Posts Tagged ‘South Korea’

Taiwanese academic: US likely to withdrawal from Taiwan’s immediate surroundings to placate China

July 17, 2018

US will withdraw from Taiwan’s immediate surroundings, accommodate China according to Kung Chia-cheng

Donald Trump waving, July 15. (By Associated Press)

TAIPEI (Taiwan News) – Former head of the National Chung-Shan Institute of Science and Technology (國家中山科學研究院), Kung Chia-cheng (龔家政) said that the U.S. will withdraw from the first island chain and Taiwan should begin to plan for a new strategic context at a conference in Taipei on July 15.

Kung said that the U.S.’s pull-back from Taiwan’s immediate surroundings would weaken its strategic positioning and diminish Taiwan’s international importance during the “New Cross-strait Relationship” conference put on by the Democratic Pacific Union (民主太平洋聯盟) in Taipei.

The “first island chain” is a strategic demarcation from Japan’s southern tip, moving southward between Taiwan’s east coast and the Philippines’s west coast, and follows the southern boundary of the South China Sea around to Vietnam.


First and Second island chains. (image courtesy of U.S. Department of Defense)

The first island chain is followed by two more island chains which are progressively further east to Taiwan. The island chain concept is used by the Chinese military and U.S. military, as well as other regional actors.

Kung said that the decision by the U.S. to suspend its joint military exercises with South Korea, represents the U.S.’s military withdrawal from the first island chain to the second island chain, reported the China Times.

South Korea and the U.S. agreed to postpone scheduled war games for August 2018, as a sign of goodwill towards North Korea as talks about denuclearization of the Korean peninsula continue. It is unclear if a one-off postponement of military training equates to wholesale forfeiture of the U.S.’s strategic foothold in east Asia.

Kung speculates that China President Xi Jinping (習近平) believes the Pacific Ocean is big enough for both China and the U.S. and America will withdraw its presence from the first island chain as a sign of goodwill and to avoid conflict.

Since President Obama’s “pivot to Asia” speech in Canberra, Australia on 17 November 2011, the U.S. military has been fully committed to maintaining its current strategic footprint in the region through their public communication.

Kung said that the recent passage by two U.S. warships through the Taiwan Strait was not as meaningful as in previous times. For Kung, the move was to pacify U.S. Congress, rather than signal to China and the broader region of the U.S.’s intent to continue its presence in the Asia Pacific.

Pacific Fleet spokesman Captain Charlie Brown said the passage was routine. “U.S. Navy Ships transit between the South China Sea and the East China Sea via the Taiwan Strait,” he said, “and have done so for many years” to CNN.

Due to China’s growing military strength, Kung believes that Taiwan cannot rely on a security blanket provided by U.S. aircraft carriers, as it had done so during the 1996 Taiwan Strait Crisis.

Kung said that the next steps depend on two factors. First, the political situation in Taiwan and potential moves towards Taiwan independence, of which China views as a precursor to remove diplomatic resolutions. Second, how the U.S. government’s Taiwan Travel Act and the 2019 National Defense Authorization Act (NDAA) is interpreted by China and its so-called “one China” principle.

https://www.taiwannews.com.tw/en/news/3483429

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South Korea’s Moon urges North, United States to move forward on ending nuclear program

July 13, 2018

South Korean President Moon Jae-in on Friday urged North Korea and the United States to move forward on a pact to end Pyongyang’s nuclear program, as a lack of firm steps by the North raised questions about its commitment to its pledge.

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South Korean President Moon Jae-in at a joint press conference with India’s Prime Minister Narendra Modi (not pictured) after holding summit talks at Hyderabad House in New Delhi, India, on July 10, 2018.PHOTO: EPA-EFE

“If Chairman Kim (Jong Un) keeps the promise of denuclearization, he will be able to lead his country into prosperity,” Moon said in a speech during a visit to Singapore.

“This path is never easy, but if the agreements at the summit are implemented with sincerity, the goal can be achieved,” he added, referring to Kim’s historic meeting with U.S. President Donald Trump in the city state a month ago.

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South Korea’s President Moon Jae-in reviews a Singapore Guard of Honor, July 12, 2018.

“If North Korea gives more substance on the implementation of denuclearization, and if South Korea and the United States quickly take comprehensive corresponding measures, the whole process will accelerate.”

At the summit, the two leaders pledged to work towards complete denuclearization of the Korean peninsula and ease tension between their countries, still technically at war, since the 1950-53 Korean War ended in a truce, not a peace treaty.

Since the June 12 meeting, however, Pyongyang has yet to show any sign of concrete action to dismantle its nuclear program that has brought a series of U.N. and international sanctions against the impoverished state.

But Trump on Thursday hailed “great progress” after disclosing a July 6 note from Kim in which the North’s leader said their efforts could open up a “new future” for the two countries.

Moon said he believed Trump and Kim would eventually make good on the promise made before the international community.

“If the leaders do not honor the promise they themselves made with the international community watching, they will be subject to grave judgment,” he said.

South Korea is willing to build an economic community with its neighbor once the effort to root out Pyongyang’s nuclear ambitions is completed, Moon said.

Reporting by Jack Kim; Writing by Aradhana Aravindan; Editing by Clarence Fernandez

Reuters

See also:

Singapore can help with efforts to denuclearise Korea: South Korean President Moon Jae-in

https://www.straitstimes.com/asia/east-asia/singapore-can-help-with-efforts-to-denuclearise-korea-south-korean-president-moon-jae

China switches strategy to deal with Trump tariffs — China wooing support from other nations

July 12, 2018

Beijing rips up its playbook by wooing support from other nations

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© Bloomberg

By Lucy Hornby in Beijing


China is taking an unusual approach with its response to the escalating trade battle with the US, ripping up the playbook it has relied on in other economic disputes as it seeks allies in Europe, Asia and within America itself.

Previous trade fights with Japan, France, the Philippines and most recently South Korea have been accompanied by a ramping up of hostility in China’s state-run media and bruising “boycott diplomacy” against those nations’ corporations.

This time, however, China has cautiously parried the US measures as it seeks instead to present itself as an attractive investment destination, while President Donald Trump’s administration pressed ahead with tariffs on $34bn in goods. The US this week released a fresh list of $200bn in goods that could face tariffs in two months’ time.

China’s calm response stems from the importance of its bilateral trade and investment from the US — the two countries’ economies are entwined. “The US is larger-scale, and a different kind of economic power than Japan or Korea. That makes this quite unique,” said Max Zenglein, senior economist at the Merics Institute in Berlin. China’s trade surplus with the US limits its ability to impose tit-for-tat tariffs, he noted.

“When dealing with the US it is clear they [China] are more vulnerable and so that forces them to take a different approach.”

With this in mind, Chinese trade negotiators, led by Liu He, have focused on finding potential allies, including pro-business officials in Washington, who they hope can be won over with investment concessions.

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Liu He

Instead of targeting American companies directly — as it did with Korean supermarket chain Lotte — Beijing has offered better market access to their competitors. Chinese officials are pushing European and Japanese corporations to take advantage of a raft of long-promised reforms rolled out earlier this year, in a reminder to US companies that Beijing can divvy up the vast Chinese market as it pleases.

An offer of $15m in aid to the Palestinians was made at a recent summit in an attempt to woo Arab leaders. Even relations with Japan and South Korea have improved. Beijing has refused to link the trade dispute with Mr Trump’s nuclear negotiations with North Korean leader Kim Jong Un.

“The challenge the Chinese are going to have is there is not much more room to respond in terms of tariffs,” said Kellie Meiman, trade expert at McLarty Associates in Washington.

Beijing does not want to scare off foreign investors or run the risk of reducing much-needed investment and loans. In the wake of the attacks on Japanese companies in 2012 and on South Korean companies last year, both nations adopted a strategy of deliberately diversifying their manufacturing bases away from China.

Even the dollar-for-dollar retaliatory tariffs China has levied carry some risk for Beijing, as they could have the effect of fuelling Chinese inflation.

“On the surface, China is trying to strike a blow at the US; in fact, the final result will be a blow to China. The three things we chose [to impose tariffs on], soyabeans, aeroplanes and chips, are the products we need the most,” said Shen Dingli, an international relations expert at Fudan University in Shanghai.

In public, Beijing has downplayed the potential impact of the tariffs. Trade war news has been relegated to the inside pages of the official People’s Daily for several days running. The reliably nationalistic Global Times has kept a restrained tone.

“We will hold public opinion at a good level without escalating it . . . and strike accurately and carefully, splitting apart different domestic groups in the US,” read a leaked memo giving instructions to the Chinese media on how to cover the trade tensions. It was published by the China Digital Times, a website that monitors propaganda orders and the Chinese media.

The intent may be to reassure the public that China can face down the threat. But it also reflects the broad exposure of the Chinese public to American culture and social values, that makes it much harder to mount a full-throated attack. At least 2m Chinese have studied in the US over the past 12 years alone. Millions more have emigrated or work for American companies and joint ventures in China. Strong Chinese nationalism is always a dangerous tool for the ruling Communist party to whip up.

“The US really has a big impact on China. The impact is 10 times bigger than that of Korea. The US influences Chinese ideology, China’s economy and it also affects lots of people’s personal interests. So lots of Chinese would not like to speak out” against the US, said Sima Pingbang, a blogger known for his leftist and nationalist views.

Indeed, Chinese “netizens” even cheered for a ship carrying soyabeans from the US, as it raced to get to a Chinese port before the tariffs kicked in.

Some Chinese officials, confident in Beijing’s strength, are impatient to strike a harder blow. For now, however, sang-froid has prevailed as the trade war is portrayed as an economic issue, not a political fight or an emotional national threat.

Additional reporting by Archie Zhang and Sherry Fei Ju in Beijing

https://www.ft.com/content/1e532c56-8501-11e8-96dd-fa565ec55929

 

North Korea: US, allies back sanctions until ‘complete denuclearization’

July 8, 2018

Top diplomats of Japan, South Korea and the US have agreed to strengthen ties and force Pyongyang to end its nuclear program. US Secretary of State Mike Pompeo said that North Korea sanctions will not be lifted yet.

    
A placard on the streets of Wonsan, North Korea

US Secretary of State Mike Pompeo, Japanese Foreign Minister Taro Kono and his South Korean counterpart Kang Kyung-wha on Sunday urged North Korea to take concrete steps toward complete denuclearization. The allied countries agreed to keep UN-backed economic sanctions on Pyongyang until it completely dismantles its nuclear program.

“We were able to reaffirm our unwavering commitment to the continued strengthening of our trilateral cooperation towards the common goal of North Korea’s complete, verifiable and irreversible dismantlement of all nuclear weapons and missiles,” Kono told a joint news conference in Tokyo.

Read more: Is North Korea defying the US in expanding weapons production?

The talks come a day after Pompeo’s Pyongyang visit, which he dubbed successful. But on Saturday, North Korean officials rejected US demands for denuclearization, calling them “unilateral.”

North Korea also slammed Washington’s “gangster-like” attitude.

“The US is fatally mistaken if it went to the extent of regarding that the DPRK (North Korea’s official name) would be compelled to accept, out of its patience, demands reflecting its gangster-like mindset,” according to a statement relayed by the state-run KCNA news agency.

Mike Pompeo, Taro Kono and Kang Kyung-whaMike Pompeo, Taro Kono and Kang Kyung-wha said they remain committed to the sanctions regime

A diplomatic failure?

A landmark meeting between US President Donald Trump and North Korean leader Kim Jong Un on June 12 in Singapore had raised hopes for peace on the Korean peninsula and improved US-North Korea ties.

But there hasn’t been much progress on the commitments made during the Singapore summit.

On Saturday, Pompeo said he received new denuclearization commitments from the Kim regime during his two-day stay in North Korea.

But North Korea’s official response after Pompeo’s departure from Pyongyang was in contrast to the secretary of state’s optimistic statement.

“I know actually what precisely took place. When we spoke to them about the scope of denuclearization, they (North Koreans) did not push back,” Pompeo told media in Tokyo on Sunday.

Despite diplomatic efforts, the Trump administration would continue enforcing sanctions until North Korea carried out “fully verified final denuclearization,” said Pompeo.

“There will be a verification connected to the complete denuclearization. It’s what President Trump and Chairman Kim both agreed to,” he added.

Read more: Under pressure from US, Japan’s Shinzo Abe ‘cancels Iran trip’

 

A North Korean woman balances a pail on her headInternational sanctions against North Korea have crippled its economy

shs/ls (dpa, Reuters, AFP)

https://www.dw.com/en/north-korea-us-allies-back-sanctions-until-complete-denuclearization/a-44574569

India Denies Visas to Pakistanis for Academic Conference, Igniting Discussions

July 7, 2018

NEW DELHI: In protest against the decision of Ministry of External Affairs to deny visas to Pakistani academics for attending a seminar in New Delhi, nearly 80 scholars from several universities such as Yale, Harvard and Princeton have mooted a resolution to not hold conferences in such countries any more, The Indian Express has reported.

India had banned the scholars from attending the conference organised by the Association for Asian Studies and Ashoka University in New Delhi. The Association for Asian Studies, since 2014, has been holding an annual conference called AAS in Asia. The previous conferences were held in Singapore, Japan, South Korea and Taiwan, while this year’s event is scheduled to be held from July 5 to 8 at the India Habitat Centre in New Delhi.

Image result for Ashoka University , New Delhi, photos

About 80 scholars attended a protest meeting, which raised enough funds to rent a hall at the conference’s venue in New Delhi so that the banned academics could join them digitally.

“As a scholar of Pakistani origin working on Pakistan, I received the AAS’ reply to the Indian government’s restrictions on Pakistani scholars [including those who are dual nationals but originally from Pakistan] with deep concern and disappointment,” a statement by Salman Hussain from The Graduate Centre, CUNY, read. Hussain is one of the academics who was not allowed to travel to India.

“I am dismayed with the AAS’ tepid response to the blanket ban — based on the association’s presumption that this reaction was expected of the Indian government given the tense relations between the two countries,” Hussain added.

The academics, at the meeting, mooted four resolutions. One of them was to demand that all future conferences by the Association of Asian Studies should be in countries that “do not have official or unofficial policies” to exclude people based on their nationality. Another resolution urged the Indian government to reconsider its ban on the scholars.

Independent researcher Sinjini Mukherjee, one of the organisers of the protest meeting, said there has been no final decision yet.

In a letter to Ashoka University dated February 19, the Ministry of External Affairs had reportedly told the organisers explicitly not to include Pakistani scholars at the event.

“The ministry has no objection from the political angle for the proposed event with foreign participants [except participants from Pakistan], as stated in your aforesaid communication, subject to the clearance of Ministry of Home Affairs as applicable and nodal ministry,” the letter read.

Several academics have criticised the Association for Asian Studies for failing to inform the participants about the ban.

Published in Dawn, July 7th, 2018

For more live updates, follow Dawn.com’s official news Instagram account@dawn.today

https://www.dawn.com/news/1418459

 

Europeans leaders worry Trump wants to fulfill promise to bring American troops home

July 6, 2018

After 18 months of Donald Trump’s “America First” presidency, European leaders meeting with him next week fear the United States may change its traditional course and begin to bring American troops home from the continent.

It comes as nations, especially in Eastern Europe, are lobbying the United States to increase the number of troops on the continent as they worry about combating an increasingly aggressive Russia.

Trump has talked about bringing U.S. troops home from around the globe since he was on the campaign trail espousing a strategy he dubbed “America First” but he has yet to act.

“They are scared to death,” former Defense Secretary Leon Panetta told McClatchy. “They are worried about a very unpredictable president of the United States. They are increasingly worried he is going to do things not based on what’s in the best interest..but based solely on his vision of ‘America First.’ “

The Pentagon is already reviewing the impact of withdrawing some of the 35,000 active-duty American troops in Germany, the Washington Post reported last month.

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German Chancellor Angela Merkel speaks with President Donald Trump during the Group of 7 summit meeting in La Malbaie, Quebec, Canada, June 9, 2018. The photo quickly went viral after it was shared on Merkel’s Instagram account. Jesco Denzel German Federal Government via The New York Times

The fate of American troops in Europe are not expected to be on the agenda of the Brussels meeting of NATO — the alliance formed after World War II to counter a Soviet, now Russian, threat — but will loom large, as it comes just before Trump’s meeting with Russian President Vladimir Putin in Helsinki, Finland.

Some worry an unpredictable Trump, at the U.S.-Russia summit, could agree to take the first steps to embolden Russia, such as halting military exercises or agreeing that Crimea, a region of Ukraine annexed by Russia in 2014, belongs to Russia.

Magnus Nordenman, who worked as a defense analyst and a strategic planning consultant for major European defense industry companies, said European allies are “absolutely worried” after hearing Trump disparage allies of the G-7, as well as NATO members’ contributions and seeing him eager to meet Putin as well as North Korean dictator Kim Jong-un.

“There is element of uncertainty in all this,” said Nordenman, now the director of the Transatlantic Security Initiative at the Scowcroft Center for Strategy and Security at the Atlantic Council. “But we all need to take a bit of a breath here…and hope the president is in a good mood when he goes to Brussels.”

A senior administration official with knowledge of the situation but not authorized to speak publicly did not initially answer the question about possible troop withdrawals on a conference call with reporters. But when asked a second time, the official said Trump is not expected to threaten troop withdrawals in Germany or elsewhere.

Congress is likely to oppose troop withdrawals and could pass legislation to prevent Trump from using money to move the military.

Trump has criticized international alliances and organizations, even the United Nations, and European allies fear he is less committed to their security and NATO as previous U.S. presidents. Last month, he abruptly refused to sign a joint statement with the G-7, the world’s largest economies following a meeting in Canada.

“At a time when the transatlantic relationship between Europe and the U.S. is under a lot of pressure over disagreements on Iran and trade, NATO is really at the core of this relationship and will Trump — by basically criticizing the Europeans and conditioning American support — bring more disunity within the alliance,” said Erik Brattberg, director of the Carnegie Endowment’s Europe program who is in touch with a few diplomats who are concerned about Trump’s possible reduction of troops. “It would weaken the alliance and provide new opportunities for countries like Russia to take advantage of that.”

A third of active-duty U.S. military troops overseas — more than 60,000 — are stationed in Europe, including 35,000 in Germany, 12,000 in Italy, 8,500 in the United Kingdom and 3,300 in Spain, according to a Pew Research Center analysis of information from the Defense Manpower Data Center, a statistical arm of the Defense Department. Thousands more rotate into other European countries temporarily.

Many U.S. troops are there to do more than protect those countries. They are strategically located to help in other regions of the world, such as counter Iran or strike the Islamic State.

The Trump administration has been supportive of NATO and European countries at a tactical level — actions generally credited to Defense Secretary Jim Mattis. It has sent more military equipment, participated in regional exercises, signed new defense agreements with Sweden and Finland and increased the number of Marines in Norway on a rotational basis by 350 and in Poland by a battalion.

Poland, Romania and the Baltic nations of Estonia, Latvia, and Lithuania have been asking the U.S. for additional troops for several years. Poland is willing to spend up to $2 billion to lobby the U.S. to build a permanent military base there, according to a Defense Ministry proposal.

Still, Trump has repeatedly threatened to punish countries if they don’t spend enough on defense, even suggesting the U.S. may not protect them if they don’t pay their fair share. That’s in direct contradiction of NATO’s pledge that an attack against one member is considered an attack against all of them.

“That’s the question: Is the U.S. security conditional?” asked Heather Conley, who served as a deputy assistant secretary of state in the Bureau for European and Eurasian Affairs for Bush and is now a senior vice president at the Center for Strategic & International Studies.

In June, he sent letters to several allies complaining they are not abiding by a 2014 commitment to spend 2 percent of their gross domestic product on national defense. Kay Bailey Hutchison, U.S. ambassador to NATO, said this week that all 29 NATO members are increasing defense spending with 16 of them on track to meet the 2 percent goal.

Daniel DePetris, a military expert as at Defense Priorities, a D.C.-based foreign policy organization focused on a strong military and restrained foreign policy that is in periodic conversations with the Trump administration, said the countries either don’t believe Russia is a real threat to them or that the U.S. will protect them.

“Either they have to step up and do what’s rational based on their economic power or it is appropriate for us to reduce our contingent over there,” he said.

The White House declined to say if and how Trump might punish the countries. “I’m not going to get ahead of any announcement or any action he could potentially take, but as you guys know, he’s shown some frustration there on the financial burden that the United States unfairly is forced to bear, and he wants changes,” White House spokesman Hogan Gidley told reporters this week.

In recent weeks, Trump suggested withdrawing more than 25,000 U.S. troops stationed in South Korea after trying to persuade Kim to rid his country of nuclear weapons.

Pentagon leaders canceled military exercises there at Trump’s direction but they quickly reaffirmed the United State’s ‘ironclad commitment’ to defend South Korea.

https://www.mcclatchydc.com/news/politics-government/white-house/article214324579.html

***

Beware the Wrath of the Chinese Consumer

July 6, 2018

US tariffs on China kick in and China has retaliated….

Or risk a chorus of complaints from boycott-battered U.S. companies.

Remember what happened to South Korea?Photographer: Nikada/Getty Images

There’s a dog that hasn’t barked in the current round of trade tensions between the U.S. and China: Despite the first direct tariffs coming into force Friday, the Chinese consumer has been on her best behavior.

That’s somewhat unusual if you consider Beijing’s most recent diplomatic spats with its trading partners.

A Chinese demonstrator swings an iron bar to smash goods at a Japanese-funded shopping center during a protest in Qingdao, Shandong province, on September 15, 2012. Reuters photo

When relations with South Korea deteriorated last year over Seoul’s decision to deploy a missile shield, Chinese civil society went straight for the jugular.

Yang Bingyang, a former model who’s known online as Ayawawa, encouraged her 2.7 million Weibo followers to boycott Korean products. “Every penny we spend is a vote on our future world!” the state-owned Global Times quoted her as saying. Hyundai Motor Co.’s market share in China was cut almost in half within a month. Lotte Shopping Co.’s local sales tumbled 84 percent from the March to June quarters of 2017 after local authorities shut stores alleging fire safety violations, and the chain is now pulling out of China altogether.

It was a similar story in 2012, during one of the periodic flare-ups over islands in the East China Sea claimed by both Japan and China. Nationalist crowds ransacked a Toyota Motor Corp. dealership and set a Panasonic Corp. factory ablaze.

Carts are piled up in a damaged area of a Japanese JUSCO department store after a group of Chinese protesters ransacked it, in Qingdao, northeast China’s Shandong province, on September 15, 2012. STR/AFP/Getty Images

.

To date, there’s been little sign of that sort of thing in this dispute. Despite claims of reduced buying of U.S. soybeans and disruptive import checks on fruit and pork in recent months, the dreaded non-tariff barriers have been confined to regulatory measures, rather than consumer boycotts.

That’s particularly surprising given consumer goods could be Washington’s Achilles’ heel.

China in December overtook the U.S. as the world’s biggest retail market. It’s the largest market by volume for General Motors Co. and the second biggest for Starbucks Corp., which expects sales in the country to overtake those from North America within a decade. Apple Inc. has some $45 billion of revenue there, while Las Vegas Sands Corp. and Wynn Resorts Ltd. would collapse without the dollars flowing from their Macau casinos.

How to account for the relative silence? One explanation is that we’re simply too early in this dispute for the big guns to be brought out.

The expected tit-for-tat response to the $34 billion of U.S. tariffs Friday is an indication China’s government is still happy with the conventional trade weapons in its armory, and wary of reaching for anything more powerful.

There might be more to it, though. China has been careful to pose as the good guy in this fight. The spectacle of Beijing unleashing nationalist boycotts on Procter & Gamble Co., Coca-Cola Co. and Apple would make that facade harder to maintain, and give ammunition to the U.S. argument that China’s economy is ultimately a tool of the Party.

The lack of consumer boycotts is “a bit unusual, but consistent with the Chinese rhetoric that China would be a defender of the global trading order,” Victor Shih, an associate professor and expert on China at the University of California, San Diego, said. “The reality is that the status quo allows China to protect many of its industries, so China wants to maintain the status quo.”

Don’t count on that forbearance continuing if tensions escalate. In all, Chinese subsidiaries of U.S. companies had about $223 billion in revenue in 2015, according to Deutsche Bank AG. Reduce those sales by just 20 percent – a rather modest target, given what consumer boycotts did to Korean firms last year – and you’ve already done $45 billion in damage, more than equivalent to the 10 percent tariff the U.S. is threatening to levy on a further $400 billion of imports if Beijing doesn’t back down.

That’s reason enough for Washington to reduce the temperature of this fight before a chorus of complaints from boycott-battered U.S. companies force it to do so. The Chinese people – reading from a script, to be sure – haven’t spoken yet. Smile at them, pay them, pass them, but do not quite forget.

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

To contact the author of this story:
David Fickling at dfickling@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net

https://www.bloomberg.com/view/articles/2018-07-06/beware-the-wrath-of-the-chinese-consumer

US Trade War with China Begins: “Trump administration is behaving like a gang of hoodlums”

July 6, 2018

U.S. tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday, and with Beijing having vowed to respond immediately in kind, the world’s two biggest economies took a high-stakes turn towards all-out trade conflict.

China’s commerce ministry said in a statement shortly after the deadline passed that it was forced to retaliate, meaning $34 billion worth of imported U.S. goods including autos and agricultural products also faced 25 percent tariffs.

© Justin Sullivan, Getty Images, AFP | A shipping container is offloaded from the Hong Kong based CSCL East China Sea container ship at the Port of Oakland in California on June 20, 2018.

China promised to not fire the first shot, but to defend national core interests and the interests of the people it has no choice but to strike back as necessary,” the Commerce Ministry said in a statement.

The ministry called the U.S. actions “a violation of world trade rules” and said that it had “initiated the largest-scale trade war in economic history.”

On Thursday, U.S. President Donald Trump warned that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China last year.

Chinese shares, which have been battered in the run-up to the tariff deadline, were down in choppy trade but recovered from earlier lows, while the yuan currency also weakened. Asian equities wobbled amid nervous trading.

“We can probably say that the trade war has officially started,” said Chen Feixiang, professor of applied economics at Shanghai Jiaotong University’s Antai Colege of Economics and Management.

“If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said then it’s going to have a big impact for both countries,” Chen said.

‘Gang of hoodlums’

Trump has railed against Beijing for intellectual property theft and barriers to entry for U.S. businesses and a $375 billion U.S. trade deficit with China.

Throughout the escalating conflict, China has sought to take the high road, positioning itself as a champion of free trade, but state media ramped-up criticism of Trump on Friday.

“In effect, the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China,” the state-run China Daily newspaper said in an English language editorial on Friday.

“Its unruliness looks set to have a profoundly damaging impact on the global economic landscape in the coming decades, unless countries stand together to oppose it.”

While the initial volley of tariffs was not expected to have major immediate economic impact, the fear is that a prolonged battle would disrupt makers and importers of affected goods in a blow to global trade, investment and growth.

“For companies with supply exposure to tariffs, they will move sourcing country of origin if they can; if they can’t, they’ll pass on as much of the tariff cost as they can, or see a cut in margins,” said Jacob Parker, vice president of China operations at the U.S.-China Business Council in Beijing.

“Companies don’t know how big this may get, or how it will end.”

On Thursday, Ford Motor Co said that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China.

A China central bank adviser said the planned U.S. import tariffs on $50 billion worth of Chinese goods– $34 billion plus a planned follow-on list worth $16 billion – will cut China’s economic growth by 0.2 percentage points, although the overall impact would be limited, the official Xinhua news agency reported Friday.

The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks. U.S. stocks edged higher on Thursday, however, amid hopes that American trade tensions with Europe may ease after comments from German Chancellor Angela Merkel.

“This is not economic Armageddon. We will not have to hunt our food with pointy sticks. But it is applying the brakes to a global economy that has less durable momentum than appears to be the case,” Rob Carnell, chief economist at ING, said in a note to clients.

Valves and disk drives

U.S. Customs and Border Protection officials were due to collect 25 percent duties on a range of products including motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.

The list avoids direct tariffs on consumer goods such as cellphones and footwear. But some products, including thermostats, are lumped into intermediate and capital goods categories.

Chinese Commerce Ministry spokesman Gao Feng said on Thursday that the proposed U.S. tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work.

Foreign companies accounted for $20 billion, or 59 percent, of the $34 billion of exports from China that would be subject to new U.S. tariffs, with U.S. firms accounting for a significant part of that 59 percent, Gao said.

China’s tariffs on hundreds of U.S. goods include top exports such as soybeans, sorghum and cotton, threatening U.S.  farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.

(REUTERS)

Trump’s Trade War Against China Is Officially Underway

July 6, 2018

Trump launches the opening salvo in US trade war with China as tariffs take effect

  • Geoff Raby, Australia’s former ambassador to China, told CNBC on Friday: “It looks like the first shots to the trade war are about to be fired.”
  • U.S. President Donald Trump said on Thursday that tariffs on $34 billion worth of Chinese goods will kick in at 12:01 a.m. EST on Friday morning. China said that its tariffs on U.S. goods would take effect immediately after the U.S. duties kick in.
  • “We’ll probably see escalation upon escalation. China has made it absolutely clear,” Raby said.

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Getty Images
If this trade fight escalates, China could fire back by selling a large chunk of the $1.17 trillion of U.S. treasury bonds it holds.

The U.S. tariffs on $34 billion worth of Chinese goods kicked in on Friday, taking the war of words between the nations into the real economic realm.

China implemented retaliatory tariffs on some imports from the U.S., state media reported about two hours later, after new U.S. duties had taken effect.

It’s unlikely to stop there, according to experts. In fact, there will be probably be “escalation upon escalation,” warned Geoff Raby, Australia’s former ambassador to China.

Ahead of the Friday implementation of American and Chinese tariffs, Raby told CNBC that “it looks like the first shots to the trade war are about to be fired.”

China, for its part, was already calling the tariff threats between Beijing and Washington a “trade war” in June.

“I thought that by now a negotiated solution would have been found,” he told CNBC’s Martin Soong, adding that it seems the U.S. has “walked away” from any potential deal.

U.S. President Donald Trump said on Thursday that tariffs on $34 billion worth of Chinese goods will kick in at 12:01 a.m. EST on Friday morning. Another $16 billion are expected to go into effect in two weeks, he said. He told reporters he would also consider imposing additional tariffs on $500 billion in Chinese goods, should Beijing retaliate against the already-scheduled actions.

China has said it will not “fire the first shot,” but its customs agency made clear on Thursday that Chinese tariffs on U.S. goods would take effect just after U.S. duties on Chinese goods kick in.

Raby, who was also his country’s former ambassador to the World Trade Organization, said that Trump seemed to be driven by “very short-term political considerations” ahead of U.S. mid-term elections in November.

“He’s escalated the dispute, the mid-terms are coming up, he’s polling well, and tough rhetoric coming out of the White House seems to be playing well with his base.”

He called it a “big risk” for the world trading system that its key player — the United States — is driven by such considerations.

“We’ll probably see escalation upon escalation. China has made it absolutely clear,” Raby concluded.

“It cannot show weakness in the face of the United States … they have to respond. So I think this comes to some sort of end once there’s been a lot of damage done and people start to come to their senses.”

‘The reckoning is in the pipeline’

The direct impact of trade tensions on China’s economic growth in 2018 is expected to be limited at between 0.1 to 0.3 percentage points, according to economist estimates.

Liang Hong, chief economist at CICC, told CNBC on Friday that China’s plan to open up its markets “can stay on course,” with its economy growth target of 6.5 percent this year still within reach.

On the other hand, it is the U.S. economy that is expected to take more damage, according to analysts, who warned U.S. levies could affect American firms with investments in China. The world’s largest economy would also be hit more considering that it is “pursuing trade wars on multiple fronts,” including its disagreements with Canada and the European Union, DBS said in a note.

“In each skirmish the U.S. targets different economies and consumers, but the retaliation from each counterpart falls on the same group of American consumers and businesses. The reckoning is in the pipeline, in our view,” the note said.

Matthew Goodman, an Asian economics specialist at the Center for Strategic and International Studies, said that the White House hasn’t considered the interest of American companies.

“There’s a long track record of U.S. companies and others in the Chinese markets, so that’s a real worry here … but, in the White House, it seems they either haven’t thought about those ramifications, or they have and they just don’t care because they think they need to turn up the heat,” he told CNBC’s “The Rundown.”

For its part, China claimed Thursday that the United States is attacking the world with its threatened tariffs.

“U.S. measures are essentially attacking global supply and value chains. To put it simply, the U.S. is opening fire on the entire world, including itself,” said Chinese Commerce Ministry spokesman Gao Feng.

According to the DBS note, South Korea, Malaysia, Taiwan and Singapore are the economies most at risk in Asia based on trade openness and exposure to supply chains. There is expected to be a drag on growth in 2018, and it could double in 2019.

— CNBC’s Chloe Aiello and Reuters contributed to this report.

https://www.cnbc.com/2018/07/06/trade-war-worries-us-china-tariffs-to-kick-in-on-friday.html

N Korean defectors caution US against Kim’s deceptive strategies

July 5, 2018
Chorus of scepticism comes as Mike Pompeo pushes for progress in Pyongyang
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US secretary of state Mike Pompeo will try to maintain diplomatic momentum by hammering out a specific timetable for the regime to dismantle its nuclear programme © AP

By Bryan Harris in Seoul 


In the weeks since his landmark summit with North Korean leader Kim Jong Un, Donald Trump has been buoyant, maintaining that talks aimed at disarming the reclusive regime were “going well” and that “all of Asia is thrilled”.

One constituency, however, that does not share the US president’s enthusiasm are the people who know North Korea the best: its own citizens.

Those who have lived and suffered under the regime in Pyongyang are increasingly convinced the bout of diplomacy is smoke and mirrors and the young marshal will never abandon his arsenal of nuclear weapons.

On Thursday, Mike Pompeo, the US secretary of state, lands in Pyongyang for the first high-level meeting between two sides since Mr Trump and Mr Kim last month pledged to work towards “complete denuclearisation”.

The challenge for Mr Pompeo will be to maintain diplomatic momentum by hammering out a specific timetable for the regime to dismantle its arsenal of warheads and its nuclear facilities.

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So many people are delusional right now. Kim [Jong Un] only wants economic support

Hyeonseo Lee, North Korean defector


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But for many North Koreans, such plans are misguided. “Kim Jong Un will never, ever denuclearise,” said Park Mija, who fled North Korea during the first year of Mr Kim’s reign in 2012.

The comments echo growing scepticism in the US intelligence community about Pyongyang’s intentions.

In the past week, a slew of reports have indicated that North Korea continues to develop and hone its ballistic missiles and nuclear weapons capabilities, despite the recent rapprochement in the region.

Many are growing anxious that the US could again fall prey to Pyongyang’s longstanding strategy of dragging out talks as it seeks economic concessions.

“So many people are delusional right now. Kim only wants economic support — and South Korea is already trying to do that,” said Hyeonseo Lee, a prominent North Korean defector and author of a 2015 bestseller, The Girl with Seven Names: A North Korean Defector’s Story.

Since the Singapore meeting between Mr Kim and Mr Trump, South Korea has forged ahead with inter-Korea exchanges aimed at bolstering economic co-operation between the two erstwhile adversaries.

South Korea’s President Moon Jae-in has already outlined plans to connect North Korea not only with the South but also the wider region. North Korea has responded in kind by agreeing to host multiple cross-border exchanges, including a reunion in August of families divided by the Korean war.

The regime has also adjusted its propaganda to reflect the changing environment. Criticisms of the US and South Korea — once standard fare in state media — have disappeared in recent months, raising hopes genuine change is afoot.

But Choi Jung-hoon, a former North Korean army officer now in the South, said: “The current rapprochement is just a show for Kim and a political strategy for Trump in the run-up to the US midterm elections in November.”

Park Sang-hak, a North Korean who runs an activist group in Seoul, echoes the sentiment, saying Mr Trump’s attitude will change once the elections are over. “I believe if Mr Pompeo fails to persuade the North to pursue complete denuclearisation, the Pentagon will deal with the matter,” he said.

The comments highlight the high-stakes nature of Mr Pompeo’s visit to Pyongyang. Mr Trump has made clear he reserves the right to use military options against North Korea should negotiations fail.

Ms Lee, the writer, stressed that despite her doubts, she hoped diplomacy would win and that North Korea genuinely sought to denuclearise and build its economy. “I hope I am wrong,” she said, “so that I can go home.”

Additional reporting by Kang Buseong

https://www.ft.com/content/86609d5c-7f56-11e8-bc55-50daf11b720d

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See also:

North Korea satellite images show missile plant construction, analysts say

https://www.cnn.com/2018/07/02/asia/north-korea-factory-intl/index.html