Posts Tagged ‘tariffs’

EU’s Jean-Claude Juncker to visit Donald Trump to talk trade on July 25

July 17, 2018

European Commission President Jean-Claude Juncker will visit US President Donald Trump in Washington on July 25 to discuss strained trade ties between the two.


European Commission President Jean-Claude Juncker at the Great Hall of the People in Beijing, China, Monday, July 16, 2018. (AP File Photo/Ng Han Guan)

“President Juncker and President Trump will focus on improving transatlantic trade and forging a stronger economic partnership,” the Commission said in a statement on Tuesday that announced the date.

Trade tensions rose after the United States imposed import tariffs on EU steel and aluminum at the start of June and have increased with Trump’s threat that those tariffs could extend to EU cars.



The President Turns the Tables on China

July 17, 2018

He imitates Beijing’s mercurial approach to negotiation.

Commerce Secretary Wilbur Ross chats with Chinese Vice Premier Liu He in Beijing, June 3
Commerce Secretary Wilbur Ross chats with Chinese Vice Premier Liu He in Beijing, June 3 PHOTO: ANDY WONG/ASSOCIATED PRESS



An overlooked irony of the American trade dispute with China is that Donald Trump is the first U.S. president to fight back using Chinese tactics. This time, it’s the Chinese officials who are frustrated over the lack of clarity in demands, the sudden changes in negotiating positions, and the unpredictable escalation of tensions.

Usually it’s the other way around, as U.S. negotiators in government and business can attest. Chinese officials often blame the foreign counterpart for any number of problems.

The foreigners then have a duty, according to the Chinese, to make things right. An old proverb often cited is that a man who drops a stone on his own foot must take responsibility for picking it up.

But instead of specifying the terms for a resolution, the Chinese officials wait for foreign concessions. When the proposal arrives, the Chinese reject it as inadequate, forcing the foreigners to negotiate against themselves, offering more in each successive round. In the end, the foreigners are relieved when the struggle concludes, but they regret settling on terms much less favorable than they had planned. A 1995 Rand Corp. study traced these techniques to 1971, when Premier Zhou Enlai reportedly blamed tensions over Taiwan on the U.S. as he pressed Henry Kissinger for favorable terms normalizing U.S.-China relations.

This Chinese approach is maddening enough for governments. Foreign businessmen are more vulnerable yet, because Beijing has total leverage over the future of their Chinese enterprises. Businessmen have no choice but to play China’s game, which commonly begins with investigations into misdeeds. Otherwise, their companies may fail regulatory reviews or lose their approval to operate. There are different versions of the game, but aggressive pressure for concessions—sometimes including the transfer of foreign technology—is a constant.

Unwittingly, Mr. Trump is turning China’s tried-and-true approach against it. He accuses Beijing of “ripping off” the U.S. and says longstanding Chinese policies are to blame for today’s trade tensions. His rhetoric addresses three U.S. interests: cutting the U.S. trade deficit with China, opening China’s market further to foreign businesses, and easing industrial policies such as the China 2025 plan, the stated goal of which is to exclude foreign technology vendors and then dominate global markets.

But Mr. Trump has never specified exactly what he wants or whom he has granted the authority to make a deal. He has shifted to China the responsibility to make things right. In response, Beijing has indicated flexibility regarding opening new sectors to foreign companies and importing more U.S. goods to reduce the trade deficit. To date, President Trump seems to have rejected these proposals as insufficient.

The Chinese clearly want to reach an agreement, but they remain confused about how to proceed. They may have to sweeten their offers and have even consulted Mr. Kissinger and other luminaries for negotiating advice. In the meantime, the Chinese have responded defensively to Mr. Trump’s tariffs with their own tariffs of equal amounts.

Mr. Trump’s negotiating style is bombastic, volatile and reckless. Its success remains very much in doubt, since the situation is difficult to read. But at least the Chinese government is learning an old American saying: What goes around comes around.

Mr. Moon is a former assistant U.S. trade representative for China.

Appeared in the July 17, 2018, print edition.

Most Asian markets down as oil slump hits energy firms

July 17, 2018


A man walks in front of trading boards at a private stock market gallery in Kuala Lumpur, Malaysia, Tuesday, July 3, 2018.

AP Photo/Vincent Thian

Energy firms led a sell-off in most Asian equity markets on Tuesday a day after supply fears sent oil prices plunging, while confidence remains fragile owing to ongoing fears of a global trade war.

After hitting three-and-a-half-year highs at the start of the month, crude has dropped almost 10 percent as it is hit by a perfect storm of issues that have fuelled fears of a glut.

Worries about the impact on demand caused by a possible trade war between the US and China took their toll last week, as did news that Libya was exporting again after recent oil field closures. That all came just weeks after major producers Saudi Arabia, Russia and OPEC agreed to lift a 2016 ceiling that had supported prices.

© AFP/File | Speculation the US could seek increased production from oil cartel OPEC and tap into its own Strategic Petroleum Reserves sent oil prices plummeting

The latest spark for selling came Monday on reports the US may tap its Strategic Petroleum Reserve to lower prices and speculation Riyadh was considering increasing output for some Asian countries.

Also Monday US Treasury secretary Steven Mnuchin indicated the Trump administration could allow some exceptions to a ban on purchases of Iranian oil.

“It very much seems like a continued reaction to potential supply increases,” Bart Melek, head of global commodity strategy at TD Securities in Toronto, told Bloomberg News.

“The combination of the supply-side effect and the potential for less demand as a result of trade woes that we’re seeing are prompting people to take some of the long bets off oil right now.”

Both main contracts tumbled more than four percent Monday, though they saw some minor increases in Asia.

– IMF trade warning –

The losses filtered through to energy firms with CNOOC and PetroChina down more than three percent in Hong Kong, while Woodside Petroleum was more than two percent off in Sydney and Tokyo-listed Inpex lost more than one percent.

Broader stock markets were also mostly down with Hong Kong 1.1 percent lower, Shanghai one percent off and Sydney 0.4 percent lower. There were also losses for Seoul, Wellington, Taipei and Singapore.

However, Tokyo — which was closed for a holiday Monday — rose 0.6 percent by the break thanks to a weaker yen.

Ongoing fears about a China-US trade war continue to nag investors, with both sides filing counter-complaints at the World Trade Organization after recently imposing and threatening further tariffs on billions of dollars worth of goods.

And on Monday the International Monetary Fund warned about the effects of a stand-off between the world’s two economic superpowers.

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

Attention is now on the start of the corporate earnings season, with hopes strong reports will deflect from the trade war, while Federal Reserve chief Jerome Powell is to give two days of congressional testimony from Tuesday.

– Key figures at 0300 GMT –

Tokyo – Nikkei 225: UP 0.6 percent at 22,724.46 (break)

Hong Kong – Hang Seng: DOWN 1.1 percent at 28,220.20

Shanghai – Composite: DOWN 1.0 percent at 2,785.60

Dollar/yen: UP at 112.52 yen from 112.27 yen at 2100 GMT

Euro/dollar: DOWN at $1.1702 from $1.1712

Pound/dollar: DOWN at $1.3232 from $1.3237

Oil – West Texas Intermediate: UP one cent at $68.07 per barrel

Oil – Brent Crude: UP 36 cents at $72.20 per barrel

New York – Dow: UP 0.2 percent at 24,064.36 (close)

London – FTSE 100: DOWN 0.8 percent at 7,600.45 (close)



SINGAPORE (AFP) – Brent crude recovered in Asian trade Tuesday after plunging more than 4 percent to three-month lows on concerns over increased production and reports the US could tap into strategic reserves.

The black gold had closed decisively lower in New York on worries of excess supply, with reports that Saudi Arabia is looking to increase production.

Speculation that US President Donald Trump could seek increased production from oil cartel OPEC and tap into the Strategic Petroleum Reserves to push down gasoline prices, sent oil plummeting.

Both Brent crude and US benchmark West Texas Intermediate fell more than 4 percent Monday, with the former hitting three-month lows of below $72 a barrel.

In early Asia trade Tuesday, WTI was back up 3 cents to $68.09 and Brent crude was up 45 cents to $72.29.

After withdrawing from the Iran nuclear deal in May, the US said it would reinstate sanctions on the oil-producing nation, and warned other countries to stop purchasing Iranian exports including crude.

“The big news… was that US Treasury Secretary Steve Mnuchin said the US wants everyone to go to zero Iranian imports but that exemptions could be made for those who can’t get there by the deadline,” said AxiTrader chief market strategist Greg McKenna in a note to clients.

Following a massive global supply glut, prices had been propped up in recent months by a production cap agreement led by oil cartel OPEC and Russia, but this has since been scaled back.

Traders will now be looking towards data from industry group the American Petroleum Institute, due later Tuesday, for an indication of US crude stockpiles.

“The sweeping slew of bearish signals has wholly eroded market sentiment,” said OANDA head of Asia-Pacific trading Stephen Innes.

EU, Japan to sign massive trade deal as US puts up barriers

July 17, 2018

The European Union’s top officials arrive in Japan Tuesday to sign the single market’s biggest trade deal ever and present a united front as Washington upends the international trade order.

EU Council President Donald Tusk and Commission head Jean-Claude Juncker land in Japan after talks in Beijing, where they urged global trade cooperation and warned against trade wars.

“It is the common duty of Europe and China, but also America and Russia, not to destroy (the global trade order) but to improve it, not to start trade wars which turned into hot conflicts so often in our history,” Tusk said Monday in Beijing.

“There is still time to prevent conflict and chaos.”

The “landmark” EU-Japan deal creates a massive economic zone and stands in stark contrast to President Donald Trump’s “America First” protectionism.

© AFP/File | European Council President Donald Tusk and other top EU officials are to sign a massive trade deal with Japan

The deal, agreed last December, is “the biggest ever negotiated by the European Union,” according to Commission spokesman Margaritis Schinas.

“This agreement will create an open trade zone covering nearly a third of the world’s GDP,” he said.

The EU — the world’s biggest single market with 28 countries and 500 million people — is trying to boost alliances in the face of Trump’s protectionist administration.

The EU-Japan deal will send a “strong signal to the world” against US protectionism, EU Trade Commissioner Cecilia Malmstrom said recently.

Trump’s administration has angered traditional allies like the EU and Japan by imposing trade tariffs, while rattling international markets by threatening a trade war with China.

On Sunday, the US president fuelled rising rancour by labelling the EU, along with Russia and China, “a foe” of the United States, and repeating his assertion that the EU has “really taken advantage of us on trade.”

The EU officials and Japan will also look to present a united front against US tariffs on steel and aluminium, which Tokyo has called “deplorable.”

Under the trade agreement, the EU will open its market to Japan’s auto industry, with Tokyo in return scrapping barriers to EU farming products, especially dairy.

The EU is seeking access to one of the world’s richest markets, while Japan hopes to jump-start an economy that has struggled to find solid growth.

Japan’s Prime Minister Shinzo Abe had been scheduled to sign the deal in Brussels last week, but cancelled his trip after devastating floods that killed more than 220 people.



IMF warns of rising risks to global growth amid trade tensions

July 16, 2018

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

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

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

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

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

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

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

– Addressing ‘disenchantment’ –

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

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

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

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

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

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

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

– Europe, Japan slowing –

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

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

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

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

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

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

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

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

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


U.S. Stocks Climb as Investors Weigh Earnings

July 16, 2018

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

Image result for bank of america, signs, photos



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

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

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

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

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

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

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

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

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

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

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

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

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

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

July 16, 2018

Chinese premier and EU officials pledge support for global trading system

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

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

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

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

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

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

Image may contain: 2 people, people smiling

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Write to Eva Dou at

China’s Cooling Economy Spells Trouble Ahead for Global Growth

July 16, 2018

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

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

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

Read more on the latest data on China’s economy

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

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

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

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

Image may contain: outdoor

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

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

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

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

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

Image result for china trade, photos

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

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

They may need to deploy more of that firepower.

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

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


Asia Stocks Decline Amid Mixed China Economic Data

July 16, 2018

Asian stocks fell as mixed economic data in China failed to allay concern about the world’s second largest economy’s ability to the withstand the impact of the trade dispute. Crude slid and the yen traded near the weakest level since January.

Image result for china trade, photos

Equities from Sydney to Shanghai dropped, while those in Hong Kong recouped losses during the morning. Volumes were down in most markets with Japan shut for a public holiday. The yen held its recent losses after posting its biggest weekly slide in 10 months. Oil fell below $71 a barrel amid speculation the Trump administration is considering tapping into emergency crude supplies. U.S. equity futures ticker higher after Friday’s gains pushed the S&P 500 back above 2,800, with a pause in trade tensions outweighing a mixed start to the earnings season.

Trade tensions have eased somewhat as officials in Beijing appeared to moderate their response to President Donald Trump’s tariff threats amid a slowing economy, falling stock market and weakening currency. Data Monday showed China’s economic expansion slowed down slightly from the previous quarter, with industrial output in June missing estimates. Later this week investors expect Federal Reserve Chairman Jerome Powell to lay the groundwork for further tightening.

No automatic alt text available.

These are some key events coming up this week:

  • Earnings season continues with reports due from companies including: Bank of America, BlackRock, Goldman Sachs, Morgan Stanley, American Express, Netflix, Microsoft, Taiwan Semiconductor Manufacturing, Unilever, Johnson & Johnson and IBM.
  • U.S. President Donald Trump and Russian President Vladimir Putin hold their first summit together.
  • Fed’s Powell delivers the semi-annual Monetary Policy Report to the Senate Banking Committee and answers lawmakers’ questions.

And here are the main market moves:


  • Hang Seng slid 0.2 percent as of 12:22 p.m. in Hong Kong, having slipped as much as 0.7 percent earlier. Hang Seng China Enterprises Index down 0.7 percent.
  • Shanghai Composite declined 0.5 percent.
  • South Korea’s Kospi index slipped 0.2 percent.
  • Australia’s S&P/ASX 200 Index fell 0.5 percent.
  • Futures on the S&P 500 Index were up 0.1 percent. The underlying gauge rose 0.1 percent Friday.


  • The Japanese yen slid 0.1 percent to 112.48 per dollar.
  • The offshore yuan rose 0.1 percent to 6.7083 per dollar.
  • The euro was little changed at $1.1684.
  • The British pound rose 0.1 percent to $1.3240.
  • The kiwi dollar climbed 0.2 percent to 67.67 U.S. cents.


  • The yield on 10-year Treasuries dipped two basis points to 2.83 percent Friday.
  • Australian 10-year government bond yields were steady at 2.63 percent.


  • West Texas Intermediate crude declined 0.6 percent to $70.60 a barrel.
  • Gold fell 0.1 percent to $1,243.64 an ounce.

— With assistance by Richard Richtmyer


EU urges big powers to avert trade ‘conflict and chaos’

July 16, 2018

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

The comments from EU Council President Donald Tusk comes as Washington and Beijing stand on the brink of an all-out trade war many fear could hammer the global economy, while the US has also picked fights with allies in Europe and Canada.

“It is the common duty of Europe and China, but also America and Russia, not to destroy (the global trade order) but to improve it, not to start trade wars which turned into hot conflicts so often in our history,” Tusk said in Beijing.

“There is still time to prevent conflict and chaos.”

© POOL/AFP | European Council President Donald Tusk (R) and European Commission President Jean-Claude Juncker met China’s Premier Li Keqiang as part of an annual summit

Tusk spoke after meeting Chinese Premier Li Keqiang as part of an annual EU-China summit that opened against the backdrop of the deepening global trade discord.

The EU — the world’s biggest single market with 28 countries and 500 million people — is trying to buttress alliances in the face of the protectionism unleashed by US President Donald Trump’s “America First” administration.

The meeting between Chinese and European officials in Beijing, which also included European Commission head Jean-Claude Juncker, comes as Trump prepared to hold talks in Helsinki with Russian leader Vladimir Putin.

Trump sprinkled further spice on the rising rancour in a interview aired Sunday in which he labelled the EU, Russia and China as “foes” of the United States.

– Tough talk –

Tusk said in Beijing that the world needs trade reform, not confrontation.

“This is why I am calling on our Chinese hosts, but also on presidents Trump and Putin, to jointly start this process from a thorough reform of the WTO (World Trade Organization),” Tusk said.

“Today we are facing a dilemma, whether to play a tough game, such as tariff wars and conflict in places like Ukraine and Syria, or to look for common solutions based on fair rules.”

Tusk did not immediately specify what sorts of reform he was referring to.

French President Emmanuel Macron had called in late May for talks on overhauling the WTO.

At the time, European companies were bracing for punishing US tariffs on steel and aluminium imports that ultimately went into effect on June 1.

Besides the steel and aluminium tariffs on the EU, Russia and major US trading partners, Trump earlier this month implemented tariffs on $34 billion worth of Chinese imports, drawing a tit-for-tat response from Beijing.

Washington last week threatened yet more measures on another $200 billion in Chinese goods, prompting Beijing to vow further retaliation.

The back-and-forth has heightened fears that trading powers will hunker down into a destructive all-out trade war that could hit global growth.

China said on Monday that its economic growth rate had slowed slightly to 6.7 percent in the second quarter of this year, from 6.8 percent the previous quarter, and a government spokesman warned a trade conflict threatens all the affected economies.

“The China-US trade friction unilaterally provoked by the United States will have an impact on the Chinese and US economies,” Mao Shengyong, a spokesman for the national statistics bureau.

“Now that the world economy is deeply integrated, industrial Chains have become globalised, and many related countries also will feel an impact.”