Posts Tagged ‘Free Trade’

France’s Emmanuel Macron calls for revival of EU democracy

April 17, 2018

In his first speech before the EU parliament, France’s Emmanuel Macron called for energetic reforms and open debate with European citizens. Macron also decried the bickering between EU politicians as a “fool’s game.”

France’s president Emmanuel Macron urged reforms to address concerns and fears of EU citizens in a speech aimed at boosting the EU unity amidst a string of crisis.

Speaking to EU lawmakers in Strasbourg on Tuesday, he urged the deputies to create a “proper debate on convictions and proposals” and make the “EU democracy come alive” as the bloc starts its preparations for the May 2019 vote. The upcoming parliamentary vote is the first EU-wide election since the UK voted to leave the union.

Read more: Is Emmanuel Macron ‘en marche’ to Brussels?

European people “have not given up on Europe,” Macron said in an emotionally charged address on Tuesday.

The French leader called for a debate on migration, a roadmap to eurozone reform, reforming the banking system, and a EU-wide sovereignty which would compliment the sovereignty of individual member states.

“We need to build this EU-wide sovereignty to protect our citizens in terms of internal and external defense and security,” he said.

‘Wost possible mistake’ to give up on democracy

Macron brings palms together ahead of his speech (Reuters/V. Kessler)Macron’s described the EU democracy and unity as a “treasure”

He also proposed creating a European program to “directly financially support local communities that welcome and integrate refugees.”

The 40-year-old Macron also pointed at the rise of populism inside the EU, following reflected in the outcome of recent elections in Italy and Hungary.

The rapid changes in the today’s world require politicians to change their ways, but this must not mean a rejection of democracy, he added.

“Indeed, in these difficult times, the European democracy is our best chance,” Macron said. “The worst possible mistake would be to give up on our model and our identity.”

“We see authoritarians all around us, and the answer is not authoritarian democracy, but the authority of democracy,” he said.

Read more: How France’s Emmanuel Macron wants to reform the EU

US moving away from EU values

Macron also decried the tendency to blame national failings on Brussels and avoid discussion on EU future.

“To carry on in this manner is a fool’s game, which may be more comfortable for us to engage in, but nothing will be resolved in this way,” Macron said.

The French president also decried the growing gap between the EU and the values propagated by the current US administration.

“We share so much with this country, but this country is rejecting multilateralism, free trade, and climate change,” he said.

European Commission President Jean-Claude Juncker welcomed Macron’s speech, noting that his election victory last year gave “new hope” to the EU.

“The true France is back,” Juncker said on Tuesday.

At the same time however, he warned that the EU was an “ensemble” and not just a club made up of Germany and France.

Waiting for Berlin

Macron previously spoke at length about his vision for a closer EU in Sorbonne some six months ago, where he urged a joint eurozone budget and an introduction of an EU finance minister. Among other steps, he also called for a joint asylum office, an aligning of national tax systems, and an EU-wide innovations office. France’s leader also suggested creating an EU rapid response force.

Read more: Is Emmanuel Macron Europe’s new Angela Merkel?

However, Macron was forced to delay its plans over the elections in France’s most important EU ally, Germany, and the unusually long talks on forming the government in Berlin. Even after the new German government took office, Berlin officials seem cautious on reforms proposed by Macron.

Read more: Merkel’s new cabinet shows youth trend

The French president is set to meet Germany’s Chancellor Angela Merkel on Thursday in Berlin. Last month, the two leaders pledged to bridge their differences and come up with a joint roadmap for reforms by June.

dj/rc (AFP, Reuters, dpa)




Macron warns of European ‘civil war’ over growing East-West divide

April 17, 2018

By The Telegraph
Aptil 17, 2018

The French president addressed the European Parliament, laying out his vision for the future of the continent

The French president addressed the European Parliament, laying out his vision for the future of the continent CREDIT: VINCENT KESSLER/REUTERS

The European Union risks being torn apart by a “civil war” between its liberal and authoritarian democracies, Emmanuel Macron, the president of France has warned.

Speaking in the European Parliament in Strasbourg, Mr Macron said that the EU must “build a new European sovereignty” and embark on much needed reforms to save the bloc.

The ardent Europhile was given a standing ovation and numerous compliments by adoring MEPs during the plenary debate on the future of Europe after Brexit.

“We have a context of division and indeed doubt within Europe,”  Mr Macron said. “There seems to be a sort of European civil war where selfish interests sometimes appear more important than what unites Europe.”

In a thinly veiled swipe at Hungary and Poland, Mr Macron said Europe was in the grips of “a fascination with the illiberal”.

Brussels is at loggerheads with Warsaw over Poland’s controversial judicial reforms and there are also concerns about the rule of law in Hungary after strongman Vikto Orban’s election campaign, which was won by stoking fears over immigration.

Members of the European Parliament hold placards saying "Stop the War in Syria" before a debate on the Future of Europe 
Members of the European Parliament hold placards saying “Stop the War in Syria” before a debate on the Future of Europe  CREDIT: VINCENT KESSLER/REUTERS

“We are seeing authoritiarinism all around us,” Mr Macron said, “ The response is not authoritarian democracy but the authority of democracy.”

“In these difficult times, European democracy is our best chance,” he added before warning against the “deadly tendency” of  national selfishishness and egotism that could lead the continent “to the abyss”.

Evoking the Second Word War, Mr Macron said he belonged to a generation that had never experienced war and that he “suffered the luxury of forgetting what happened to our ancestors”.

“I don’t want to be part of a generation of sleepwalkers. A generation that has forgotten its past,” he declared as the plenary chamber broke into applause.

“I will not give in to any kind of fixation on authoritarianism,” said Mr Macron, “I want to belong to a generation that will defend European sovereignty because we fought to attain it.

“European sovereignty is the system I believe in,” Mr Macron said. “Defending Europe is not defending something abstract or the dilution of our own sovereignty.”

Mr Macron, under pressure domestically as he tries to force through unpopular labour reforms, even took a swipe Donald Trump, the US president and at his ally in the strikes on Syria.

“We share so much with country but this country has rejected multilateralism, free trade and climate change,” he said before exhorting MEPs to “listen to the anger of the people of Europe” who felt abandoned by the bloc.

Florian Philippot, a French MEP in Nigel Farage’s Europe of Freedom and Direct Democracy group, attacked Mr Macron, branding him the EU’s “top pupil” repeating all “the canons of the European catechism”.

Mr Philippot, a former member of Marine Le Pen’s National Front, praised Britain “for breaking free of its chains” and to hoots and catcalls called for a Frexit referendum that would allow France to go out into the world.

Mr Macron gave him short shrift and said the French people had spoken when they elected him last year.

“You lost because the French people decided otherwise,” Mr Macron told the MEP.

The French president called for a European fund for communities taking in migrants and insisted that Brexit must not derail EU spending suggesting a tax could be levied to raise money for the EU Budget.  He also demanded that eurozone banking integration picked up pace and other reforms.

Mr Macron, who praised Michel Barnier, the EU’s chief Brexit negotiator, for his handling of the talks was greeted with unabashed admiration by Europhiles in Strasbourg. Outside the parliament a demonstration was held against the French president.

“The true France is back,” declared Jean-Claude Juncker, the president of the European Commission.

“This house has waited a long time for a French president like you”, Manfred Weber, the German MEP who leads the largest party in the European Parliament, told Mr Macron.

But hard left MEPs accused Mr Macron of breaking international law by launching missile strikes on Syria.


China Would Gain by Resolving Trade Dispute

April 14, 2018

No automatic alt text available.

By Mohamed El-Erian, Bloomberg View
Friday, 13 April 2018 04:44 PM

Almost all economists agree that a full-blown trade war would leave both China and the U.S. worse off. A simple game theory framework shows that international trade is inherently a “cooperative game,” especially when  consumption and production chains are tightly interconnected across borders.

If the game is played uncooperatively, the hoped-for gains for specific activities and segments of the population would pale in comparison to the losses for big majorities in each country. That would be true even if the (few) winners from widespread protectionism tried to compensate the (many) losers.

For that reason alone, many expect China and the U.S. to find a solution that would result in fairer but still-free trade (similar to the hoped-for outcome in the negotiations to modernize the North American Free Trade Agreement between Canada, Mexico and the U.S.). This hope is enhanced by another argument that hasn’t received sufficient attention: By acceding to mounting external demands on intellectual property and excessive trade barriers, China would be accelerating three longer-term transitions that it has willingly embarked on or knows that it will be necessary to undertake.

For years, as it navigates what economists call the “middle-income transition” — one of the hardest phases in economic development — China has been gradually redirecting its growth engines away from exports and toward internal demand. Along the way, it has been moving from inefficient investments by state-owned enterprises toward private consumption. Further trade liberalization would assist this process.

Reducing trade barriers and adhering to widely-accepted intellectual property norms would also be consistent with a second important developmental transition for China: The gradual increase in its willingness to assume greater global responsibilities, consistent with its overall size in the world economy. The hesitation to step up had to do with its sheer size of the country, which attained global systemic importance, economically and financially, at a relatively low level of per-capita income and before joining the ranks of advanced countries.

Finally, China has benefited over several decades from its ability to remain highly focused on long-term goals and successfully run out the clock on various short-term issues that have arisen in domestic and international economic interactions. Yet, with overall durable success both at home and abroad, China is increasingly being pressed to deal with what it would typically regard (and dismiss) as tactical issues rather than simply waiting them out. The spike in trade tensions with the U.S. is one example.

Rather than avoid negotiation, it is in China’s short- and longer-term interest to sit down for talks with the U.S., preferably behind closed doors. And it should expect to do the same with Europe, which would highlight the advantages of supplementing bilateral discussions with more effective multilateralism.

A successful, orderly outcome would benefit a global system that is now under considerable stress, if not at risk of gradually fragmenting, due in part to a neglect of marginalized and alienated segments of the population, as well as insufficient reciprocity. It would also help China’s tricky middle-income transition, as well as provide the country with an important platform to pursue its legitimate demands for more equal representation and voice in multilateral institutions — an enhanced status that Europe, in particular, has been slow in granting.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mohamed A. El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He was chairman of the president’s Global Development Council, CEO and president of Harvard Management Company, managing director at Salomon Smith Barney and deputy director of the IMF. His books include “The Only Game in Town” and “When Markets Collide.”


Rare Coalition Bands Together to Fight Trump Tariffs

April 11, 2018


By Lindsey Rupp and  Mark Niquette

  • More than 40 groups have aligned to say tariffs hurt consumers
  • Companies lobbying around more battles in Trump’s Washington
U.S. President Donald Trump

Photographer: Al Drago/Bloomberg

A rare coalition of business groups are banding together to fight President Donald Trump’s proposed tariffs, arguing they will hurt U.S. consumers and the economy.

Retail, agriculture, technology, manufacturing and other industries say the tariffs on $150 billion in Chinese goods are counterproductive to the goal of holding Beijing accountable for intellectual property theft and other trade practices. The groups are working to keep specific products off the U.S. list and trying collectively to keep levies from being imposed at all.

The message they’re sending?

“This is nuts,” said David French, senior vice president for government relations at the National Retail Federation, which hosted a recent meeting of the coalition.

Trump’s surprise request for an additional $100 billion in tariffs on Chinese goods April 5, two weeks after proposing $50 billion, was “the alarm-bell that woke up every sector of the U.S. economy,” said Hun Quach, vice president of international trade for the Retail Industry Leaders Association.

’Here We Go Again’

The next day, a meeting of the coalition at the NRF in Washington started with “Here we go again,” said French, referring to being buffeted by the second, unexpected round of proposed tariffs. Participants shared information and technical analysis and coordinated group outreach efforts, he said.

The coalition consists of more than 40 trade organizations, including the U.S. Chamber of Commerce. The different industries have come together to argue that the tariffs are the wrong approach, said Jose Castaneda, spokesman for the Information Technology Industry Council, which represents companies including Amazon, Google, Facebookand IBM.

The coalition sent a joint letter to Trump on March 18 opposing the tariffs before they were announced and followed up with the April 6 meeting at the NRF.

“Tariffs become trade wars, and trade wars have no winners,” said Steve Lamar, executive vice president of the American Apparel & Footwear Association, in an interview.

Latest Battle

The fight is just the latest battle bringing companies to lobby Washington since Trump became president. Between the corporate efforts against the proposed border-adjusted tax in 2017, renegotiation of Nafta and the new tariffs, Lamar said companies that may have only made one trip to D.C. in the past 10 years have now visited 10 times in the last 15 months. New companies and industries are also entering the fray, he said.

“The existential threats, in general, that have been moving their way through Washington have really gotten a lot more people to focus on Washington as a place they have to pay attention to,” Lamar said.

A total of 34 clients registered lobbyists on issues related to Nafta since the beginning of 2017, compared with none in 2016 — before Trump took office — according to filings with Congress. Lobbying reports mentioning Natfa increased from 26 in the fourth quarter of 2016 to 427 in the same period last year.

On trade as a general issue, registrations increased by 133 percent from 2016 to 2017, and the number of lobbying reports were up by almost 20 percent in the fourth quarter last year compared with the same period a year earlier.

Trump Unpredictable

One of the challenges for U.S. companies and trade groups is that they’ve never experienced a president as unpredictable as Trump, who doesn’t always follow normal protocol, said Lee Drutman, a senior fellow at New America, a Washington think tank, who has written about lobbying.

Trump “seems to change his mind all the time and only listen to a handful of people right around him,” Drutman said. “So it makes lobbying more difficult.”

It’s still early stages for the coalition, which is considering the next steps its members might take together and individually, Castaneda said. They’re reviewing the more than 1,300 products on the list for proposed tariffs and plan to argue for exclusions during a formal comment period that ends May 11.

Groups are also meeting with the office of the U.S. Trade Representative and the National Economic Council in the White House as well as Speaker of the House Paul Ryan, Representative Kevin Brady and members of the Ways and Means and Finance committees on Capitol Hill, said the NRF’s French.

China’s Retaliation

The industry groups are warning that China’s retaliation with levies on products will ultimately be passed along to shoppers as price increases. That would hurt the U.S. economy, cost jobs and erase benefits from the tax overhaul last year, the groups said.

“The administration is rightly focused on restoring equity and fairness in our trade relationship with China,” Myron Brilliant, executive vice president and head of International Affairs at the U.S. Chamber, said in a statement. “However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends.”

The approach is consistent with the campaign the NRF and other groups waged successfully last year to keep a proposed “border-adjusted tax” out of the tax overhaul. The opponents said the BAT would hurt their businesses while increasing prices for U.S. consumers, and their campaign included a parody-style TV ad.

“That’s the type of messaging we thought would resonate the most,” ITIC’s Castaneda said.

Emerge Unscathed

Even industries whose products were largely left off the list are concerned they won’t emerge unscathed, because the tariffs are so far-reaching they’ll impact the entire global supply chain that retailers and other industries rely on to produce and sell goods, AAFA’s Lamar said.

For example, although apparel and footwear products weren’t on the initial list of Chinese items to be subject to the tariffs, in retaliation China slapped higher duties on cotton, which it imports from the U.S. to be processed and manufactured.

“Even though the cotton shirt might not be on the target list the U.S. proposed so far, the cotton shirt is itself made with cotton exports, and that’s on the list that the Chinese put out,” Lamar said.

The United States Council for International Business, which is participating in the coalition, won’t advocate on behalf of individual members, which include Apple Inc.General Electric Inc. and Microsoft Corp., because their interests differ, spokesman Jonathan Huneke said. But the council will make the case that no one wins in a tit-for-tat trade war, he said.

Trade War

Larry Kudlow, Trump’s top economic adviser, has said he doesn’t think there will be a trade war as China and the U.S. try to negotiate an agreement that forestalls the tariffs. But Trump has said there could be some short-term “pain.”

“We certainly hope they’re going to negotiate their way out of this, but I wouldn’t put it past either party to go to the mat and impose the tariffs and see what happens next,” Huneke said.

— With assistance by Bill Allison

Apple’s Cook to Trump: Embrace Open Trade — “Countries that embrace openness, that embrace trade, that embrace diversity are the countries that do exceptionally.” — Tim Cook has a good social credit rating

March 24, 2018

Cook also calls for regulations to protect privacy during forum in Beijing

Apple CEO Tim Cook arrives at the China Development Forum in Beijing on Saturday.
Apple CEO Tim Cook arrives at the China Development Forum in Beijing on Saturday. PHOTO: GIULIA MARCHI/BLOOMBERG NEWS

BEIJING—Apple Inc. Chief Executive Tim Cook urged U.S. President Donald Trump to support free-trade policies as a series of tariffs and other actions raise tensions between the U.S. and China.

“Countries that embrace openness, that embrace trade, that embrace diversity are the countries that do exceptionally,” Mr. Cook said during a panel discussion at an economic forum here Saturday, when asked what message he would like to bring home to Mr. Trump. “And the countries that don’t, don’t,” he added, without mentioning the president by name.

Larry Fink, chief executive of investment firm BlackRock Inc., who also attended the China Development Forum, said the U.S. and China shouldn’t fight a trade war. “The world needs a strong China and a strong U.S. The world does not need a public fight in which we reduce mutual opportunities,” he said.

The comments from Messrs. Cook and Fink came after the U.S. this week proposed tariffs on as much as $60 billion of Chinese products and tighter restrictions on acquisitions and technology transfers.

A separate, previously announced round of U.S. tariffs on Chinese steel and aluminum products took effect Friday. The U.S. on Friday also lodged a dispute at the World Trade Organization against China’s technology licensing practices, which the Trump administration says favor Chinese companies.

China responded with plans to impose tariffs on $3 billion of U.S. goods. On Saturday, Chinese Vice Premier Liu He told U.S. Treasury Secretary Steven Mnuchin during a phone call that China is ready to defend its national interests, according to China’s state-run news agency Xinhua.

A Chinese Commerce Ministry spokesman also expressed regret at the U.S.’s case at the WTO and said China protects intellectual property rights.

Lou Jiwei, China’s former finance minister who is now the chairman of the National Council for Social Security Fund, said at the forum that he thought China’s response was too soft.

“It did not hit the spot where it hurts” the U.S., Mr. Lou said, adding that he believed a negotiated settlement was possible.

“The important thing is that he’s a businessman,” Mr. Lou said, referring to Mr. Trump. “We fight a bit, then we could talk it through.”

The three-day China Development Forum, held at Beijing’s Diaoyutai State Guesthouse, gives global business chiefs with big stakes in the Chinese market an opportunity to build relationships with China’s senior officials, and vice versa.

Top executives of other foreign companies including Alphabet Inc.’s Google, Qualcomm Inc.and Daimler AG are also attending the conference. Mr. Cook is this year’s co-chairman.

Like most companies at the conference, Apple depends on smooth bilateral relations between the U.S. and China. The iPhone is a product of U.S. engineering talent and Chinese manufacturing prowess, with each phone carrying the line “Designed by Apple in California Assembled in China.”

China, the world’s biggest smartphone market, is a crucial market for the iPhone.

Members of the U.S. business community are set to meet senior Chinese officials over the next few days to exchange views on trade and business environment.

That is expected to include a meeting next week with China’s new vice president, Wang Qishan, whose tasks includes managing the critical but increasingly fraught relationship with the U.S., people familiar with the matter said.

In a forum at the event, Mr. Cook also called for regulations to protect privacy. “I think this certain situation is so dire and has become so large that probably some well-crafted regulation is necessary,” he said.

How technology firms handle their users’ data has become a pressing issue since Facebook Inc. said a firm with ties to the 2016 Trump campaign improperly kept data for years even though it said it has destroyed those records.

Mr. Cook said that businesses or governments shouldn’t be able to know intimate details of individuals’ lives. “The ability for anyone to know what you’ve been browsing about for years, who your contacts are, who their contacts are, things you like and dislike and every intimate detail of life: from my point of view, it shouldn’t exist,” he said.

Recently, Apple has been criticized by privacy experts over its move to store encryption keys in China for local iCloud users. Some experts said such a move could risk access to user data by Chinese authorities. Apple has said it will store the keys in a secure locationand retain control over them. Mr. Cook didn’t touch on the issue during his speech at the forum.

Write to Yoko Kubota at

Big data meets Big Brother as China moves to rate its citizens

The Chinese government plans to launch its Social Credit System in 2020. The aim? To judge the trustworthiness – or otherwise – of its 1.3 billion residents

Kevin Hong

On June 14, 2014, the State Council of China published an ominous-sounding document called “Planning Outline for the Construction of a Social Credit System”. In the way of Chinese policy documents, it was a lengthy and rather dry affair, but it contained a radical idea. What if there was a national trust score that rated the kind of citizen you were?

Imagine a world where many of your daily activities were constantly monitored and evaluated: what you buy at the shops and online; where you are at any given time; who your friends are and how you interact with them; how many hours you spend watching content or playing video games; and what bills and taxes you pay (or not). It’s not hard to picture, because most of that already happens, thanks to all those data-collecting behemoths like Google, Facebook and Instagram or health-tracking apps such as Fitbit. But now imagine a system where all these behaviours are rated as either positive or negative and distilled into a single number, according to rules set by the government. That would create your Citizen Score and it would tell everyone whether or not you were trustworthy. Plus, your rating would be publicly ranked against that of the entire population and used to determine your eligibility for a mortgage or a job, where your children can go to school – or even just your chances of getting a date.

A futuristic vision of Big Brother out of control? No, it’s already getting underway in China, where the government is developing the Social Credit System (SCS) to rate the trustworthiness of its 1.3 billion citizens. The Chinese government is pitching the system as a desirable way to measure and enhance “trust” nationwide and to build a culture of “sincerity”. As the policy states, “It will forge a public opinion environment where keeping trust is glorious. It will strengthen sincerity in government affairs, commercial sincerity, social sincerity and the construction of judicial credibility.”

Others are less sanguine about its wider purpose. “It is very ambitious in both depth and scope, including scrutinising individual behaviour and what books people are reading. It’s Amazon’s consumer tracking with an Orwellian political twist,” is how Johan Lagerkvist, a Chinese internet specialist at the Swedish Institute of International Affairs, described the social credit system. Rogier Creemers, a post-doctoral scholar specialising in Chinese law and governance at the Van Vollenhoven Institute at Leiden University, who published a comprehensive translation of the plan, compared it to “Yelp reviews with the nanny state watching over your shoulder”.

For now, technically, participating in China’s Citizen Scores is voluntary. But by 2020 it will be mandatory. The behaviour of every single citizen and legal person (which includes every company or other entity)in China will be rated and ranked, whether they like it or not.

Kevin Hong

Prior to its national roll-out in 2020, the Chinesegovernment is taking a watch-and-learn approach. In this marriage between communist oversight and capitalist can-do, the government has given a licence to eight private companies to come up with systems and algorithms for social credit scores. Predictably, data giants currently run two of the best-known projects.

The first is with China Rapid Finance, a partner of the social-network behemoth Tencent and developer of the messaging app WeChat with more than 850 million active users. The other, Sesame Credit, is run by the Ant Financial Services Group (AFSG), an affiliate company of Alibaba. Ant Financial sells insurance products and provides loans to small- to medium-sized businesses. However, the real star of Ant is AliPay, its payments arm that people use not only to buy things online, but also for restaurants, taxis, school fees, cinema tickets and even to transfer money to each other.

Sesame Credit has also teamed up with other data-generating platforms, such as Didi Chuxing, the ride-hailing company that was Uber’s main competitor in China before it acquired the American company’s Chinese operations in 2016, and Baihe, the country’s largest online matchmaking service. It’s not hard to see how that all adds up to gargantuan amounts of big data that Sesame Credit can tap into to assess how people behave and rate them accordingly.

So just how are people rated? Individuals on Sesame Credit are measured by a score ranging between 350 and 950 points. Alibaba does not divulge the “complex algorithm” it uses to calculate the number but they do reveal the five factors taken into account. The first is credit history. For example, does the citizen pay their electricity or phone bill on time? Next is fulfilment capacity, which it defines in its guidelines as “a user’s ability to fulfil his/her contract obligations”. The third factor is personal characteristics, verifying personal information such as someone’s mobile phone number and address. But the fourth category, behaviour and preference, is where it gets interesting.

Under this system, something as innocuous as a person’s shopping habits become a measure of character. Alibaba admits it judges people by the types of products they buy. “Someone who plays video games for ten hours a day, for example, would be considered an idle person,” says Li Yingyun, Sesame’s Technology Director. “Someone who frequently buys diapers would be considered as probably a parent, who on balance is more likely to have a sense of responsibility.” So the system not only investigates behaviour – it shapes it. It “nudges” citizens away from purchases and behaviours the government does not like.

Friends matter, too. The fifth category is interpersonal relationships. What does their choice of online friends and their interactions say about the person being assessed? Sharing what Sesame Credit refers to as “positive energy” online, nice messages about the government or how well the country’s economy is doing, will make your score go up.

Alibaba is adamant that, currently, anything negative posted on social media does not affect scores (we don’t know if this is true or not because the algorithm is secret). But you can see how this might play out when the government’s own citizen score system officially launches in 2020. Even though there is no suggestion yet that any of the eight private companies involved in the ongoing pilot scheme will be ultimately responsible for running the government’s own system, it’s hard to believe that the government will not want to extract the maximum amount of data for its SCS, from the pilots. If that happens, and continues as the new normal under the government’s own SCS it will result in private platforms acting essentially as spy agencies for the government. They may have no choice.

Posting dissenting political opinions or links mentioning Tiananmen Square has never been wise in China, but now it could directly hurt a citizen’s rating. But here’s the real kicker: a person’s own score will also be affected by what their online friends say and do, beyond their own contact with them. If someone they are connected to online posts a negative comment, their own score will also be dragged down.

So why have millions of people already signed up to what amounts to a trial run for a publicly endorsed government surveillance system? There may be darker, unstated reasons – fear of reprisals, for instance, for those who don’t put their hand up – but there is also a lure, in the form of rewards and “special privileges” for those citizens who prove themselves to be “trustworthy” on Sesame Credit.

If their score reaches 600, they can take out a Just Spend loan of up to 5,000 yuan (around £565) to use to shop online, as long as it’s on an Alibaba site. Reach 650 points, they may rent a car without leaving a deposit. They are also entitled to faster check-in at hotels and use of the VIP check-in at Beijing Capital International Airport. Those with more than 666 points can get a cash loan of up to 50,000 yuan (£5,700), obviously from Ant Financial Services. Get above 700 and they can apply for Singapore travel without supporting documents such as an employee letter. And at 750, they get fast-tracked application to a coveted pan-European Schengen visa. “I think the best way to understand the system is as a sort of bastard love child of a loyalty scheme,” says Creemers.

Higher scores have already become a status symbol, with almost 100,000 people bragging about their scores on Weibo (the Chinese equivalent of Twitter) within months of launch. A citizen’s score can even affect their odds of getting a date, or a marriage partner, because the higher their Sesame rating, the more prominent their dating profile is on Baihe.

Sesame Credit already offers tips to help individuals improve their ranking, including warning about the downsides of friending someone who has a low score. This might lead to the rise of score advisers, who will share tips on how to gain points, or reputation consultants willing to offer expert advice on how to strategically improve a ranking or get off the trust-breaking blacklist.

Indeed, the government’s Social Credit System is basically a big data gamified version of the Communist Party’s surveillance methods; the disquieting dang’an. The regime kept a dossier on every individual that tracked political and personal transgressions. A citizen’s dang’an followed them for life, from schools to jobs. People started reporting on friends and even family members, raising suspicion and lowering social trust in China. The same thing will happen with digital dossiers. People will have an incentive to say to their friends and family, “Don’t post that. I don’t want you to hurt your score but I also don’t want you to hurt mine.”

We’re also bound to see the birth of reputation black markets selling under-the-counter ways to boost trustworthiness. In the same way that Facebook Likes and Twitter followers can be bought, individuals will pay to manipulate their score. What about keeping the system secure? Hackers (some even state-backed) could change or steal the digitally stored information.

The new system reflects a cunning paradigm shift.

As we’ve noted, instead of trying to enforce stability or conformity with a big stick and a good dose of top-down fear, the government is attempting to make obedience feel like gaming. It is a method of social control dressed up in some points-reward system. It’s gamified obedience.

In a trendy neighbourhood in downtown Beijing, the BBC news services hit the streets in October 2015 to ask people about their Sesame Credit ratings. Most spoke about the upsides. But then, who would publicly criticise the system? Ding, your score might go down. Alarmingly, few people understood that a bad score could hurt them in the future. Even more concerning was how many people had no idea that they were being rated.

Currently, Sesame Credit does not directly penalise people for being “untrustworthy” – it’s more effective to lock people in with treats for good behaviour. But Hu Tao, Sesame Credit’s chief manager, warns people that the system is designed so that “untrustworthy people can’t rent a car, can’t borrow money or even can’t find a job”. She has even disclosed that Sesame Credit has approached China’s Education Bureau about sharing a list of its students who cheated on national examinations, in order to make them pay into the future for their dishonesty.

Penalties are set to change dramatically when the government system becomes mandatory in 2020. Indeed, on September 25, 2016, the State Council General Office updated its policy entitled “Warning and Punishment Mechanisms for Persons Subject to Enforcement for Trust-Breaking”. The overriding principle is simple: “If trust is broken in one place, restrictions are imposed everywhere,” the policy document states.

For instance, people with low ratings will have slower internet speeds; restricted access to restaurants, nightclubs or golf courses; and the removal of the right to travel freely abroad with, I quote, “restrictive control on consumption within holiday areas or travel businesses”. Scores will influence a person’s rental applications, their ability to get insurance or a loan and even social-security benefits. Citizens with low scores will not be hired by certain employers and will be forbidden from obtaining some jobs, including in the civil service, journalism and legal fields, where of course you must be deemed trustworthy. Low-rating citizens will also be restricted when it comes to enrolling themselves or their children in high-paying private schools. I am not fabricating this list of punishments. It’s the reality Chinese citizens will face. As the government document states, the social credit system will “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step”.

According to Luciano Floridi, a professor of philosophy and ethics of information at the University of Oxford and the director of research at the Oxford Internet Institute, there have been three critical “de-centering shifts” that have altered our view in self-understanding: Copernicus’s model of the Earth orbiting the Sun; Darwin’s theory of natural selection; and Freud’s claim that our daily actions are controlled by the unconscious mind.

Floridi believes we are now entering the fourth shift, as what we do online and offline merge into an onlife. He asserts that, as our society increasingly becomes an infosphere, a mixture of physical and virtual experiences, we are acquiring an onlife personality – different from who we innately are in the “real world” alone. We see this writ large on Facebook, where people present an edited or idealised portrait of their lives. Think about your Uber experiences. Are you just a little bit nicer to the driver because you know you will be rated? But Uber ratings are nothing compared to Peeple, an app launched in March 2016, which is like a Yelp for humans. It allows you to assign ratings and reviews to everyone you know – your spouse, neighbour, boss and even your ex. A profile displays a “Peeple Number”, a score based on all the feedback and recommendations you receive. Worryingly, once your name is in the Peeple system, it’s there for good. You can’t opt out.

Peeple has forbidden certain bad behaviours including mentioning private health conditions, making profanities or being sexist (however you objectively assess that). But there are few rules on how people are graded or standards about transparency.

China’s trust system might be voluntary as yet, but it’s already having consequences. In February 2017, the country’s Supreme People’s Court announced that 6.15 million of its citizens had been banned from taking flights over the past four years for social misdeeds. The ban is being pointed to as a step toward blacklisting in the SCS. “We have signed a memorandum… [with over] 44 government departments in order to limit ‘discredited’ people on multiple levels,” says Meng Xiang, head of the executive department of the Supreme Court. Another 1.65 million blacklisted people cannot take trains.

Where these systems really descend into nightmarish territory is that the trust algorithms used are unfairly reductive. They don’t take into account context. For instance, one person might miss paying a bill or a fine because they were in hospital; another may simply be a freeloader. And therein lies the challenge facing all of us in the digital world, and not just the Chinese. If life-determining algorithms are here to stay, we need to figure out how they can embrace the nuances, inconsistencies and contradictions inherent in human beings and how they can reflect real life.

Kevin Hong

You could see China’s so-called trust plan as Orwell’s 1984 meets Pavlov’s dogs. Act like a good citizen, be rewarded and be made to think you’re having fun. It’s worth remembering, however, that personal scoring systems have been present in the west for decades.

More than 70 years ago, two men called Bill Fair and Earl Isaac invented credit scores. Today, companies use FICO scores to determine many financial decisions, including the interest rate on our mortgage or whether we should be given a loan.

For the majority of Chinese people, they have never had credit scores and so they can’t get credit. “Many people don’t own houses, cars or credit cards in China, so that kind of information isn’t available to measure,” explains Wen Quan, an influential blogger who writes about technology and finance. “The central bank has the financial data from 800 million people, but only 320 million have a traditional credit history.” According to the Chinese Ministry of Commerce, the annual economic loss caused by lack of credit information is more than 600 billion yuan (£68bn).

China’s lack of a national credit system is why the government is adamant that Citizen Scores are long overdue and badly needed to fix what they refer to as a “trust deficit”. In a poorly regulated market, the sale of counterfeit and substandard products is a massive problem. According to the Organization for Economic Co-operation and Development (OECD), 63 per cent of all fake goods, from watches to handbags to baby food, originate from China. “The level of micro corruption is enormous,” Creemers says. “So if this particular scheme results in more effective oversight and accountability, it will likely be warmly welcomed.”

The government also argues that the system is a way to bring in those people left out of traditional credit systems, such as students and low-income households. Professor Wang Shuqin from the Office of Philosophy and Social Science at Capital Normal University in China recently won the bid to help the government develop the system that she refers to as “China’s Social Faithful System”. Without such a mechanism, doing business in China is risky, she stresses, as about half of the signed contracts are not kept. “Given the speed of the digital economy it’s crucial that people can quickly verify each other’s credit worthiness,” she says. “The behaviour of the majority is determined by their world of thoughts. A person who believes in socialist core values is behaving more decently.” She regards the “moral standards” the system assesses, as well as financial data, as a bonus.

Indeed, the State Council’s aim is to raise the “honest mentality and credit levels of the entire society” in order to improve “the overall competitiveness of the country”. Is it possible that the SCS is in fact a more desirably transparent approach to surveillance in a country that has a long history of watching its citizens? “As a Chinese person, knowing that everything I do online is being tracked, would I rather be aware of the details of what is being monitored and use this information to teach myself how to abide by the rules?” says Rasul Majid, a Chinese blogger based in Shanghai who writes about behavioural design and gaming psychology. “Or would I rather live in ignorance and hope/wish/dream that personal privacy still exists and that our ruling bodies respect us enough not to take advantage?” Put simply, Majid thinks the system gives him a tiny bit more control over his data.

Kevin Hong

When I tell westerners about the Social CreditSystem in China, their responses are fervent and visceral. Yet we already rate restaurants, movies, books and even doctors. Facebook, meanwhile, is now capable of identifying you in pictures without seeing your face; it only needs your clothes, hair and body type to tag you in an image with 83 per cent accuracy.

In 2015, the OECD published a study revealing that in the US there are at least 24.9 connected devices per 100 inhabitants. All kinds of companies scrutinise the “big data” emitted from these devices to understand our lives and desires, and to predict our actions in ways that we couldn’t even predict ourselves.

Governments around the world are already in the business of monitoring and rating. In the US, the National Security Agency (NSA) is not the only official digital eye following the movements of its citizens. In 2015, the US Transportation Security Administration proposed the idea of expanding the PreCheck background checks to include social-media records, location data and purchase history. The idea was scrapped after heavy criticism, but that doesn’t mean it’s dead. We already live in a world of predictive algorithms that determine if we are a threat, a risk, a good citizen and even if we are trustworthy. We’re getting closer to the Chinese system – the expansion of credit scoring into life scoring – even if we don’t know we are.

So are we heading for a future where we will all be branded online and data-mined? It’s certainly trending that way. Barring some kind of mass citizen revolt to wrench back privacy, we are entering an age where an individual’s actions will be judged by standards they can’t control and where that judgement can’t be erased. The consequences are not only troubling; they’re permanent. Forget the right to delete or to be forgotten, to be young and foolish.

While it might be too late to stop this new era, we do have choices and rights we can exert now. For one thing, we need to be able rate the raters. In his book The Inevitable, Kevin Kelly describes a future where the watchers and the watched will transparently track each other. “Our central choice now is whether this surveillance is a secret, one-way panopticon – or a mutual, transparent kind of ‘coveillance’ that involves watching the watchers,” he writes.

Our trust should start with individuals within government (or whoever is controlling the system). We need trustworthy mechanisms to make sure ratings and data are used responsibly and with our permission. To trust the system, we need to reduce the unknowns. That means taking steps to reduce the opacity of the algorithms. The argument against mandatory disclosures is that if you know what happens under the hood, the system could become rigged or hacked. But if humans are being reduced to a rating that could significantly impact their lives, there must be transparency in how the scoring works.

In China, certain citizens, such as government officials, will likely be deemed above the system. What will be the public reaction when their unfavourable actions don’t affect their score? We could see a Panama Papers 3.0 for reputation fraud.

It is still too early to know how a culture of constant monitoring plus rating will turn out. What will happen when these systems, charting the social, moral and financial history of an entire population, come into full force? How much further will privacy and freedom of speech (long under siege in China) be eroded? Who will decide which way the system goes? These are questions we all need to consider, and soon. Today China, tomorrow a place near you. The real questions about the future of trust are not technological or economic; they are ethical.

If we are not vigilant, distributed trust could become networked shame. Life will become an endless popularity contest, with us all vying for the highest rating that only a few can attain.

This is an extract from Who Can You Trust? How Technology Brought Us Together and Why It Might Drive Us Apart (Penguin Portfolio) by Rachel Botsman, published on October 4. Since this piece was written, The People’s Bank of China delayed the licences to the eight companies conducting social credit pilots. The government’s plans to launch the Social Credit System in 2020 remain unchanged

Updated 28.11.17: An amendment has been made to clarify a comparison between the Chinese government’s Social Credit System and Communist Party surveillance methods.

China’s premier pledges further market opening as talk of trade war mounts — “foreign and domestic firms allowed to compete on an equal footing”

March 20, 2018

Chinese Premier Li Keqiang speaks at the news conference following the closing session of the National People’s Congress (NPC), at the Great Hall of the People in Beijing, China March 20, 2018. REUTERS/Jason Lee


BEIJING (Reuters) – China will open up its economy further, and its door to the outside will only get wider, with foreign and domestic firms allowed to compete on an equal footing, Premier Li Keqiang said at the close the country’s annual parliament session on Tuesday.

The familiar-sounding pledges from Beijing came as the prospect of a global trade war loomed in the wake of U.S. President Donald Trump imposition of hefty import tariffs on steel and aluminum earlier this month.

By the end of this week, according to sources in Washington, the United States is expected to unveil new tariffs on up to $60 billion worth of Chinese technology and consumer goods annually, fulfilling Trump’s campaign promises to get tough on China and its trade practices.

“I hope both China and the U.S. will act rationally, and not be led by emotions, and avoid a trade war,” Li told reporters in a televised news conference at the Great Hall of the People in central Beijing.

China will improve access to its services and manufacturing sectors while further lowering import tariffs, including those on cancer-related drugs, Li also said at his once-a-year press conference. He did not give more specifics.

“China’s economy has been so integrated with the world’s, that closing China’s door would mean blocking our way for development,” Li said.

“China’s aim is to ensure that both domestic and foreign firms, and companies under all kinds of ownership structure, will be able to compete on fair terms in China’s large market.”

When President Xi Jinping’s top economic adviser Liu visited Washington recently, the Trump administration pressed him to find ways to reduce China’s $375 billion trade surplus with the United States.

“We are unwilling to see a big trade deficit, not only with the U.S.,,” Li said. “We hope trade will be balanced.”

In his remarks, Li said that as China widens access to its markets, there will be no forced transfers of technology, and China will better protect intellectual property rights.

Trump says Beijing has forced U.S. companies to transfer their intellectual property to China as a cost of doing business there, though China has insisted that technology transfers are not a condition of gaining market access.

A source who had direct knowledge of the Trump administration’s thinking told Reuters last week that the tariffs expected to be announced this week would chiefly target information technology, consumer electronics and telecoms and other products benefiting from U.S. intellectual property.

But they could be much broader and hit consumer products such as clothing and footwear, with a list eventually running to 100 products, this source said.

The U.S. currently restricts exports of items for military use to China, which could potentially cover a wide range of dual-use technology products.

The situation is also complicated by the fact that many Chinese firms are active in both civilian and military industries.

“We hope the U.S. could ease restrictions on high-tech or high value-added product exports,” Li said.

“We will strictly protect intellectual property. We hope this important means for balancing China-U.S. trade will not be missed, otherwise we will lose a chance to make money.”

Li said China was confident of achieving its 2018 economic targets. The government aims to expand its economy by around 6.5 percent this year, having easily surpassed the same target in 2017.

China’s financial sector were in good shape and banks have enough provisions, Li said, adding that regulators would take “resolute measures” to tackle financial risks.

The Chinese central bank was being given responsibility for drafting important laws covering banking and insurance sector, with regulation over the $42 trillion sector becoming more streamlined and tighter.

Before the press conference, Li introduced China’s four new vice premiers, though they neither took questions or spoke. Among them was Liu He, widely regarded as China’s new economic tsar.

(Reporting by Kevin Yao; Additional reporting by Lusha Zhang and Elias Glenn; Writing by Ryan Woo and Tony Munroe; Editing by Simon Cameron-Moore)

Donald Trump aligned with blue-collar workers; Hillary Clinton loves the coasts, globalists but ‘flyover country’ — not so much

March 19, 2018

President’s appeal to blue-collar workers comes as his 2016 rival trumpets economic dynamism

President Trump signing his proclamation placing tariffs on steel and aluminum imports at the White House earlier this month.
President Trump signing his proclamation placing tariffs on steel and aluminum imports at the White House earlier this month. PHOTO: LEAH MILLIS/REUTERS

Consider two scenes of recent days, which say much about the jumbled state of the two major American political parties:

In Scene One, President Donald Trump appears in the White House with nine metal workers, some of them carrying their hard hats, to impose stiff tariffs on imported steel and aluminum—tariffs that most mainline Republicans oppose but that he insists would reopen mills and bring back jobs.

In Scene Two, Hillary Clinton appears onstage in India, to discuss her losing 2016 presidential campaign, and declares that she won in “places that are optimistic, diverse, dynamic, moving forward,” while Mr. Trump prevailed “by looking backwards” and carrying “all that red in the middle” of the country.

If you take a step back from those two scenes, you have the Republican who won the presidential election going to bat for the guys in hard hats (and yes, eight of the nine workers in the White House that day were guys), who personify the kinds of blue-collar workers in Rust Belt America who once formed the backbone of the Democratic Party. And you have the Democrat who won the popular vote explaining that her party prevailed not among workers in that Rust Belt but among upwardly mobile voters in “places that represent two-thirds of America’s gross domestic product.”

Taken together, those two scenes portray the two parties somewhere between transition and identity crisis.

Mr. Trump spent much of his first year pursuing policies that pleased traditional Republicans: tax cuts and attacks on Obamacare and what his party calls its intrusions into the health-care marketplace. But now, in year two, when Mr. Trump is increasingly casting aside aides who would have him continue to hew to a fairly conventional version of GOP rule, his effort to redefine what it means to be a Republican is proceeding apace.

Hillary Clinton shortly after her arrival in Jodhpur, India, last week.
Hillary Clinton shortly after her arrival in Jodhpur, India, last week. PHOTO: SUNIL VERMA/ASSOCIATED PRESS

That is true in immigration policy, where decades of Republican odes to the economic virtues of immigration are being cast aside. But it’s especially true on trade, where tariffs on steel and aluminum are to be followed by new penalties on imports from China, and perhaps withdrawal from the North American Free Trade Agreement, a deal championed most notably by a former Republican president, George H.W. Bush. The party’s speaker of the House and its leader in the Senate are opposed to the tariffs, as are the Chamber of Commerce and the Business Roundtable.

Indeed, Mr. Trump has found more support among some Rust Belt Democrats, including Ohio Sen. Sherrod Brown.

For now, Mr. Trump’s GOP is an amalgam of social conservatives willing to look past the president’s own personal history; establishment types who have made their peace with him; and working-class voters who once would have been natural Democrats.

Ultimately, of course, this Trumpian version of the GOP may collapse because of its own internal contradictions: If tax cuts so slice into federal revenue that they force cuts in the Medicare and Medicaid programs so many Trump voters rely upon; if trade wars that prompt China and Mexico to close markets to the crops grown by farmers who supported Mr. Trump; if Trump-supporting workers in industries that use steel are hurt by those new tariffs that raise the prices for the material their plants use every day. Meanwhile, business interests will have to decide whether the tax-cut benefits they love outweigh misgivings about trade policies they fear.

Can the Democrats Ride a Blue Wave to Midterm Election Wins?
The Democrats have a “blue wave” of momentum building for the 2018 midterms, thanks to a motivated base, success in special elections and a low approval rating for President Trump. Will that be enough to take back the House and the Senate?

Democrats, meanwhile, are evolving into a party dominated by higher-educated and upwardly mobile Americans on the coasts and in urban areas; millennials; suburban women; and minority groups and immigrants. That mix of constituencies will push the party toward the kinds of free-trade and immigration policies once espoused more by moderate Republicans than mainline Democrats.

And inevitably that new coalition, and its views on cultural issues such as gun rights, same-sex marriage and the environment, will pull Democrats further away from some of those traditionally Democratic blue-collar voters in middle America. Indeed, one Trump campaign volunteer in Ohio recalls that no issue was more effective in drawing blue-collar voters away from Democrats than climate change, which workers saw more as a threat to their income than a threat to the environment.

Democrats have to ask whether they can devise a message that somehow binds together their middle-American, lunch-bucket constituency with the new, bicoastal core of their party.

Republicans have to ask whether the new, Trumpian version of the party is, as Mrs. Clinton suggested, essentially backward-looking and destined to shrink over time as the economy changes. In that regard, here is a number that should really concern the GOP: In the latest Wall Street Journal/NBC News poll, only 19% of Americans aged 18 to 34 have a positive view of the Republican Party.

Write to Gerald F. Seib at

Protectionism is a ‘dead-end’, embrace free trade: Malcolm Turnbull

March 16, 2018

Image may contain: 1 person, smiling

SYDNEY: Countries must “embrace free trade and not retreat from it”, and they must do so on the basis of “strong and transparent rules, fair and open competition, and non-discriminatory legislation”, said Australian Prime Minister Malcolm Turnbull on Friday (Mar 16).

He was speaking at a conference for small and medium-sized businesses held on the sidelines of the first ASEAN-Australia Special Summit.

“Open markets, together with democracy, have been two of the most powerful forces in human history, and they have led to worldwide growth and prosperity,” said Mr Turnbull, giving the assurance that Australia will continue to work with its closest neighbours in the region.

“You don’t grow stronger by closing the door to other markets. Protectionism is a dead-end. It is not a ladder to get you out of the low-growth trap – it’s a shovel to dig it much deeper,” added Mr Turnbull.

Mr Turnbull could be alluding to US President Donald Trump’s controversial move to impose a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium, which could potentially affect Australia.

He described the free trade agreement inked with ASEAN, Australia and New Zealand (AANZFTA) as a “demonstration to the world of what can be done” by sharing ideas, expertise and new technologies for mutual benefit.

On the note of forging closer ties with ASEAN, Mr Turnbull announced that Australia will be working with the regional grouping to develop digital-trade standards, particularly for SMEs, in this age of technological advancements.

“Nowhere is the potential for digital trade greater than in our region,” said Mr Turnbull, who cited Google estimates of almost 4 million new users from Southeast Asia coming online every month, making it the fastest-growing Internet market in the world.

But he noted that the scale and pace in which things are changing is putting “enormous pressure” on existing regulations.

The ASEAN-Australia Digital Trade Standards joint initiative provides both sides with a consistent framework to develop, adopt and use international standards to promote digital trade, as well as support inclusive economic growth in the region.

“It will show the world yet again what can be achieved when nations work together,” Mr Turnbull added.

Source: CNA/aa

EU’s negotiator says Britain can only get a free-trade deal now — EU is piling pressure on Britain

March 1, 2018

Image may contain: 1 person, suit

Michel Barnier


BRUSSELS (Reuters) – The European Union’s Brexit negotiator said on Thursday that London’s stance on its future ties with the bloc only left a free trade agreement as an option.

Michel Barnier’s speech at a seminar in Brussels comes as the EU is piling pressure on Britain over slow Brexit talks, warning it on citizens’ rights, the Irish border and stressing that a post-Brexit transition period is not a done deal.

“The UK is closing the doors on itself one by one and the only possible model which remains is that of the free trade agreement, as we did recently with Canada, Japan or Korea,” Barnier said.

“It is always possible to choose a more ambitious model and stay in a customs union with the European Union but it would imply a balance of rights and obligations,” he said.

Barnier stressed the EU would not compromise on what it sees as its basic principles – the integrity of its single market and the free movement of goods and people, among others.

He also warned that business would only be sure of any post-Brexit transition once Britain’s EU withdrawal treaty was ratified early next year, in time for the country to leave the bloc in March 2019.

“The future of our union is much more important that the Brexit,” Barnier said.

Additional reporting by Alissa de Carbonnel, Robert-Jan Bartunek and Samantha Koester, Writing by Gabriela Baczynska; Editing by Alison Williams

Trade top of agenda as Chinese economic adviser Liu He ‘seeks coordination’ with US officials

February 28, 2018

Trip comes amid reports White House adviser Peter Navarro, known for being tough on China, could be given more direct influence on US trade policy

By Teddy Ng and Wendy Wu
South China Morning Post

PUBLISHED : Tuesday, 27 February, 2018, 10:03pm
UPDATED : Wednesday, 28 February, 2018, 12:08am

Xi Jinping’s most trusted economic adviser left for the United States on Tuesday seeking more engagement with Washington on trade and macroeconomic policy at a rocky time for relations.

Liu He, director of the Office of the Central Leading Group for Financial and Economic Affairs, will meet US officials in Washington during the visit that finishes on Saturday.

The trip signals that Liu will be a key official handling economic relations between China and the US following a reshuffle during Beijing’s annual legislative session starting next week. Liu is also widely seen as the most likely candidate to take over as central bank governor when incumbent Zhou Xiaochuan retires.

It comes after the ruling Communist Party on Sunday announced controversial proposed changes to the constitution removing term limits on the president and vice-president.

But diplomatic observers said trade and economic issues would be at the top of Liu’s agenda, especially with the prospect of Peter Navarro being given more direct influence over US trade policy.

The White House trade adviser, who is known for being tough on China, was sidelined last year after he reportedly clashed with US President Donald Trump’s more moderate advisers. But US media have reported this week that Trump aides are now considering promoting Navarro to assistant to the US president on trade policy – a sign that Washington could be about to put its rhetoric against China into action.

A Beijing-based source familiar with Sino-US trade talks said giving Navarro more say on trade policy could worsen relations between the two countries.

“We have now reached the stage where we have to be frank and open in our talks, and make clear what China’s bottom line is,” the source said. “We have not been clear about this in previous talks, and we were also not clear about how should handle trade with the US.”

Trade tensions between the two sides have been building, with Trump labelling China as a major strategic rival, along with Russia, in December. This month, the US Commerce Department recommended a tariff of at least 24 per cent be imposed on all steel products from China. The Trump administration is also mulling over actions to punish alleged Chinese intellectual property theft.

Beijing has meanwhile vowed to take all necessary measures to protect its interests. But on Monday, it said it removed anti-dumping and anti-subsidy duties on US white-feathered broiler chickens after a World Trade Organisation ruling last month that pushed Beijing to lower the tariffs.

 The US Commerce Department has recommended imposing a tariff of at least 24 per cent on all steel products from China. Photo: Reuters

Shen Jianguang, Mizuho Securities chief China economist, said China and the US were facing a serious challenge and talks were urgently needed to avoid misunderstandings.

As well as trade, China is also concerned about recent turbulence on the US stock market and the impact of US monetary policy on its financial market, according to observers.

“Liu will not only talk about trade, but also long-term Sino-US cooperation. The two sides will seek coordination on macroeconomic policy as there are uncertainties about a possible US interest rate rise and the stability of the US dollar,” the source said.

John Frisbie, president of the US China Business Council, said Liu’s trip was a positive move by Beijing to seek engagement with the Trump administration.

“We hope he brings substantive commitments on policy changes he referred to in his recent Davos speech,” Frisbie said.

Liu, 66, a Harvard-educated technocrat, told the World Economic Forum in Davos in January that China’s economic transformation could create huge potential for foreign companies.