Posts Tagged ‘tariffs’

China Seeks to Defuse Trade War With Reversals on Cars and Corn

December 14, 2018
  • Tariff imposed on U.S. imports removed for three months
  • Additional 25% duty imposed on U.S. vehicles to be removed
Vehicles, assembled in the U.S., are driven onto a carrier ship at the Port of Charleston.  Photographer: Luke Sharrett/Bloomberg

China took more steps to defuse trade tensions with the U.S., confirming it will remove the retaliatory duty on automobiles imported from America and preparing to restart purchases of American corn.

The 25 percent tariff imposed on vehicles as a tit-for-tat measure will be scrapped starting Jan. 1, the finance ministry said Friday. China also may buy at least 3 million metric tons of American corn, said people familiar with the discussions, who asked not to be named as the information is confidential.

The moves come two weeks after President Donald Trump and his Chinese counterpart Xi Jinping agreed to a truce in the trade war at their meeting in Argentina. Trump claimed he won a concession during talks with Xi and said China, the world’s biggest automobile market, would reduce and remove tariffs, a claim that Beijing didn’t immediately confirm.

The White House is also looking to officially delay the tariffs that had been due on Jan. 1, with an announcement expected on Friday.

U.S.-China Trade War Truce: What’s Happened and What’s Next

Despite the latest concessions, there remains doubt in Washington and Beijing over whether China is willing to water down its plans to match and exceed U.S. industrial strength, which are one of the root causes of the current fight.

China’s top leaders are expected to meet next week to decide economic policies for 2019. Their focus will be on how they propose to sustain stable growth when faced with both uncertainty from the trade war and from the slowing domestic economy.

Doubt Builds Over China’s Retreat From Industrial Dominance Plan

The temporary tax reduction for U.S. car imports comes as China heads for its very first annual vehicle sales decline in 28 years amid the trade war and an economic slowdown that’s undermining consumption momentum.

Car sales in China have fallen for six straight months after decades of almost uninterrupted growth. While there were other factors, the tit-for-tat jabs between the world’s biggest economies have played a role. The move by China would reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent, in line with what other countries pay.

Corn Imports

The corn imports are likely to start as early as January, following a revival of American soybean purchases, the people said. The government is also considering various options for how to handle the 25 percent retaliatory tariffs on American corn that China adopted in July, the people said.

China’s decision on vehicles may provide a respite for American carmakers such as Tesla Inc.. German carmakers such as BMW AG and Daimler AG would also benefit as they bring to China U.S.-made cars.

German carmakers BMW and Daimler have been hardest hit by the additional levies, shipping large numbers of sport utility vehicles from plants in the U.S. to China. Six of the top ten vehicles exported from the U.S. to the world’s biggest car market are from the two German brands, according to forecaster LMC Automotive.

BMW said the punitive levies caused a hit of 300 million euros ($339 million) to its bottom line during the second half of the year. The trade tensions were a key factor in both carmakers cutting profit forecasts for the year.

BMW and Daimler, which import thousands of SUVs into China from plants in the U.S., reversed earlier losses tied to a weak European auto sales report. BMW rose 0.2 percent, after falling as much as 2.4 percent. Daimler’s decline narrowed to 0.6 percent from as much as 2.8 percent earlier. Volkswagen AG was down 1.2 percent, after dropping 2.9 percent.

Foreign carmakers have long pleaded for freer access to China’s auto market, while its own manufacturers are trying to expand abroad. In April, China announced a timetable to permit foreign companies to own more than 50 percent of local vehicle-making ventures.

Longer-term, China has a lot to gain from free trade in autos as manufacturers such as Guangzhou Automobile Group Co. and Geely Automobile Holdings Ltd. look to move overseas. The U.S. currently charges a 27.5 percent tax on imported cars from China after adding a 25 percent additional tariff during the trade row.

— With assistance by Ying Tian, Anthony Palazzo, Elisabeth Behrmann, James Mayger, Haze Fan, Steven Yang, and Shuping Niu

https://www.bloomberg.com/news/articles/2018-12-14/china-cuts-tax-on-u-s-vehicles-in-move-to-soothe-trade-tensions?srnd=premium

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Chinese data reveal economy is slowing despite stimulus

December 14, 2018

Retail sales growth hits 15-year low while factory output slumps to weakest level in nearly 3 years

Image result for china, autos, assembly line, photos

China’s automotive market, the world’s largest, is on track for its first annual sales decline since the 1990s © AP

By Gabriel Wildau and Yizhen Jia in Shanghai and Hudson Lockett in Hong Kong

Chinese retail sales grew at the slowest pace in 15 years in November and factory output was the weakest in nearly three years, in the latest signs that economic stimulus measures enacted since the summer have failed to reverse flagging growth.

Even as Chinese exports have remained resilient in the face of US tariffs, weak consumer spending and slowing investment in housing construction are weighing on China’s economy. Friday’s data weighed on stock markets across the globe.

The CSI 300 index of mainland Chinese equities dropped 1.7 per cent, Hong Kong’s Hang Seng lost 1.6 per cent, while the Europe-wide Stoxx 600 shed 1.1 per cent. Chinese policymakers have injected cash into the banking system and fiscal authorities have pledged to increase infrastructure spending, but the latest data suggest that further measures are likely.

Consumers are worried that economic growth is slipping, they’re worried that their salaries aren’t increasing

Lin Longpeng, Guotai Junan Securities

At a politburo meeting on Thursday, the Communist party’s top policymaking body pledged to “maintain economic activity within a reasonable range” and “further stabilise” employment, investment and foreign trade.

“We expect the government to take further measures to support the economy as downward pressures increase,” Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong, wrote on Friday.

“The recent US-China truce is a positive and we expect the overall impact of policy easing to be large enough to help economic growth bottom out around the second quarter of 2019.”

Retail sales grew 8.1 per cent in November from a year earlier, the slowest pace since 2003, while industrial production rose 5.9 per cent, the weakest in 33 months, according to data from China’s statistics bureau on Friday.

Both figures were well below expectations, based on a Reuters poll.  Among retail items, sharply declining automotive sales dragged down the headline figure, while fast-moving consumables and home appliances rebounded slightly.

China’s auto market, the world’s largest, is on track for its first annual sales decline since the 1990s, while the China Association of Automobile Manufacturers forecast on Friday that sales would be flat in 2019.

“Consumers are worried that economic growth is slipping, they’re worried that their salaries aren’t increasing,” said Lin Longpeng, chief market analyst at Guotai Junan Securities in Shenzhen.

“There may even be some corporate lay-offs.

All this is causing a decline in consumer confidence.”

Friday’s news followed trade data released last weekend that showed that imports grew only 3 per cent in November, far below expectations of 14.5 per cent, according to a Reuters poll. China’s imports of commodities such as oil and iron, which fuel the country’s vast factory sector, are seen as a gauge of domestic demand.

Credit and money-supply data released earlier in the week also suggested that stimulus measures have yet to produce a rise in lending that policymakers intended.

Growth in outstanding credit slowed to a record low of 10.4 per cent in November, down from 11.1 per cent in October, according to Financial Times calculations based on central bank data.

But Friday’s data contained some bright spots. Fixed-asset investment growth hit a five-month high, supported by faster spending on housing and infrastructure. But annual growth of 5.9 per cent in the January to November period was still well below 2017’s full-year pace of 7.2 per cent.

“The contraction in property sales deepened last month,” wrote Julian Evans-Pritchard, senior China economist at Capital Economics in Singapore.

“But developers continued to shrug off this weakness in demand — new housing starts and property investment both accelerated.”

Follow @gabewildau on Twitter

https://www.ft.com/content/717636be-ff43-11e8-aebf-99e208d3e521

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China’s consumers, factories take a beating as economic gloom deepens

December 14, 2018

China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as the economy lost further momentum, heaping pressure on Beijing to defuse its trade dispute with the United States.

The world’s second-largest economy has been losing momentum in recent quarters as a multi-year government campaign to curb shadow lending put increasing financial strains on companies in a blow to production and investment.

The stresses on broad activity have been compounded by a sharp escalation in China’s trade row with the United States, which has threatened to fracture global supply chains, chill investment, exports and growth.

The slowdown in Chinese industries and the trade tensions have started to weigh on consumer sentiment, tapping the brakes on retail sales. Big-ticket items have been the first to be hit, with auto sales declining since May.

China is lookig to transform the economy from one driven by exports and state investment to one that relies on domestic consumption

China is lookig to transform the economy from one driven by exports and state investment to one that relies on domestic consumption China is lookig to transform the economy from one driven by exports and state investment to one that relies on domestic consumption AFP

Retail sales rose 8.1 percent in November from a year earlier, data from the National Bureau of Statistics showed on Friday, below expectations for an 8.8 percent rise and the slowest since May 2003. In October, sales increased 8.6 percent.

Auto sales fell a sharp 10.0 percent from a year earlier, in line with industry data showing sales dived 14 percent in November – the steepest drop in nearly seven years.

Industrial output rose 5.4 percent year-on-year in November, missing analysts’ estimates and matching the pace seen in January-February 2016. Factory output had been expected to grow 5.9 percent, unchanged from October’s pace.

Over the weekend, China reported far softer than expected November exports and imports, reflecting slower global demand and waning domestic factory activity as profit margins narrow.

With economic growth at its weakest since the global financial crisis, Chinese policymakers are ramping up spending, pushing banks to increase lending and cutting taxes to shore up businesses and ward off a more damaging slump.

The weaker November industrial output and retail sales growth numbers showed that downward pressure on the economy is increasing, said Mao Shengyong, spokesman at the statistics bureau.

But China is on track to hit its 2018 economic growth target of around 6.5 percent, Mao told reporters.

“The need for cutting taxes, fees and interest rates has further increased,” said Wang Jun, chief economist at Zhongyuan Bank in Beijing. “Insufficient demand has become the main problem.”

Image result for Zhongyuan Bank in Beijing, pictures

The slackening demand in China is starting to worry its trading partners too. In Japan, machinery makers and auto manufacturers have seen their monthly orders to China falling, some by double-digits.

Asian shares tumbled on Friday after the weak Chinese data, fanning fresh worries of a sharp slowdown in Asia’s largest economy. Chinese equities also slipped, while the yuan currency CNY=CFXS softened slightly.

GREATER URGENCY

A temporary 90-day trade war truce agreed by the United States and China early this month may have removed some of the immediate pressure on the economy. Both countries have heaped tariffs on billions of dollars of each other’s goods since early summer.

“China’s economy, if it’s in trouble, it’s only in trouble because of me,” U.S. President Donald Trump told Fox News in an interview on Thursday.

The impact on China’s economy from the Sino-U.S. trade frictions are not apparent yet, Mao cautioned, adding that the nation will face more “external” uncertainties in 2019 – increasing the urgency for Beijing to resolve the tariff dispute with the United States.

“So, the worst is yet to come and policymakers will be very worried, particularly with consumption growth falling off a cliff,” said Sue Trinh, head of Asia FX Strategy at RBC Capital Markets.

Indeed, even in the unlikely event the world’s top two economies reach a durable resolution in their dispute, ebbing domestic demand, mounting household debt and a cooling real estate sector point to a further slowdown in growth next year.

China’s fixed-asset investment growth quickened to 5.9 percent in the January-November period, compared to an expected 5.8 percent gain and the 5.7 percent growth in January-October.

The year-to-date acceleration was due to weaker expansion earlier this year, according to Goldman Sachs.

EASY POLICY

Infrastructure investment, a major growth lever that Chinese policymakers have pulled in past slowdowns, rose 3.7 percent in the first 11 months. That was unchanged from the pace in the first 10 months of the year.

Mao said he expected to see more of an impact on investment from infrastructure projects in 2019.

Private-sector fixed-asset investment rose 8.7 percent in January-November, compared with an increase of 8.8 percent in the first 10 months.

Private investment accounts for about 60 percent of overall investment in China.

On the property front, real estate investment rose 9.7 percent in the first 11 months, unchanged from the pace in January-October.

Property sales by floor area grew 1.4 percent in January-November, slowing from an increase of 2.2 percent in the first 10 months.

The real estate sector, a key driver of economic growth in China, has been cooling in recent months as a government crackdown on property speculation and thinning margins for developers led to a surge in failed land auctions.

The cooling momentum in China is seen keeping monetary conditions easy for a while, with policy makers already having cut the level of cash banks must hold as reserves four times this year. China’s central bank governor said on Thursday that monetary conditions should be relatively loose but not too loose.

“For monetary policy, there is still the possibility of cutting the RRR (reserve requirement ratio), but cutting interest rates is not needed for the time being,” said Tang Jianwei, senior economist at Bank of Communications in Shanghai.

“Easing policy is necessary, but it is more important to boost confidence.”

Reporting by Kevin Yao; Writing by Ryan Woo and Lusha Zhang; Editing by Shri Navaratnam

Reuters

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Asian markets sink as profit-takers move in, pound resilient

December 14, 2018

“Persistent uncertainties relating to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility”.

Asian markets fell on Friday, putting the region on course to end a broadly positive week on a sour note, as traders took a step back and their profits off the table.

There was also some unease after the head of the European Central Bank raised concerns about the growth outlook for the eurozone owing to issues within and outside the bloc.

The pound showed some resilience, even as European leaders refused pleas for help from Prime Minister Theresa May to push their Brexit deal through a fractured British parliament.

Signs of easing tensions in the China-US trade row helped propel equities this week, with both sides seeming to give key concessions, fuelling hopes they can eventually resolve their differences.

Equity markets have gone into reverse after a broadly positive week

Equity markets have gone into reverse after a broadly positive week Equity markets have gone into reverse after a broadly positive week AFP

But observers noted that dealers will remain on alert for any negative news, including further developments in China’s detention of two Canadians on suspicion of threats to national security.

That move came after a top executive at Chinese telecoms giant Huawei was arrested in Ottawa. She faces extradition to the US over allegations the firm broke sanctions on Iran.

In early trade Hong Kong fell 1.6 percent and Shanghai was down 0.4 percent.

Tokyo finished the morning 1.7 percent lower. A survey of confidence among Japan’s big businesses showed they remain cautious, with worries about the global outlook offsetting fading concerns about the impact of this year’s major earthquakes and typhoons.

Sydney fell 1.2 percent, Singapore was 1.3 percent off and Seoul shed 1.5 percent while Taipei was also more than one percent lower. Wellington, Manila and Jakarta were also down.

On currency markets the pound was holding its own — maintaining gains won after May’s no-confidence vote win — despite the growing prospects of Britain leaving the EU without a deal.

With her agreement having no chance of passing through parliament in its present form, the PM called on her EU counterparts in a Brussels summit to give her some leeway that could get her majority support.

But she has so far failed to win any concessions on the main sticking point over Northern Ireland’s future relationship.

The euro continued to struggle after being sold Thursday in reaction to ECB boss Mario Draghi’s assessment that there were increasing risks to the eurozone.

After announcing the end to years of bond-buying stimulus, Draghi warned of “persistent uncertainties relating to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility”.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.7 percent at 21,439.16 (break)

Hong Kong – Hang Seng: DOWN 1.6 percent at 26,111.39

Shanghai – Composite: DOWN 0.4 percent at 2,622.85

Pound/dollar: DOWN at $1.2633 from $1.2660 at 2130 GMT

Euro/dollar: DOWN at $1.1360 from $1.1361

Dollar/yen: DOWN at 113.46 yen from 113.61 yen

Oil – West Texas Intermediate DOWN eight cents at $52.50

Oil – Brent Crude: DOWN 26 cents at $61.19 per barrel

New York – Dow: UP 0.3 percent at 24,597.38 (close)

London – FTSE 100: FLAT at 6,877.50 points (close)

AFP

https://www.france24.com/en/20181214-asian-markets-sink-profit-takers-move-pound-resilient

Trump Vows Consequences for GM, Says China Car Tariffs Too High

December 13, 2018

President Donald Trump reaffirmed his promise to punish General Motors Co. for plans to close an auto factory in the electoral battleground of Ohio and said China’s plan to lower tariffs on U.S. cars to 15 percent doesn’t go far enough.

“General Motors is not going to be treated well,” Trump said in a Fox News interview Thursday. He said GM chief executive Mary Barra was “nasty” to announce the factory-closing plan shortly before the holidays.

“I don’t like what she did, I think it was nasty,” Trump said. “It doesn’t really matter because Ohio is under my leadership from a national standpoint. Ohio is going to replace those jobs in like two minutes.”

Image result for GM, Lordstown, factory, pictures

GM announced in November it planned to cut more than 14,000 jobs and close seven factories worldwide, including one in Lordstown, Ohio, that produces the Chevrolet Cruze. The announcement drew immediate criticism from Trump and he later said he would seek to block any federal subsidies the carmaker receives.

Trump also said he would seek further reductions in the tariff China charges on U.S.-made automobiles.

“It’s not acceptable, 15 is still too high,” Trump said.

proposal to reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent — bringing the U.S. back in line with what other countries pay — has been submitted to China’s Cabinet for review, according to people familiar with the matter.

https://www.bloomberg.com/

Apple to build $1 bln campus in Texas

December 13, 2018

Apple announced Thursday it will build a $1 billion campus in Texas as part of a nationwide expansion.

The facility will be less than a mile from the tech giant’s existing facility in Austin and initially accommodate 5,000 additional employees, with room to grow to 15,000.

As it stands, 6,200 people now work for Apple in the Texan capital — the largest cluster outside its headquarters in Cupertino, California.

Apple will spend $1 billion on its new Texan campus

Apple will spend $1 billion on its new Texan campus Apple will spend $1 billion on its new Texan campus AFP/File

Employees at the new campus will work in fields including engineering, R&D, operations, finance, sales and customer support, Apple said in a statement.

“Apple is proud to bring new investment, jobs and opportunity to cities across the United States and to significantly deepen our quarter-century partnership with the city and people of Austin,” Apple CEO Tim Cook said.

“Talent, creativity and tomorrow?s breakthrough ideas aren’t limited by region or zip code, and, with this new expansion, we?re redoubling our commitment to cultivating the high-tech sector and workforce nationwide.”

Apple also said it plans to boost its employee base in regions across the United States over the next three years.

It will expand to over 1,000 employees each at new sites in Seattle, San Diego and Culver City, California, and add hundreds of jobs in Pittsburgh, New York, Boulder, Colorado, Boston and Portland.

Apple said it plans to invest $10 billion in US data centers over the next five years, including $4.5 billion this year and next.

Earlier this month online retail giant Amazon also announced a major expansion, saying it will build a new headquarters divided between Long Island City in New York and Crystal City, across the Potomac River from Washington, DC. It says this $5 billion investment will create 50,000 jobs.

AFP

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See also:

Apple to Build New Campus in Austin

https://www.wsj.com/articles/apple-to-build-new-campus-in-austin-11544691545?mod=hp_lead_pos1

and

Apple CEO Tim Cook calls for Bloomberg to retract Chinese spy chip report

https://www.theverge.com/2018/10/19/18000876/apple-tim-cook-retract-chinese-spy-chip-story-bloomberg

and

Apple Reportedly Weighing Move Away from Manufacturing in China Due to Tariffs

https://www.thestreet.com/technology/apple-considering-moving-china-manufacturing-14809167

Apple to invest $1 billion in new Texas campus — added 6,000 jobs to its U.S workforce in 2018

December 13, 2018

  • Apple will invest $1 billion in a new campus in Austin, Texas, the company announced on Thursday.
  • The 133-acre campus will be located in North Austin and will accommodate an initial 5,000 employees, with capacity for 15,000 employees in total.
  • Apple also announced plans to open new sites in Seattle, San Diego and Culver City, California over the next three years.
  • Apple Reportedly Weighing Move Away from Manufacturing in China Due to Tariffs
Image result for tim cook, photos
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Apple will invest $1 billion in a new campus in Austin, Texas, the company announced on Thursday.

The 133-acre campus will be located in North Austin and will accommodate an initial 5,000 employees, with capacity for 15,000 employees in total. The new campus will be located less than one mile from Apple’s existing Austin facilities and will house a range of jobs in engineering, R&D, operations, finance, sales and customer support.

Apple said the expansion will make it the largest private employer in Austin.

Image result for apple, china, pictures

“Apple is proud to bring new investment, jobs and opportunity to cities across the United States and to significantly deepen our quarter-century partnership with the city and people of Austin,” Apple CEO Tim Cook said in a press release.

Texas Governor Greg Abbott said in a statement Apple’s decision to expand in Texas “is a testament to the high-quality workforce and unmatched economic environment that Texas offers.”

On Thursday, Apple also announced plans to open new sites and add over 1,000 employees in Seattle, San Diego and Culver City over the next three years. It said it will also expand its existing operations in Pittsburgh, New York, Boulder, Boston and Portland, Oregon.

Apple also announced that it has added 6,000 jobs to its U.S workforce in 2018 and is on track to create 20,000 jobs across the country by 2023.

Image result for apple, china, pictures

Apple plans to invest $10 billion in U.S. data centers over the next five years, including $4.5 billion this year and next. On Thursday, the company said its newest data center would be located in Waukee, Iowa. It is also expanding its data centers in North Carolina, Arizona and Nevada.

President Donald Trump has attacked Apple for producing many of its devices outside of the United States. In September, he warned Apple it could face more tariffs, ordering the company to “make your products in the United States instead of China.”

Donald J. Trump

@realDonaldTrump

Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting!

55.3K people are talking about this

Apple shares have been under pressure in recent months amid worries about demand for its new iPhones. The tech titan has also been in the crosshairs of the trade war between the U.S. and China. President Trump threatened to place a 10 percent tariff on iPhones and laptops made in China last month. Apple’s stock has tumbled more than 20 percent over the past three months.

https://www.cnbc.com/2018/12/13/apple-to-invest-1-billion-in-new-austin-campus.html

Related:

See also:

Apple to Build New Campus in Austin

https://www.wsj.com/articles/apple-to-build-new-campus-in-austin-11544691545?mod=hp_lead_pos1

and

Apple CEO Tim Cook calls for Bloomberg to retract Chinese spy chip report

https://www.theverge.com/2018/10/19/18000876/apple-tim-cook-retract-chinese-spy-chip-story-bloomberg

and

Apple Reportedly Weighing Move Away from Manufacturing in China Due to Tariffs

https://www.thestreet.com/technology/apple-considering-moving-china-manufacturing-14809167

China to Replace Made in China 2025, Increase Access for Foreign Companies

December 13, 2018

China plans to replace an industrial policy savaged by the Trump administration as protectionist with a new program promising greater access for foreign companies, according to people briefed on the matter, in a move to resolve trade tensions with the U.S.

By  Lingling Wei in Beijing and  Bob Davis in Washington
The Wall Street Journal
Updated Dec. 12, 2018 7:21 p.m. ET

The Tech Arms Race Driving the U.S.-China Trade Dispute

The Tech Arms Race Driving the U.S.-China Trade Dispute
“Made in China 2025” is Beijing’s industrial plan to dominate high-tech industries including robotics, aerospace and computer chips. The Trump administration argues China is using the plan to give its tech companies unfair advantage over foreign rivals. But what is it exactly?

China’s top planning agency and senior policy advisers are drafting the replacement for Made in China 2025—President Xi Jinping’s blueprint to make the country a leader in high-tech industries, from robotics to information to clean-energy cars. The revised plan would play down China’s bid to dominate manufacturing and be more open to participation by foreign companies, these people said.

Current plans, these people said, call for rolling out the new policy early next year, a time when the U.S. and China are expected to be accelerating negotiations for a deal to end their bruising trade battle.

Odds that the new plan will go far enough in addressing U.S. complaints are long. President Xi and others in the Chinese leadership are used to exercising a strong hand in the economy. Many bureaucracies and state-owned enterprises benefit from the unfettered access to resources that come with big government initiatives and so don’t want to be hampered by the greater competition of a level playing field.

The revision is also likely to be treated with skepticism in the U.S. Officials in the Trump administration have called Made in China 2025 a threat to fair competition, saying it encourages state subsidies for domestic companies and forces technology transfer from foreign partners. Some U.S. officials are likely to see the changes as more cosmetic than real.

An expanded version of this report appears on WSJ.com.

China Prepares Policy to Increase Access for Foreign Companies

https://www.wsj.com/articles/china-is-preparing-to-increase-access-for-foreign-companies-11544622331

Asian markets build on trade optimism, pound faces pressure

December 13, 2018

Asian markets enjoyed more gains Thursday as investors are cheered by the more conciliatory noises from China and the US on trade, while uncertainty over Brexit continued to pressure the pound.

While the tariffs row between Beijing and Washington is far from being resolved, there is a lot more optimism on trading floors this week that the world’s top two economies can make headway in talks over the next three months.

The latest buying queues came from a report that Beijing is considering replacing its “Made in China 2025” programme that aims to boost its technology sector, a key point in anger for Washington.

The Wall Street Journal said authorities were looking at putting back the scheme’s timetable by a decade to concentrate on improving standards.

While Prime Minister Theresa May survived her party's no-confidence vote she still faces a struggle to push through her Brexit plan and observers warn the pound could fall again

While Prime Minister Theresa May survived her party’s no-confidence vote she still faces a struggle to push through her Brexit plan and observers warn the pound could fall again While Prime Minister Theresa May survived her party’s no-confidence vote she still faces a struggle to push through her Brexit plan and observers warn the pound could fall again AFP

That followed news China had agreed to resume importing soybeans — a major boost for US farmers — as well as remove a levy on US autos imposed earlier this year in response to Donald Trump’s initial tariffs.

China’s technology concession “is far more relevant than China agreeing to restart purchases of American soybeans, or even reducing the tariff on US car imports”, said National Australia Bank strategist Ray Attrill.

Canada’s release on bail of a top executive at Chinese telecoms giant Huawei, whose arrest had sparked fears of an adverse impact on the trade talks, also soothed worries.

– Dollar dips –

Asian markets extended Wednesday’s gains, which helped reverse some of the huge losses suffered last week.

Tokyo ended the morning one percent higher, while Hong Kong and Shanghai both surged 1.3 percent.

Sydney climbed 0.4 percent and Seoul was 0.5 percent higher, while Singapore and Taipei each rose 0.3 percent. Wellington, Manila and Jakarta were also well in positive territory.

The upbeat mood provided another lift to higher-yielding, riskier currencies, with the South African rand more than one percent up, while the Chinese yuan bounced 0.3 percent.

Sterling is stuck around 20-month lows but held up against the dollar after gaining more than one percent Wednesday in reaction to Prime Minister Theresa May winning a no-confidence vote by her ruling Conservative party.

Investors welcomed news she had seen off the challenge, which secures her leadership for the next 12 months, but she had to concede to stepping aside before the 2022 election, while the vote showed that more than a third of her own colleagues wanted her gone now.

It also highlights the uphill struggle she faces in pushing through a controversial Brexit deal that has been slammed from all sides. She had already called off a vote Tuesday on the agreement, knowing it would fail.

May is now hoping EU leaders will provide some concessions to help her pass the legislation but with little hope of concessions from Brussels, the chances Britain will leave the bloc with no deal are growing, which analysts have said could be economically calamitous.

“The result neither guaranteed the pound’s stability nor paves the way for a successful Brexit deal,” said Masakazu Satou, senior analyst at Gaiame Online. “Pound-selling sentiment could revive at any time.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.0 percent at 21,817.62 (break)

Hong Kong – Hang Seng: UP 1.3 percent at 26,536.08

Shanghai – Composite: UP 1.3 percent at 2,636.86

Pound/dollar: DOWN at $1.2618 from $1.2629 at 2130 GMT

Euro/dollar: UP at $1.1368 from $1.1365

Dollar/yen: UP at 113.40 yen from 113.22

Oil – West Texas Intermediate UP 26 cents at $51.41 per barrel

Oil – Brent Crude: UP 34 cents at $60.49 per barrel

New York – Dow Jones: UP 0.6 percent at 24,527.27 (close)

London – FTSE 100: UP 1.1 percent at 6,880.19 (close)

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Trump says China ‘back in the market’ for U.S. soybeans — U.S. Farmers look for new buyers

December 12, 2018

President Donald Trump said on Tuesday that China was buying a “tremendous amount” of U.S. soybeans and that trade talks with Beijing were already under way by telephone, with more meetings likely among U.S. and Chinese officials.

Trump told Reuters in an interview that the Chinese government was “back in the market” to buy soybeans after a Dec. 1 truce in the U.S.-China trade war.

But traders in Chicago said they have seen no evidence of a resumption of such purchases following China’s imposition of a 25 percent tariff on U.S. soybeans in July.

Related image

“I just heard today that they’re buying tremendous amounts of soybeans. They are starting, just starting now,” Trump said in the interview.

Trump also said he believes China will soon cut tariffs on U.S. autos to 15 percent from the current 40 percent level.

“I think they’re looking to do it immediately, very quickly,” he said.

A Trump administration official earlier told Reuters that China’s plan to cut car tariffs was outlined in a phone call between Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

SOYBEAN SALES AWAITED

U.S. government data has not shown any soybean sales to China since July, when Beijing imposed tariffs on U.S. supplies of the oilseed in retaliation for U.S. duties on Chinese goods.

Traders have been watching closely for signs of confirmation of a resumption of Chinese buying of U.S. soybeans, particularly after Trump tweeted on Tuesday morning that “very productive conversations” were going on with China. “Watch for some important announcements!” he added.

Chicago Board of Trade soybean futures edged higher on Tuesday on hopes that new deals would be signed soon, but there were no signs of increased activity in the cash markets, traders said.

U.S. Agriculture Department rules require exporters to promptly report sales of 100,000 tonnes or more of a commodity made in a single day.

China last year purchased about 60 percent of U.S. soybean exports in deals valued at more than $12 billion. With those exports gone, soybean prices had tumbled to their lowest in a decade, heaping pain on U.S. farmers, a key Trump constituency.

Trump and Chinese President Xi Jinping called a temporary truce in their trade war on Dec. 1. Trump agreed to postpone for 90 days a Jan. 1 increase in tariffs on Chinese goods while the two sides negotiated over increased Chinese purchases of American farm and energy commodities, an end to forced technology transfers and stronger protections for U.S. intellectual property in China.

Trump said on Tuesday that those negotiations were already taking place by telephone.

“We’ll probably have another meeting. And maybe a meeting of the top people on both sides,” Trump said. “If it’s necessary, I’ll have another meeting with President Xi, who I like a lot and get along with very well.”

Trump did not offer any timetable for further face-to-face meetings among U.S. and Chinese officials.

He said he would wait to increase tariffs on Chinese goods to 25 percent from 10 percent until it becomes apparent whether the United States and China can make a deal.

Reporting by Roberta Rampton and Jeff Mason; Additional reporting by Tom Polansek and Michael Hirtzer in Chicago; Writing by David Lawder; Editing by Sandra Maler and Leslie Adler

Reuters

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U.S. Soybean Farmers Work to Loosen China’s Grip

Agriculture officials are looking to Asia and Europe amid trade tensions, while producers consider new domestic uses.

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CHICAGO—U.S. soybean farmers worked for decades to make China their biggest foreign customer. Now they face a tougher challenge: weaning themselves off the market.

As trade tensions cut deeply into exports, U.S. soybean farmers, industry groups and government officials are seeking a stronger foothold in international markets beyond China, including Europe and Southeast Asia.

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