funds.

By owning production abroad, Chinese steelmakers aim to gain largely unfettered access to global markets. Their factories back in China are constrained by steep tariffs imposed by the U.S. and numerous other countries—largely before President Donald Trump took office—to stop Chinese steelmakers from dumping excess production onto world markets. But their factories outside China face few so-called antidumping tariffs.

The Trump administration in March jolted the global trading system by imposing additional tariffs of 25% on all imported steel and 10% on aluminum, a move aimed at ratcheting up pressure on China to shut domestic steel and aluminum plants. (Last week, those tariffs were extended to Canada, Mexico and the European Union.) The EU is considering its own tariffs to stop metals exports blocked by the U.S. tariffs from flooding into Europe.

Even though the new U.S. tariffs apply to Chinese steelmakers that moved production abroad, the moves are still paying off. The Trump tariff rate is much lower than existing U.S. antidumping tariffs on steel produced inside China, which often exceeded 200%.

A spokesman for Hesteel declined to comment. China’s Ministry of Industry and Information Technology, which oversees the steel and aluminum industries, didn’t respond to inquiries.

Chinese overcapacity has depressed global steel prices and wreaked havoc on China’s competitors. After cajoling Beijing to cut domestic capacity, Western officials have watched with exasperation as Chinese companies boost production around the world. And Western industry executives worry the overseas investments are helping Chinese steelmakers avoid the antidumping tariffs that governments have imposed to protect their companies against allegedly unfair Chinese trade practices.

Chinese steel production rose sevenfold between 2000 and 2013. A worker helps load steel rods at a plant in Hebei province.
Chinese steel production rose sevenfold between 2000 and 2013. A worker helps load steel rods at a plant in Hebei province. PHOTO: KEVIN FRAYER/GETTY IMAGES

China’s steel-production boom took off around the turn of the century as Beijing threw its support behind a sector seen as vital to the nation’s emergence as a global economic power. The 2008 financial crisis prompted Beijing to undertake an economic stimulus program that included the construction of hundreds of new steel plants. Chinese steel production rose sevenfold between 2000 and 2013, when it accounted for half of all global capacity.

By 2013, China’s domestic economy was slowing, leading Chinese steel and aluminum producers to flood global markets and drive down prices. The average price of Chinese steel exports fell by about 50% between 2011 and 2016.

Governments around the world responded by imposing more than 130 antidumping tariffs against Chinese metals manufacturers, mostly on steel, depriving the domestic market of an important outlet.

Beijing responded by ordering capacity cuts: a net of 150 million tons of annual steel capacity is slated to be shut between 2016 and 2020, as are aluminum plants that were built without government approval. At the same time, in 2014, the government launched a plan, called International Capacity Cooperation, that enlisted Chinese state financial institutions to help manufacturers add production overseas.

Analysts and Western government and industry officials say Chinese manufacturers are receiving hundreds of billions of dollars of state support to build and purchase plants on foreign soil, through money provided by institutions such as China Development Bank, Bank of China and funds like China Investment Corp. The overseas plants are likely to be tapped as exclusive suppliers for the “One Belt, One Road” initiative, Beijing’s trillion-dollar infrastructure plan to project economic influence across Eurasia and Africa.

“China is just moving whole industrial clusters to external geographies and then continuing to overproduce steel, aluminum, cement, plate glass, textiles, etc.,” says Tristan Kenderdine, research director at Future Risk, a consulting firm that tracks China’s overseas investments. “None of this is economically viable under a supply-demand regime without state subsidies.”

Big Steel in ChinaBeijing has sharply increased domestic steel-production capacity and has made far more steel than it hasused inside the country.Sources: World Steel Association (production, use); Group of 20 nations and the Organization for Economic Cooperation andDevelopment (capacity)
.billion metric tonsDomestic productionDomestic useDomestic capacity2007’08’09’10’11’12’13’14’15’16’ usex2012x0.603 billion metric tons

Chinese steel companies have signed agreements to build plants in Malaysia, Pakistan, India and elsewhere.

In northern Brazil, a Chinese consortium is expected to break ground later this year on an $8 billion project to build one of the world’s biggest steel plants, expanding Brazil’s potential steel output even though the industry there operates at less than 70% of capacity.

“This is total nonsense, with all the idle capacity that we have,” says Alexandre Lyra, chairman of the Brazilian Steel Institute, which represents Brazilian producers.

Chinese companies also are building new steel mills in Indonesia. Last year, Tsingshan Group Holdings, a state-backed steel producer based in Wenzhou on China’s southeastern coast, opened a two-million-ton stainless-steel plant on the Indonesian island of Sulawesi that accounts for 4% of the world’s stainless-steel production. The mill, built using a $570 million loan from the China Development Bank, is now pushing down prices from Asia to the U.S., industry executives and analysts say.

“We are seeing tenders in the area from Tsingshan at very, very, competitive prices,” Miguel Ferrandis Torres, financial director at stainless-steel companyAcerinox , told analysts in April. Tsingshan is likely losing money on those shipments from its Indonesian plant, Mr. Torres said.

Tsingshan declined to comment.

Tsingshan’s product is entering the U.S. through a joint venture with Pittsburgh-based stainless-steel producer Allegheny Technologies Inc. The joint venture is restarting a stainless-steel rolling plant in western Pennsylvania that Allegheny had shut in 2016 partly because of pressure from inexpensive Chinese imports. The new company is importing 300,000 metric tons of semifinished stainless-steel slabs from Tsingshan’s Indonesian plant—replacing slab Allegheny made in a now-closed production line—and processing them into sheets for products ranging from household appliances to medical equipment.

That put downward pressure on U.S. stainless-steel prices last year, industry executives say. “We’re moving from being a high-cost producer, which we’ve been for a while, to being the low-cost producer in the market,” Robert Wetherbee, an Allegheny executive, told analysts in November.

The Trump tariffs that came into force in March hit the stainless steel Tsingshan was importing from Indonesia to its joint-venture plant in Pennsylvania. Allegheny has asked the Trump administration for an exemption from the tariffs on those imports.

Tsingshan is expanding its Indonesian plant, and Jiangsu Delong, a Chinese producer based in Jiangsu province, is building another plant nearby. Those projects alone will increase global stainless-steel capacity by 9% from 2017 levels, according to Michael Finch, a steel analyst at CRU Group in London, even though the stainless-steel industry has significant spare capacity.

Hebei province, a pollution-choked region near Beijing, is home to steelmaking operations like this one in Qianan.
Hebei province, a pollution-choked region near Beijing, is home to steelmaking operations like this one in Qianan. PHOTO: NG HAN GUAN/ASSOCIATED PRESS

In 2014, officials from Hebei province, a pollution-choked steelmaking region near Beijing, began hunting for overseas investments for the province’s most important company: Hebei Iron & Steel Group, renamed Hesteel Group in 2016.

When Hebei officials approached the Serbian government in 2014 about investment opportunities in the country, Belgrade immediately thought of the Železara Smederevo steel company, which had a mill on the Danube River, say people familiar with the deal.

The Serbian government had purchased the plant in 2012 for $1 from United States Steel Corp. After shutting the plant for several months, Belgrade restarted it to make it attractive for potential buyers, pumping tens of millions of dollars into it to keep it alive.

But with its public finances deteriorating, Serbia in 2014 sought a standby loan facility from the International Monetary Fund, which along with the European Commission, ordered it to stop subsidizing the steel company.

In early 2015, the Serbian government pulled the plug on subsidies for Železara, says Bojan Bojkovic, who was in charge of efforts to sell the mill for the Serbian government. “A lot of people, especially so-called economists, wanted to shut it down immediately,” he says.

Meanwhile, in March 2015, Hesteel signed an agreement with China Investment Corp., which has more than $200 billion in foreign assets, to fund Hesteel’s overseas expansion.

Beijing touted the $54 million acquisition of the steel plant in Serbia as one of China’s flagship overseas investments.
Beijing touted the $54 million acquisition of the steel plant in Serbia as one of China’s flagship overseas investments. PHOTO: NEMANJA CABRIC/XINHUA/ZUMA PRESS

During the talks with the Serbians, Hesteel pledged to invest at least $300 million in the plant over the next three years. Beijing touted the €46-million ($54 million) acquisition as one of China’s flagship overseas investments. Chinese President Xi Jinping visited the mill for the June 2016 signing ceremony.

Hesteel executives have said that they quickly turned around the money-losing plant after taking control in June 2016. Serbian corporate records show an operating loss of $34 million over the next six months. Records for 2017 aren’t yet available.

“This is all part of a huge political initiative,” says  Markus Taube, professor of East Asian economic studies at the Mercator School of Management in Duisburg, Germany. “They are extremely insensitive to losses.”

The EU for years has applied tariffs to low-price Chinese steel exports. Now, Hesteel’s Serbian plant can export tariff-free into the 28-nation bloc.

“We feel like the Serbian plant is a Trojan horse,” says Sonia Nalpantidou, a trade-policy expert with Eurofer, a trade association representing EU steel producers.

At a steel expo in Beijing last month, a “Hesteel of the World” banner hung near the company’s booth. Pins in a map marked countries where Hesteel had invested—Serbia, Macedonia, Switzerland, South Africa, Australia and the U.S. A company representative said overseas expansion is now a core strategy. The company is planning to build more plants in regions such as North America, she said, and plans to derive 20% of revenue from non-Chinese markets by 2020.

“Products made in Europe shouldn’t be subject to European tariffs,” the representative said.

Late last year, Hesteel offered $1.5 billion for a large steel mill in Slovakia owned by United States Steel, according to a person familiar with the talks. The Slovak prime minister said last month that U.S. Steel wouldn’t sell the plant to Hesteel. A U.S. Steel spokeswoman declined to comment.

After purchasing the plant in Serbia, Hesteel began selling its output onto the U.S. market.
After purchasing the plant in Serbia, Hesteel began selling its output onto the U.S. market. PHOTO: MARKO RISOVIC FOR THE WALL STREET JOURNAL

After purchasing the plant in Serbia, Hesteel began selling its output, including a sheet-steel product called wide hot-rolled coil, onto the U.S. market through Duferco, a Swiss trading company in which it owns a 51% stake.

Since 2001, China’s domestic producers of that product have faced antidumping tariffs of more than 64% at U.S. borders, effectively shutting them out of the market. Hesteel’s Serbian plant could export to the U.S. with minimal tariffs—until the additional Trump tariffs took effect earlier this year.

In March, one of the Serbian plant’s U.S. customers, Priefert Ranch Equipment of Mt. Pleasant, Texas, asked the Trump administration for an exemption from the tariff to import 28,000 metric tons of steel sheet annually made at the plant. Priefert argued that it has long relied on overseas steel mills to supply product that domestic mills don’t produce. Priefert executives didn’t respond to a request for comment. The Trump administration hasn’t yet decided on the request.

“We want to be the world’s Hesteel,” Yu Yong, the company’s chairman, said when signed the deal to buy the Serbian plant. He pledged to make the Serbia plant “the most competitive steelmaker in Europe.”

Write to Matthew Dalton at and Lingling Wei at


Another Sad Day For U.S. Trade, Relations With The World

June 1, 2018
I analyze export-import data, connecting it to trade policy, life  Opinions expressed by Forbes Contributors are their own.

President Trump pumps his fist to the crowd as he arrives at Ellington Field Joint Reserve Base in Houston, Texas on Thursday. (Photo by JIM WATSON/AFP/Getty Images)


The good news is that people are talking about trade. It makes a guy like me a little more topical at dinner parties.

The bad news is, we are talking about trade for all the wrong reasons.

The most recent affront is President Trump’s indefensible decision Thursday to impose steel and aluminum tariffs on national security grounds against countries previously treated like allies, countries that have largely fought on our side in the last two world wars as well as a several countries that didn’t but that have been among our most loyal friends for more than half a century.

Let’s remember where this started: China was “dumping” too much steel and aluminum on world markets, depressing prices.

There have been other poorly reasoned moves, and I will get to some of those, but let me start by saying that I have tried to give President Trump the benefit of the doubt since he took office. Every president deserves that.

So, I tried. When I could, anyway.

It didn’t start well. On his first full weekday as president, Trump withdrew the United States from the Trans-Pacific Partnership and I just couldn’t find anything good to say. To date, that remains  the worst, most consequential policy decision he has made.

Some of his critics will argue that pulling out of the essentially voluntary Paris climate accords was worse, leaving the United States as the world’s only country not part of it, while still others will point to the more recent decision to walk away from the Iran peace accords, even though Iran was in compliance. A few might nominate the decision to move the U.S. embassy from Tel Aviv to Jerusalem.

Trust me, it’s the T.P.P. decision. That was an important free trade agreement seven years in the making, one that sought to dilute rising Chinese influence. All the other nations that were part of the negotiations have subsequently signed it.

But there have been instances where I have been able to give the president the benefit of the doubt, even as fellow proponents of increased trade have not.

When Trump said he wanted to renegotiate the North America Free Trade Agreement, after calling NAFTA the worst treaty ever during the campaign and subsequently vowing to walk away from it on numerous occasions, the approach was and remains un-presidential but I didn’t think it was a terrible idea to take another look at a treaty that had been in place for a quarter century. A lot has changed since the first President Bush negotiated the treaty and his successor, President Clinton, pushed it across the finish line with the help of Republicans in Congress. So, I reasoned, why not update it?

Today, as the NAFTA negotiations appear stalled due largely to one or two largely unpalatable U.S. positions, Trump announced that tariffs on steel and aluminum go in place against Canada and Mexico.

On China, when he complained about intellectual property issues and the nation’s continued reliance on the “developing nation” crutch, I had no objections. Reasonable complaints, I thought. Yesterday, the White House announced, as previously threatened, that it will be placing 25% tariffs on at least $50 billion in Chinese imports. The stated purpose is to reduce the U.S. trade deficit, rather than push toward protecting intellectual property rights.

When he got into a verbal scuffle with Canada’s president, Justin Trudeau, over whether the United States had a trade deficit with Canada or not, I took Trump’s side even though he somewhat inexplicably chose to admit he didn’t really know. Although the slings and arrows directed northward have been more benign than to most U.S. allies, Trump included Canada in the steel and aluminium tariffs. I don’t see that helping in the NAFTA negotiations.

When he questioned why automobile tariffs between the United States and Germany are not equal, I thought it a reasonable question (though wondered if the answer is more complex). Germany, our No. 3 market for auto exports thanks to Mercedes manufacturing in Alabama and BMW manufacturing in South Carolina, is now subject to the steel and aluminum tariffs as are the rest of the European Union nations. Those cars, as they rely on foreign steel but made by American workers, will now be more expensive.

Egged on by a trade triumvirate that is as decidedly opposed to trade as any in the post-World War II era, Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and Director of Trade Policy Robert Navarro, Trump is now lighting a match to the world order that has, while imperfect, done more to improve the human condition more rapidly, than at any time in history. Remember, the first two are long-time advocates of defending the U.S. steel industry from foreign competition through government intervention while the latter is an avowed and unapologetic China basher.

One of the president’s few cordial relationships with a head of state to date has been with Japanese Prime Minister Shinzo Abe. The steel and aluminum tariffs against Japan went into effect today.

W e are increasingly isolated as a nation by a president who came to politics as a builder and developer and now does little more than demolish. He has no plans to build. He talked of being opposed to multilateral deals and preferring bilateral treaties but there are no negotiations underway. Think I’m too harsh? Quick, name the United States’ strongest ally. Sure, Israel’s Benjamin Netanyahu is often in agreement with the president but the roster gets pretty thin from there.

If this isn’t a trade war, it’s pretty close to one. And if it is, there’s no one on our side. I wish I could be more optimistic.

Agree? Disagree? Email me. Or follow me here or on LinkedIn or Twitter, or watch my “Trade Matters” series on WorldCity’s YouTube channel

US to impose steel, aluminum tariffs on EU, Canada, Mexico

May 31, 2018

The United States said Thursday it will impose harsh tariffs on steel and aluminum imports from the European Union, Canada, Mexico at midnight (0400 GMT Friday) — another move sure to anger Washington’s trading partners.

The announcement by Commerce Secretary Wilbur Ross was sure to cast a long shadow over a meeting of finance ministers from the world’s Group of Seven top economies that opens later in the day in Canada.

© AFP/File / by Heather SCOTT, with Jurgen Hecker in Paris | US Commerce Secretary Wilbur Ross announced the imposition of steel and aluminum tariffs on Thursday

Ross said talks with the EU had failed to reach a satisfactory agreement to convince Washington to continue the exemption from the tariffs imposed in March.

Meanwhile, negotiations with Canada and Mexico to revise the North American Free Trade Agreement are “taking longer than we had hoped” and there is no “precise date” for concluding them, so their exemption also will be removed, Ross told reporters.

The announcement was confirmed by presidential proclamation shortly after Ross addressed reporters.

Despite weeks of talks with his EU counterparts, Ross said the US was not willing to meet the European demand that the EU be “exempted permanently and unconditionally from these tariffs.”

“We had discussions with the European Commission and while we made some progress, they also did not get to the point where it was warranted either to continue the temporary exemption or have a permanent exemption,” Ross said.

Ross downplayed the threats of retaliation from those countries, but said talks can continue even amid the dispute to try to find a solution.

And President Donald Trump has the authority to alter the tariffs or impose quotas or “do anything he wishes at any point” — allowing “potential flexibility” to resolve the issue.

Trump imposed the tariffs of 25 percent on steel and 10 percent on aluminum using a national security justification, which Ross said encompasses a broad array of economic issues.

South Korea negotiated a steel quota, while Argentina, Australia and Brazil have arranged for “limitations on the volume they can ship to the US in lieu of tariffs,” Ross said.

“We believe that this combined package achieves the original objectives we set out, which was to constrict imports to a level to allow those industries that operate domestically to do so on a self-sustaining basis going forward.”

– Not a western –

French Economy Minister Bruno Le Maire has warned before the announcement that the EU would take “all necessary measures” if the US imposed the tariffs.

“World trade is not a gunfight at the O.K. Corral,” Le Maire quipped, referring to a 1957 western movie

“It’s not everyone attacking the other and we see who remains standing at the end,” he said, declaring that the stiff taxes would be “unjustified, unjustifiable and dangerous”.

German Chancellor Angela Merkel said the EU would respond in a “firm and united” manner to the tariffs.

“We want to be exempt from these tariffs” which were “not compatible” with World Trade Organization (WTO) rules, Merkel told a press conference with Portuguese premier Antonio Costa in Lisbon.

by Heather SCOTT, with Jurgen Hecker in Paris

China lowers tariffs, rejects US trade war escalation — Afraid of Trump?

May 31, 2018

China said Thursday it wanted to avoid an escalation of trade tensions with the United States, as the two sides held new talks and Beijing decided to lower some tariffs.

The overture came two days after the White House said its planned trade sanctions against China were still in the works despite the announcement of a truce following a previous round of talks earlier in May.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods.

© AFP/File | China has said it wants to avoid an escalation of trade tensions with the United States

A 50-strong US delegation arrived in Beijing on Wednesday for follow-up meetings, Chinese commerce ministry spokesman Gao Feng said, without proving more details.

“We hope that China and US economic and trade cooperation can benefit people in both countries, and we are not willing to see trade frictions escalate,” Gao told a regular press briefing.

The delegation is laying the groundwork for a weekend visit by US Commerce Secretary Wilbur Ross.

The Trump administration said Tuesday that US sanctions announced in March — including restrictions on Chinese investment, export controls and 25 percent tariffs on as much as $50 billion in Chinese tech exports — remain under development.

Gao slammed the proposal, saying US measures to implement investment restrictions and export controls against China “do not conform with the basic principles and spirits of the WTO (World Trade Organization)”.

“China will carefully evaluate the US measures and relevant impact and retain its rights to adopt relative measures.”

Separately, the Chinese government announced in a statement late Wednesday that it would further cut import tariffs on daily consumer goods from July 1.

The average tariff on clothing, shoes and hats, kitchenware, and sports and fitness supplies will be reduced from 15.9 percent to 7.1 percent.

The rate for home appliances such as washing machines and refrigerators will be lowered from 20.5 percent to eight percent.

– ‘No forced tech transfers’ –

Gao said China will also publish a “negative list” of foreign investment by June 30 to ease restrictions in fields including energy, resources, infrastructure and transportation. A negative list includes all the industries with foreign investment restrictions.

Beijing previously said it would relax restrictions on foreign investment in automobiles, shipbuilding and aircraft firms.

At a meeting Wednesday chaired by Premier Li Keqiang, the State Council — or cabinet — also decided that China would widen market access through more foreign investor-friendly measures, according to the official Xinhua news agency.

“We should raise our innovation capacity in the new round of opening up and see that all intellectual property be fully protected,” Li said.

“No forced technology transfer will ever be imposed on foreign-invested enterprises and IPR (intellectual property rights) infringements will be penalised to the full extent of the law.”

Donald Trump has accused China of forcing US firms to hand over their industrial secrets to Chinese firms in order to do business in the country, a charge that Beijing has rejected.

In other measures announced by Xinhua, overseas traders will be encouraged to participate in crude oil and iron ore futures trading.

Severe measures will be taken to punish infringements, counterfeiting, commercial secret violators and trademark squatters.



China Cuts Tariffs on Wide Range of Consumer Goods From July

 Updated on 

China will reduce tariffs on a wide range of consumer goods from July 1, the State Council said in a statement.

The tariff cuts will apply to products including clothes, washing machines and makeup. The reduction was decided at the state council on Wednesday which was chaired by Premier Li Keqiang.

The announcement came after President Donald Trump decided to move ahead with additional tariffs on $50 billion of imports from China, a move that could potentially derail the truce reached last week between the world’s two biggest economies. China hit back at that, with a foreign ministry spokeswoman saying on Wednesday that China would respond accordingly if the U.S. insisted on unilateral measures.

Read the rest:


Aslo consider:

Trump urges staff to portray him as “crazy guy”

US-China Trade: “We’ve got to stand up to Chinese economic predation.”

May 31, 2018

Navarro speaks about China’s predatory trade practices

US trade adviser undercuts claim that trade war is ‘on hold’ as Commerce Secretary Wilbur Ross preps for Beijing


South China Morning Post
Thursday, 31 May, 2018, 5:22am

US President Donald Trump’s top trade adviser undercut Treasury Secretary Steven Mnuchin on Washington’s position with respect to China on Wednesday, calling Mnuchin’s declaration of a pause in trade action against Beijing “an unfortunate sound bite”.

“That was an unfortunate sound bite basically for two reasons. What we’re having with China is a trade dispute, plain and simple,” US National Trade Council Director Peter Navarro said, referring to Mnuchin’s May 20 comment that trade action against China was “on hold”.

“They engage in a whole range of unfair trade practices, they run up a US$370 billion trade surplus with us, which costs us over a million factory jobs a year,” Navarro said in an interview with National Public Radio. “President Trump basically is going to address that with appropriate measures.”

Navarro’s comments underscore the frequent shifts in the Trump administration’s position on China – which the president has both praised and denigrated since before he took office last year – and come shortly before US Commerce Secretary Wilbur Ross departs for Beijing for a third round of high-level talks aimed at defusing the trade dispute.

They also come a day after Trump surprised analysts by announcing dates for his tariffs to go into effect, a move that appeared to nullify Mnuchin’s positive take on the most recent round of talks, which ended on May 19.

Trump’s move also prompted an immediate rebuke from China.

China’s commerce ministry said in a statement released hours after Trump’s announcement that the move “clearly contradicts the consensus reached by China and the US in Washington recently”.

From left: US Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, US Trade Representative Robert Lighthizer and National Trade Council Director Peter Navarro. While the four men are the Trump administration’s top officials on trade issues, they have splintered over how best to negotiate with China. Photo: Jabin Botsford/Washington Post

“China is confident, capable and experienced to defend Chinese people’s interests and national core interests, regardless of whatever measures the US side could take,” the ministry said.

Still, a return to Trump’s hard-line approach will not necessarily doom Ross’s trip this weekend, said Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Washington-based think tank Centre for Strategic and International Studies, citing China’s “very measured” response.

“Ross is still going to Beijing, and he will come home with some kind of deal,” Kennedy said. “Now President Trump can claim that whatever is achieved is the result of this dialed-up pressure.”

Navarro was part of the delegation Mnuchin led to Beijing in early May for the first round of talks, which produced no consensus and reportedly included a shouting match between the two men over the US negotiating stance.

Navarro was not involved in the most recent round of talks in Washington.

Ross and Mnuchin, both former investment bankers, are seen as the more moderate members of the US negotiating team. Navarro is an economist best known for writing Death by China: Confronting the Dragon – A Global Call to Action.

An advance team of more than 50 economic officials arrived in Beijing on Wednesday “to come to a mutual understanding about what kind of joint statement the two sides will make” regarding the forthcoming talks, the China Ministry of Commerce announced.

A US Commerce Department official confirmed to the South China Morning Post on Wednesday that Ross would be in Beijing from Saturday through Monday, but declined to say whether Navarro would be part of the delegation.june2-4

Navarro is seen as closely aligned with US Trade Representative Robert Lighthizer, who spearheaded his department’s investigation into China’s trade and investment policies. That inquiry provided the justification for punitive tariffs on US$50 billion worth of annual imports from China, which Trump announced last month.

The trade representative’s nearly 200-page report outlining China’s trade practices alleges, among other things, that these policies “deprive U.S. companies of the ability to set market-based terms in licensing and other technology related negotiations with Chinese companies and undermine US companies’ control over their technology in China”.

In his interview with NPR, Navarro said: “America is the best innovator in the world. The problem we have now is every time we innovate something new, China comes in and either buys it or steals it.

“What we need to do as a country, and the president has the courage and vision to do this, we’ve got to stand up to Chinese economic predation.”

Image result for china's stealth fighter

Above: China’s stealth fighter


US President Donald Trump to meet Chinese Vice-Premier Liu He ahead of trade talks

May 17, 2018

Liu’s surprise visit to the White House ‘means that there’s great interest here in furthering’ the talks, Trump’s economic adviser says

South China Morning Post

Image result for Liu He, photos

Liu He

US President Donald Trump will meet with Chinese Vice-Premier Liu He on Thursday to discuss the simmering bilateral dispute threatening more than US$200 billion in trade, the top White House economic adviser said.

The meeting between Trump and his Chinese counterpart’s top economic aide, taking place on the first day of a two-day visit by Liu, was not on the White House schedule or mentioned in the US State Department’s recent announcement about the trip.

“The president is meeting with Liu this afternoon,” National Economic Council director Larry Kudlow told White House reporters. “It means that there’s great interest here in furthering the deal and furthering negotiations and trying to reach some remedies regarding unfair and illegal trading practices.”

Treasury Secretary Steven Mnuchin is leading the trade negotiations, along with Commerce Secretary Wilbur Ross and US Trade Representative Robert Lighthizer, whose department is currently holding hearings in Washington with US companies and industry associations about proposed punitive tariffs on imports from China.

In its statement about the talks, the State Department said additional senior administration officials would also participate.

Liu‘s trip to America is his second in three months and follows the recent visit to Beijing by the US delegation led by Mnuchin, which ended without tangible achievements.

China spots problems with US cars, pork as trade talks loom — Inspections of US goods get tougher

May 16, 2018

China said on Wednesday it had stepped up inspections of key US imports such as pork and automobiles, just as a high-level delegation visits Washington for key trade negotiations.

Image result for Yi Gang, photos

Yi Gang

The world’s two largest economies are locked in a tense standoff with tariff threats hanging over billions of dollars of goods many fear could spark a damaging trade war between the economic superpowers.

Vice Premier Liu He, President Xi Jinping’s top economic adviser, and central bank chief Yi Gang arrived in the US capital on Tuesday for a new round of talks aimed at heading off a trade war.

Hopes the two sides can reach a deal were raised at the weekend when President Donald Trump said he was working with Xi to prevent telecom giant ZTE from going out of business after it was hit by a US technology sales ban.

Image result for Liu He, photos

Liu He

However, Commerce Secretary Wilbur Ross has said there was a “wide” gap between the US and China while lawmakers in Washington questioned the offer to prevent ZTE’s collapse, citing national security issues

Meanwhile, Beijing has taken action to show their US counterparts the value of access to China’s market for American goods and firms.

“We increased the inspection ratio of American pork,” China’s customs bureau said in faxed comments to AFP, calling the practice “in line with international norms.”

It added that inspections came after “we found there were problems with American pork”, the department said without providing details.

Reports have also said inspectors are taking similar action against US car giants such as Ford, waste imports, among other products.

The customs administration said US car imports were quickly deteriorating in quality when AFP queried the regulator about holdups for Ford.

“In the first four months of the year, major car ports in China detected a total of 652 batches of cars from the US — totalling 4,360 vehicles worth $312.5 million — that were not up to standard,” the customs administration said.

“This is a relatively quick pace of growth,” the regulator said.

A spokesman for Ford said: “We are closely monitoring our situation at the port.”

The moves against waste imports have thrown the American recycling industry into a tailspin as China was one of the most important destinations for US trash.

On May 3, China said it would inspect all US waste coming into the country, according to a Chinese customs notice reposted by a US recycling trade group.

Citing statistics showing US waste imports failing to meet standards, China’s customs department said it took action to “protect people’s lives and health and safeguard the ecological environment”.

“The United States has become the largest source of solid waste materials that do not meet environmental or major quarantine standards, so the risk attached to importing its waste materials is obviously high.”

It denied any of the action targeted a specific country.

In a meeting with US business leaders in Beijing, Vice President Wang Qishan struck a more conciliatory tone.

“Economic and trade relations are the ballast of the the two nations’ relations, and their essence is cooperatively beneficial,” he said, according to the People’s Daily.

Asian markets down as attention turns back to trade talks

May 15, 2018

Asian markets fell on Tuesday as trade moves back into view with China and the US holding more high-level talks this week, while oil prices edged higher as tensions in the Middle East simmer.

© AFP | Chinese Vice Premier Liu He is due in Washington for fresh talks aimed at heading off a trade war with the United States


A recent run-up in equities over the past week has also led to profit-taking with Hong Kong turning lower after six straight days of gains.

US markets rose again as Chinese Vice Premier Liu He — President Xi Jinping’s right-hand man on economic issues — headed to Washington on Tuesday for a new round of talks aimed at heading off a trade war between the economic giants.

There are hopes the two sides can hammer out an agreement to end a spat that has seen both sides threaten tariffs on billions of dollars of goods.

Donald Trump’s call to help get Chinese telecom equipment maker ZTE “back into business fast” soothed nerves, while Commerce Secretary Wilbur Ross said Monday he was exploring “alternative remedies” for the firm, which was in April banned from buying crucial US technology for seven years.

“China is reportedly close to removing tariffs on agricultural products in exchange for relief for ZTE,” said Stephen Innes, head of Asia-Pacific trade at OANDA. “It helps explain why President Trump said he’d work with President Xi on this company.”

The talks come as US officials try to reach agreements with Canada and Mexico on revising their three-way trade pact, while EU steel tariff exemptions are due to end on June 1.

– ‘Hornet’s nest’ –

Hong Kong was 0.8 percent lower after racking up gains of more than five percent over the previous six sessions, while Tokyo ended the morning slightly down.

Shanghai was marginally down, while Sydney and Singapore each shed 0.4 percent, Seoul gave up 0.6 percent and Taipei dipped 0.2 percent.

However, there were gains in Manila and Kuala Lumpur.

Concerns about the already tinderbox Middle East helped put upward pressure on oil prices, with deadly clashes in Gaza during the opening of the US embassy in Jerusalem coming less than a week after Trump ripped up the Iran nuclear deal.

“In general, the market is wholly focused on the hornet’s nest in the Middle East that is an accident waiting to happen,” Innes added.

Both main crude contracts are are at highs not seen since November 2014, with economic uncertainty in major producer Venezuela also playing a key role.

The increase in oil prices is helping fan inflation expectations in the United States, which has given fuel to talk that the Federal Reserve will lift interest rates three more times this year

While the dollar was flat against its main peers it was sharply up against most high-yielding currencies including the South Korean won, Mexican peso and Indonesian rupiah.

– Key figures around 0300 GMT –

Tokyo – Nikkei 225: FLAT at 22,862.79 (break)

Hong Kong – Hang Seng: DOWN 0.8 percent at 31,292.54

Shanghai – Composite: FLAT at 3,173.77

Euro/dollar: UP at $1.1934 from $1.1931 at 2100 GMT

Pound/dollar: UP at $1.3565 from $1.3556

Dollar/yen: UP at 109.75 yen from 109.65 yen

Oil – West Texas Intermediate: UP 11 cents at $71.07

Oil – Brent North Sea: UP 15 cents at $78.38 per barrel

New York – Dow: UP 0.3 percent at 24,899.41 (close)

London – FTSE 100: DOWN 0.2 percent at 7,710.98 (close)

U. S. demands make China trade resolution tougher

May 5, 2018


Chicago Sun-Times
May 5, 2018

BEIJING — A list of hard- line demands that the Trump administration handed China this week could make it evenmore difficult to resolve a trade conflict between the world’s two largest economies.

That’s the view of trade analysts who say the U. S. insistence that Beijing shrink America’s gaping trade deficit with China by $ 200 billion by the end of 2020, among other demands, are more likely to raise tensions.

A U. S. official confirmed the authenticity of a document outlining U. S. priorities that was presented to China ahead of two days of trade talks that ended Friday. The official spoke on condition of anonymity.

In Washington on Friday, President Donald Trump said, “We have to bring fairness in trade between the U. S. and China, and we will do that.” Trump had campaigned for the presidency on a promise to reduce America’s trade deficit with China, which amounted last year to $ 337 billion in goods and services.

Image may contain: 1 person

The U. S. document is described, in an introductory disclaimer, as being provided to the Chinese ahead of the visit to Beijing by the U. S. officials. It included demands that China immediately stop providing subsidies to industries listed in a key industrial plan. China must end some of its policies related to technology transfers, a key source of tension underlying the dispute, the list also says.

The U. S. wants China not to retaliate against U. S. measures currently being pursued against it. For instance, the U. S. says China should agree not to target U. S. farmers or agricultural products and “not oppose, challenge or otherwise retaliate” when the U. S. moves to restrict Chinese investment in the U. S. in sensitive sectors.

American analysts were struck by the aggressiveness of the Trump team’s demands. Eswar Prasad, a professor of trade policy at Cornell University, said the hard- nosed approach “makes it harder to envision a path toward a negotiated settlement.”

Prasad said the Chinese are open to negotiations on opening their market wider and doing a better job of protecting intellectual property. “Beijing is clearly in no mood, however, to meet the U.S. team’s expectation of capitulation in the face of threats of tariffs and other trade sanctions,” he said.

Wendy Cutler, a former U.S. trade negotiator who specialized in Asia, said it was encouraging to see the two countries talking and trading proposals. But she said the “kitchen sink” U.S. demands look unrealistic.

“If the U.S. is serious and wants all of this, it’s hard to see a constructive path forward,” said Cutler, now vice president at the Asia Society Policy Institute.

Analysts said the Chinese were likely to view the confrontational posture struck by the U.S. as unreasonable and akin to bullying, potentially making it difficult to tone down friction over such issues.

Yu Miaojie, a professor at Peking University’s National School of Development, described some of the demands as “like lions opening their mouths.”

“When it comes to negotiations, both sides can provide a list of requests and we will seek common ground while reserving our differences,” Yu said. “If one side provides a list with unreasonable requests, the Chinese government is unable to accept it.”

“China won’t be frightened by this kind of threat,” wrote Hu Xijin, the chief editor of the Global Times, a nationalistic tabloid affiliated with the Communist Party mouthpiece, in a post on the Sina Weibo website. Hu said he believed China would engage in talks seriously but also be fully prepared for them to fail.

Still, the list was welcomed by a U.S. business group which has lobbied the Trump administration for greater clarity on what it wanted China to do. Some groups had complained the administration was sending mixed messages.

“We’ve been saying that the Trump administration needs to define success and what specific outcomes it is seeking,” said Jake Parker, vice president for China of the U.S.-China Business Council. The list submitted to China helps “lead to a solution and avoid tariffs and other sanctions,” he said.

The two sides “reached consensus in some areas,” the official Xinhua News Agency said.

“Both sides realized that there are still relatively big differences over some issues and that they need to continue to work hard to make more improvements,” the report said.

There was no immediate comment from the U.S. delegation. A motorcade was seen leaving the U.S. Embassy in Beijing on Friday afternoon and the group departed China later in the day.

The list of U.S. demands was first reported by The Wall Street Journal on Friday.

The dispute will be tough to resolve because the fundamental issue is that the U.S. wants to stop China from moving up the so-called value chain as it transforms into an advanced economy, said Louis Kuijs, head Asia economist at Oxford Economics. But “there’s no way that China’s going to change its strategy on that.”

Kuijs said the ball is now in the U.S. court on deciding whether the talks were fruitful and merit more discussion or that they’re stalled and Washington needs to take more serious measures targeting China.

This is “much more than just a trade dispute,” Kuijs said. “This is very much about economic strategy and the U.S. coming to grips with a big country running its economy in a way that the U.S. is uncomfortable with, and becoming successful, and starting to threaten U.S. dominance.”


Wiseman reported from Washington. Associated Press reporters Kelvin Chan in Hong Kong, Martin Crutsinger in Washington and Christopher Bodeen and researcher Yu Bing in Beijing contributed to this report.


China state media sees positives in trade talks with U.S.

May 5, 2018

Chinese state media struck an optimistic note on trade talks between Chinese and U.S. officials after U.S. President Donald Trump threatened to impose tariffs on up to $150 billion in Chinese goods over allegations of intellectual property theft.

The English-language China Daily saw a “positive development” in the two days of talks in an agreement to establish a mechanism to keep the dialogue open, despite “big differences”, as part an effort to resolve trade disputes.

The newspaper said the biggest achievement was “the constructive agreement between Beijing and Washington to keep discussing contentious trade issues, instead of continuing the two-way barrage of tariffs, which pretty much brought the two countries to the brink of a trade war”.

The People’s Daily said the talks “laid solid foundation for further talks on trade and economic cooperation, and for ultimately achieving benefits (to both countries) and win-win results”.

China’s state-run Xinhua news agency described the talks as “constructive, candid and efficient” but with disagreements that remain “relatively big”.

People familiar with the talks said on Friday the Trump administration had drawn a hard line, demanding a $200 billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies.

The lengthy list of demands was presented to Beijing before the start of talks on Thursday and Friday to try to avert a damaging trade war between the world’s two largest economies.

A White House statement issued on Friday said the U.S. delegation, led by Treasury Secretary Steven Mnuchin, “held frank discussions with Chinese officials on rebalancing the United States–China bilateral economic relationship, improving China’s protection of intellectual property, and identifying policies that unfairly enforce technology transfers”.

The statement gave no indication that Trump would back off on his threat to impose tariffs.

Capital Economics, a private economic research consultancy based in London, said in a research note that demands made by the United States were so “unrealistically high” that an agreement was unlikely this week.

“Unless the Trump administration settles for a lot less

than initially demanded, tensions between the two countries will continue for some time,” it said.

But “both the U.S. and China have shown some willingness to compromise”, it said. “Given that the U.S. entered into the negotiations with a list of unrealistically high demands… it is reassuring that the talks didn’t break down altogether.”

The U.S. delegation was returning to Washington to brief Trump and “seek his decision on next steps”, the White House said, adding that the administration had “consensus” for “immediate attention” to change the U.S-China trade and investment relationship.

Trump said he would meet the delegation on Saturday.

“We will be meeting tomorrow to determine the results, but it is hard for China in that they have become very spoiled with U.S. trade wins!” he said in a Twitter post late on Friday.

Reporting By Norihiko Shirouzu and Pei Li; Editing by Nick Macfie