Posts Tagged ‘technology’

Trump’s tariffs prove tougher obstacle than China expected 

August 12, 2018

Beijing leaders weigh likely effects of retaliation on domestic economy

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Xi Jinping’s administration has sought to stabilise China’s domestic economy, currency and stock markets, while also appealing to people’s patriotism © AFP

By Tom Mitchell in Beijing

As China’s top leaders huddled on their annual summer retreat on August 3, US President Donald Trump loomed large over their deliberations.

Just two days earlier, Trump administration officials had said they were considering taxing Chinese exports worth $200bn at 25 per cent — compared to a previously announced tariff of 10 per cent. The world’s two largest economies had formally started trade hostilities in July, when they slapped punitive duties on $34bn of each other’s exports.

Chinese officials hoped their unwanted trade war with the US would pause there, at least for the summer. “Everyone has been surprised by Trump,” said one Chinese economist who is close to Beijing policymakers. “Most Chinese officials assumed that Trump was just trying to push the boundary but would eventually back off.”

Mr Trump has instead pressed ahead with his efforts to turn up the heat on Chinese President Xi Jinping. Next week, the US will impose already announced tariffs on another $16bn in Chinese exports, which will be matched by Beijing.

In the face of this unprecedented economic and geopolitical challenge, Mr Xi’s administration has sought to stabilise China’s domestic economy, currency and stock markets, while also appealing to people’s patriotism.

In its most recent meeting on July 31, the Chinese Communist party’s politburo — comprising its 25 most senior officials — called for “stable employment, stable finance, stable foreign trade, stable foreign investment, stable investment and stable expectation”.

Days later at Beidaihe, a seaside resort near the Chinese capital, politburo member Chen Xi urged a group of the country’s leading scientists to “keep a patriotic heart” and help China “independently control core technologies”. 

During the two months before the Politburo’s appeal for economic stability, the renminbi had fallen more than 6 per cent against the dollar to a low of 6.85 — a huge move for the carefully controlled currency. Since the Politburo’s statement, the renminbi has traded sideways.

The country’s stock markets, which Mr Trump gleefully noted on August 4 had dropped more than 20 per cent this year, have gained ground this week.

This week, China’s central bank guided interbank lending rates to their lowest levels since the country’s stock markets crashed three years ago. It also reimposed rules that make it more expensive to bet against the renminbi.

Chinese officials must strike a balance between their determination to reduce financial risks and ensuring that economic growth does not slow too sharply in the face of Mr Trump’s onslaught. “The authorities have not given up on [reducing] risk, but they also want to support the real economy,” said Andrew Polk at Trivium, a Beijing consultancy. “The two may not be compatible.”

Keeping the currency at less than Rmb7 to the dollar, which one prominent central bank adviser this week called an important “psychological barrier”, could prove expensive.

“In an environment where growth continues slowing down and the China-US relationship doesn’t improve, holding at seven would just raise a lot of other issues,” said one currency strategist. “You would have to burn reserves, tighten capital controls and tighten monetary conditions, which runs against your current monetary policy.”

In its quest for stability on all fronts, the Chinese government has had to calibrate its response to Mr Trump’s escalating tariff threats. “Beijing is de-emphasising ‘retaliation equal in intensity and scale’ because that is difficult to execute without acceptable pain to the Chinese economy,” said Yanmei Xie, a China political analyst at Gavekal Dragonomics.

When Mr Trump’s second round of tariffs takes effect on August 23, only 10 per cent of China’s exports to the US — or 2.2 per cent of its total exports — will have been affected. As the official China Daily newspaper said in a commentary this week, “the two countries’ trade conflict is merely push and shove at the moment”.

But if the Trump administration follows through on its most recent threat against an additional $200bn worth of Chinese exports, bringing the total value of affected goods to $250bn, about half of China’s exports to its largest trading partner — and 11 per cent of its total exports — will be taxed at 25 per cent. Last year China exported goods worth $505bn to the US.

In contrast China, which imported US goods worth $130bn last year, has already taxed — or threatened to tax — US exports worth $110bn.

In its response to Mr Trump’s latest 25 per cent tariff threat, China’s commerce ministry said it would respond with duties ranging between five and 25 per cent. Products that are harder to source from countries other than the US will be taxed at lower rates. Chinese officials have, for now, have exempted US oil exports from retaliation. 

Having hoped in vain for the best, they are also now girding themselves for the worst. “Some people are loath to see a lion awaken or a dragon take off, feeling uncomfortable with a population of more than 1.3bn living a better life,” the Communist party’s flagship newspaper, People’s Daily, said in a commentary on Thursday. “We will stand firm.”


China’s lead trade negotiator Liu He joins technology panel

August 9, 2018

Vice-premier named deputy head of revamped policy committee in latest evidence of the growing importance of technology to the Chinese government

South China Morning Post

PUBLISHED : Thursday, 09 August, 2018, 8:02pm
UPDATED : Thursday, 09 August, 2018, 9:21pm
 Vice-Premier Liu He is now deputy head of China’s policy group on science and technology. Photo: AFP

China’s top trade negotiator Liu He has been given another potentially influential position, on the country’s technology development committee, showing the leadership’s growing trust in him despite escalating tensions with the US.

The State Council, China’s government cabinet, has reorganised a high-level policy group on science and technology and assigned its deputy leadership to Vice-Premier Liu He, one of Chinese President Xi Jinping’s most trusted advisers.

Mainland and Hong Kong tech shares rose on Thursday amid hopes that the revamping of the technology leading group will mean more support for the sector.

Liu now has four top economic management titles, including leading trade talks with the United States, heading the powerful Financial Stability and Development Committee that manages China’s financial and economic risks, and leading the long overdue reform of state-owned corporate enterprises.

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China’s trade negotiator Liu He

The new position further increases Liu’s influence in the government, which could give him more leverage in any future talks with US President Donald Trump’s administration.

Trump’s escalating trade sanctions are aimed at the hi-tech industries that are the focus of the Chinese government’s “Made in China 2025” plan, which the US argues benefits from unfair government subsidies and non-financial support.

It is unclear what effect Liu’s appointment may have on China’s industrial policy in trade talks with the US, according to Ether Yin, an partner from Beijing-based research firm Trivium China.

“On one hand, Liu, as a technocrat, has always been involved in making industrial policies to support industrial growth. He is not going to sacrifice that for a deal with the US,” Yin said.

“On the other hand, even if he wants to make some sort of concession as China’s point man on trade, it’s not totally up to him to decide and won’t easily win support from higher up.”

To some extent, Liu’s new role was anticipated by observers. On April 3, he visited the Ministry of Science and Technology, listening to reports from the top science and engineering academies and reminding Chinese scientists of the “extreme significance” of science and technology in China’s long-term strategic plan.

Over the past two decades, China’s technology sector has been of lesser importance in Communist Party politics. Liu’s presence has underlined the sector’s upgraded significance in the central government’s agenda.

The National Science, Technology and Education Leading Group in the State Council has traditionally taken charge of developing the country’s major policies on science, technology and education. An official statement released on Wednesday said education had been removed from its remit.

“The committee renaming shows that Beijing is attaching much importance to science and technology, particularly given the ongoing trade disputes between the US and China and the US’ restriction of China on hi-tech development,” said Hu Xingdou, a Beijing-based economic analyst.

“Under such circumstances, it was necessary to create a separate science and technology leadership group to better coordinate and improve innovation.”

As the trade war continues, China is rethinking how to eliminate its technology gap with the US in a range of industries.

Some Chinese scholars argue that state media has oversold the country’s technological achievements and goals, and so fuelled concerns in the West. Beijing’s plan for industrial modernisation emphasising hi-tech industries, known as “Made in China 2025”, has become the primary target for Trump’s protectionist moves.

Lately, Beijing has begun to play down its technological ambitions in public, with muted references in Chinese media coverage. At a half-yearly briefing on the country’s industrial development late last month, Huang Libin, spokesman from the Ministry of Industry and Information Technology, said “Made in China 2025” was a long-term strategy that needed to be viewed “objectively” by the global community.

Hu said it was vital for China to revamp its scientific and technological work to make the use of funds less wasteful and keep research more closely connected with real-life applications. “China’s science and technology research system has a series of problems,” Hu said. “Only by conducting a top-down reform can China manage to secure core technologies instead of leaving them to other countries.”

The National Science and Technology Leading Group was first set up in 1982 to discuss long-term plans for developing Chinese science and technology programmes, under the reform and opening up policy introduced by Chinese paramount leader Deng Xiaoping. The panel added education to its policy mandate in 1998.

Handling of U.S. trade dispute causes rift in Chinese leadership: sources

August 9, 2018

A growing trade war with the United States is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, according to four sources close to the government.

President Xi Jinping still has a firm grip on power, but an unusual surge of criticism about economic policy and how the government has handled the trade war has revealed rare cracks in the ruling Communist Party.

A backlash is being felt at the highest levels of the government, possibly hitting a close aide to Xi, his ideology chief and strategist Wang Huning, according to two sources familiar with discussions in leadership circles.

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Wang Huning with Xi Jinping

A prominent and influential academic whose views have found favor in some party quarters has also come under attack for his strident views on Chinese power.

Wang, who was the architect of the “China Dream”, Xi’s vision for China to become a strong and prosperous nation, has been taken to task by the Chinese leader for crafting an excessively nationalistic image for the country, which has only provoked the United States, the sources said.

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“He’s in trouble for mishandling the propaganda and hyping up China too much,” said one of the sources, who has ties to China’s leadership and propaganda system.

The office of the party’s spokesman did not respond to a request for comment on Wang and his relationship with Xi, or on whether China had erred in its messaging in the trade war.

There is a growing feeling within the Chinese government that the outlook for China has “become grim”, according to a government policy advisor, following the deterioration in relations between China and the United States over trade. The advisor requested anonymity.

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Those feelings are also shared by other influential voices.

“Many economists and intellectuals are upset about China’s trade war policies,” an academic at a Chinese policy think tank told Reuters, speaking on condition of anonymity due to the sensitivity of the issue. “The overarching view is that China’s current stance has been too hard-line and the leadership has clearly misjudged the situation.”

That view contrasts with the thinking at the beginning of the year of many Chinese academics who had touted China’s ability to withstand the trade row in the face of Trump’s perceived political weakness at home.

China thought it had reached a deal with Washington in May to avoid a trade war, but was shocked when the Trump administration, in Beijing’s eyes, went back on that agreement.

“The evolution from a trade conflict to trade war has made people rethink things,” the policy advisor said. “This is seen as being related to the exaggeration of China’s strength by some Chinese institutions and scholars that have influenced the U.S. perceptions and even domestic views.”

One official who is familiar with China’s propaganda efforts said the messaging had gone astray.

“In the trade war, the line of thinking in the propaganda has been that Trump is crazy,” said the official. “In fact, what he is scared of is us getting strong.”


Under Xi, officials have become increasingly confident in proclaiming what they see as China’s rightful place as a world leader, casting off a long-held maxim of Deng Xiaoping, the former paramount leader who said the country needed to “bide its time and hide its strength”.

That confidence has been apparent as the government pushes its Belt and Road initiative to develop trade routes between East and West and takes a hard line on territorial issues such as the South China Sea and Taiwan.

Hu Angang, an economics professor at Tsinghua University and an expert in the field of “Chinese exceptionalism”, is one prominent advocate for the view that China has achieved “comprehensive national power”.

In recent weeks, Hu has faced a public backlash, with critics blaming him for making the United States wary of China by trumpeting and exaggerating its relative economic, technical and military might.

That view of Hu is also shared by some people in official circles, according to the policy advisor.

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Chinese foreign minister Wang Yi. Some say the problem is Chinese arrogance while ignoring international laws and norms….

Hu declined to comment when contacted by Reuters.

The cracks within the party come as China’s stock markets and currency have slumped, and the government has struggled to shore up the economy to cushion the impact of the trade war.

China in recent weeks has encouraged more lending and pledged to use fiscal policy – including tax cuts and more funding for local governments – to combat slowing economic growth and rising uncertainty driven in part by the escalating trade war.

Xi has had other fires to hose too, including public anger over a vaccine fraud case and protests in Beijing this week by investors in failed online lending platforms.

Meanwhile, top leaders are believed to be meeting for secretive annual talks, most likely at the seaside resort of Beidaihe, leaving a policy vacuum as Xi and other officials all but vanish from state media. Based on what has happened in previous years, that could be for up to two weeks.

It is unclear if Wang, the propaganda boss, will face any consequences, and there may be other reasons for the tensions within the party related to him.

A third source with ties to the leadership told Reuters the tension had to do with Wang opposing a cult of personality that has been forming around Xi.

Wang still features in state media and diplomats and leadership sources say he is unlikely to be removed from the Standing Committee, the party body that runs China, in what would be an unprecedented move.

Though official media has in recent days been filled with defiant commentary regarding the United States and the trade war, there have been signs of a shift in China’s messaging.

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Beijing has begun downplaying Made in China 2025, the state-backed industrial policy that is core to Washington’s complaints about the country’s technological ambitions.

State television’s English-language news channel CGTN, which is aimed at foreigners, has also been focusing on how ordinary Americans will be affected by more expensive prices for cheap made-in-China consumer goods and the damage tariffs will do to the U.S. economy.

But the thinking in Chinese government circles is that the damage has already been done – and that China has learned the hard way that its domestic propaganda is now being scrutinized abroad in a way it never was before.

“It’s impossible for China to ‘bide its time and hide its strength’, but at least we can control the volume of our own propaganda and tell China’s story the proper way,” the policy insider said.

“When the size of China’s economy was small, it got little outside attention but China is now closely watched.”


China retaliates with tariffs on more U.S. goods — “China cheats, and another round of tariffs on China will not fix the problem.”

August 9, 2018

China on Wednesday showed no signs of backing down in its escalating trade war with the U.S., announcing that it will begin imposing additional 25% tariffs on $16 billion of American goods starting Aug. 23.

The announcement by China’s Commerce Ministry came a day after the Trump administration formalized its own additional tariffs of the same size and on the same value of Chinese goods, effectiveon the same date.

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Containers at the Yangshan Deep-Water Port in Shanghai Photograph: Johannes Eisele/AFP/Getty Images

Both moves were expected as the tit-for-tat trade battle continues. The new U.S. tariffs are “very unreasonable,” the Chinese Commerce Ministry said in a statement.

China’s new tariffs, originally outlined in June, will hit 333 categories of U.S. imports, including some vehicles, fiber optic cables, industrial chemicals, gasoline and other fuels.

Both countries slapped tariffs on $34 billion in imports from each other last month as President Trump has sought to force changes in China’s policies to reduce the U.S. trade deficit with the Asian superpower.

Trump has threatened to place tariffs on an additional $200 billion in Chinese imports. Last week, Trump tried to increase pressure on Beijing by directing administration officials to consider more than doubling the size of those tariffs, to 25% from the 10% initially proposed in July.

The U.S. trade representative’s office announced on Tuesday that it was moving forward with additional 25% tariffs on $16 billion of imports from China. Customs officials will begin collecting those on Aug. 23 on 279 categories of goods, including motorcycles, fiber optic cables and railway cars.

The National Assn. of Manufacturers trade group warned of the effects of the trade battle on the U.S. economy and urged the Trump administration and Chinese officials to renew negotiations to resolve the dispute.

“Two things are abundantly clear to manufacturers: China cheats, and another round of tariffs on China will not fix the problem,” Jay Timmons, the group’s president, said in response to the latest U.S. tariffs on Chinese goods.

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Jay Timmons, National Association Of Manufacturers

“While these additional tariffs may be an attempt to create more leverage, they also increase the risks for manufacturing in America and add to mounting uncertainty,” he said. “We are already seeing price increases that will be felt by consumers and working families, and additional retaliatory tariffs could close major markets off to U.S. exports.”

China appeared unwilling to back down.

“Some people selfishly swim against the tide and act against morality, wantonly raising the barrier of tariffs and waving the stick of hegemony everywhere,” said an editorial published Wednesday by the official Xinhua News Agency, the Wall Street Journal reported.

Bloomberg was used in compiling this report.

Germany Goes More Protectionist to Keep China From Buying Technology Companies — “This is about public order or national security.”

August 7, 2018
Germany plans further foreign investment rules aimed at curbing China’s predatory practices

Threshold to veto deals will be lowered as concern grows over Chinese acquisitions

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Protectionist sentiment has been growing in Germany since the €4.5bn acquisition of Kuka, an industrial robotics company, by Chinese appliance maker Midea in 2016 © Bloomberg

By Guy Chazan in Berlin

Germany is to increase its powers to block foreign investments by significantly lowering the threshold for deals that can be subject to ministerial veto, in a further sign of growing protectionist sentiment towards Chinese acquisitions.
Berlin can veto deals that involve the purchase of at least 25 per cent of the equity of a German company by an entity from outside the EU, and only if they endanger public order or national security. Ministers now want to reduce that threshold to 15 per cent.Peter Altmaier, economics minister, told the newspaper Die Welt that the threshold would be lowered “so that we can check more acquisitions in sensitive sectors of the economy”. Die Welt said the new bill could come into force this year.“We want to be able to take a much closer look at companies in the defence sector and in critical infrastructures, and certain other civilian technologies that are relevant to security, such as IT-security,” Mr Altmaier said.No automatic alt text available.Germany is increasingly intervening to stop Chinese investments, particularly in companies operating in critical infrastructure, amid fears that some of its most advanced technology is ending up in Chinese hands.

Last month, the government directed state development bank KfW to take a 20 per cent stake in 50Hertz, a high-voltage power network operator, to pre-empt the stake’s acquisition by a Chinese state investor.

Last week a Chinese company, Yantai Taihai, withdrew its bid for Leifeld Metal Spinning, a small German machine tool manufacturer that specialises in materials for the aerospace and nuclear industries, after the government moved to block the deal. It would have been the first use of Germany’s foreign investment law to veto a mergers and acquisitions transaction.

Germany’s tougher stance is part of a global backlash against Chinese takeovers. President Donald Trump is expected to sign into law measures to expand the powers of the Committee on Foreign Investment in the US (Cfius), an inter-agency panel that reviews foreign investments for national security threats. Meanwhile the UK recently unveiled a 120-page policy to enhance government powers to prevent foreign purchases of security-sensitive British assets.

China has also hit back. Its recent move to scupper a $44bn bid by chipmaker Qualcomm for a Dutch rival was seen by many experts as retaliation for a string of decisions by Cfius to reject Chinese acquisitions of US companies.

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Protectionist sentiment has been growing in Germany since the €4.5bn acquisition of Kuka, a leading industrial robotics company, by Chinese appliance maker Midea in 2016.

Germany’s wariness about Chinese investment has increased since the emergence of Made in China 2025, President Xi Jinping’s 10-year plan to transform the country from a low-cost manufacturer into a high-tech power dominant in 10 advanced industries.

“They have made clear they will pursue that goal with every means available,” says Mikko Huotari, deputy director of Merics, a think-tank focused on Asia.

Germany’s main business lobby, the BDI, gave a cautious response to the proposed change to the law. “Germany is reliant on its open investment climate,” said Joachim Lang, the group’s managing director.

He said capital was increasingly coming from dynamic emerging markets and “a smart economic policy must take care to ensure that Germany remains attractive for investors”. Nearly 3m workers in Germany are employed at companies that are owned by foreigners, he added.

Mr Lang said the lower threshold must “be focused strictly on protecting national security”.

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This is the second time in little more than a year that Germany has tightened its foreign investment law to expand its ability to block deals deemed to endanger national security.

Last year the law was broadened to apply to all companies operating in “critical infrastructure” such as energy and water supply networks, electronic payments, hospitals and transport systems. It also gave the government longer to investigate takeovers, expanding the timeframe for such probes from two to four months.

The new version of the law will also cover companies involved in the interception of telecoms, cloud-computing services, control systems for power plants and power networks, the provision of drinking water or sewage disposal, systems for cash supply and credit cards and the settlement of securities transactions, among other sectors.

“Of course we want companies to continue to invest in Germany,” Mr Altmaier said. “But we also have a duty to protect the interests of security and public order.”


U.S.-China Trade War: “It’s such a fundamental miscalculation that the Chinese are going to buckle.”

August 4, 2018

The trade war between the world’s two biggest economies is taking on a life of its own.

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When President Donald Trump first threatened to slap tariffs on Chinese goods in March to punish Beijing for stealing American intellectual property, trade experts warned the two nations risked slipping into a downward spiral of tit-for-tat trade actions. The global economy now appears to be living that reality, with the trade war settling into a regular rhythm of counterblows.

The latest shot came Friday, when China released a list of $60 billion in U.S. goods that Beijing intends to hit with tariffs in retaliation for Trump’s plan to impose duties on $200 billion in Chinese imports. While the Chinese threat isn’t proportional in absolute dollars, it’s actually an escalation on a relative basis, given China buys less from the U.S.

Within hours, White House economic adviser Larry Kudlow promised Trump wouldn’t back down until China changed its trade practices. “Don’t underestimate President Trump’s determination to follow through,” Kudlow told Bloomberg Television in an interview.

“They keep digging the hole deeper, violating the first rule of holes, which is when you’re in one, stop digging,” said William Reinsch, a trade expert at the Center for Strategic and International Studies who worked at the Commerce department during the Clinton administration.

Amid the more heated rhetoric, U.S. stocks ended the week up about 0.8 percent, the fifth straight week of advances. The Chinese equity market this week slumped 5.9 percent, the steepest drop since February.

Hopes had been rising that Trump might drop his trade-war campaign after the president announced a deal last week with European Commission President Jean-Claude Juncker that would see the U.S. and EU cut tariffs and other barriers.

There are also signs the Trump administration is trying to revive formal negotiations with Beijing. There’s “some hint” the Chinese may be warming to the idea, and recently there’s been some communications at the highest levels of both governments, Kudlow said. A White House spokeswoman said the administration remains open to further talks.

‘Chronic Problem’

But finding common cause with Europe is one thing. America’s differences with China, a one-party state that has promised to open its markets gradually, run deep. U.S. Trade Representative Robert Lighthizer last week called trade tensions a “chronic problem” that would likely take years to resolve. Kudlow cited state subsidies and forced technology transfers as behaviors that the Trump administration wants China to end.

Earlier this week, the U.S. said it was considering more than doubling to 25 percent the tariffs for the $200 billion in Chinese imports that are under public review.

The conflict with China is taking on a “cyclical” pattern with roughly two weeks of escalation followed by two weeks of relative calm, said Mark Rosenberg, chief executive at Geoquant Inc., a firm that uses computer models to gauge political risk.

“These two sides effectively have equal leverage over one another,” Rosenberg said. “No one has a real incentive to blink first. That suggests this is going to be a more protracted conflict.”

The question is what other tools the two countries may use, once they have no more goods upon which to impose tariffs. The U.S. imported $506 billion in goods from China last year, and Trump has threatened to slap duties on effectively all imports from the Asian nation. China imported $130 billion in goods from the U.S. in 2017, according to U.S. figures.

Yuan’s Decline

Currencies would be one option. Kudlow suggested Friday that China is letting its currency fall to offset losses from the trade war, though he added that the decline is partly due to weak economic fundamentals. The People’s Bank of China stepped in to support the yuan on Friday after the currency slid to the lowest in more than year.

In the meantime, signs of the trade war are creeping into the economic data. U.S. manufacturers are considering expanding outside the country to avoid the widening trade conflict, according to the Institute for Supply Management’s July survey. Such sentiment may weigh on business investment, which contributed last quarter to the fastest pace of growth in four years.

The Trump administration may be overestimating its ability to pressure Beijing into changing its economic behavior, said Stefan Selig, managing partner at BridgePark Advisors LLC and former trade undersecretary at the Commerce Department under Barack Obama. China’s one-party system gives President Xi Jinping several advantages in a trade war, such as the ability to control the nation’s media, Selig said.

“It’s such a fundamental miscalculation that the Chinese are going to buckle,” Selig said.

White House Urges China Address ‘Unfair Trading Practices’ Not Tariff Retaliation

August 3, 2018
White House press secretary Sarah Huckabee Sanders speaks during the press briefing at the White House, Monday, May 7, 2018, in Washington. Sanders said the White House has compete confidence in Gina Haspel, Preisdent Trump's nominee to head the Central Intelligence Agency. (AP Photo/Evan Vucci)
AP Photo/Evan Vucci
Stop unfair trading practices, stop technology theft and intellectual property theft…

White House Press Secretary Sarah Sanders responded to news of China’s retaliatory tariffs, urging the country to instead address its unfair trading practices.

“Instead of retaliating, China should address the longstanding concerns about its unfair trading practices, many of which are laid out in USTRs 301 report,” Sanders told Breitbart News in a response to news of the $60 billion in Chinese retaliatory tariffs on U.S. goods.

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US Trade Representative Robert Lighthizer with President Trump

The news came Friday out of China’s commerce ministry that the country will be imposing$60 billion in retaliatory tariffs on news that the United States plans to raise the rate for $200 billion in proposed tariffs on China, from 10 percent to 25 percent.

While previously China issued retaliatory tariffs targeting U.S. goods in areas of the U.S. where President Trump typically finds support, Friday’s announcement from China did not identify which U.S. goods would be hit with the $60 billion in new retaliatory tariffs.

The Trump administration has issued temporary emergency financial support of $12 billion to help farmers hard-hit by China’s retaliatory tariffs such as soybean farmers. The move is meant to bide time while the tariffs fight between the two nations plays out.

President Donald Trump and his administration have repeatedly called on China to stop unfair trading practices, stop technology and intellectual property theft, and for a decrease in the U.S. trade deficit with the China.

The U.S. has already levied tariffs on $34 billion in Chinese goods with tariffs on another $16 billion set to go into effect in the near future. President Trump has proposed additional tariffs on up to $500 billion in Chinese goods if China does not change its unfair trading practices.

Less than a month after U.S. Trade Representative Robert Lighthizer’s June rebuke of China, the European Union, and other countries for retaliatory tariffs on U.S. goods, European Commission President Jean-Claude Juncker met with President Trump at the White House. Immediately following that meeting the two world leaders announced that they would work toward and in the spirit of a “zero tariffs, zero non-tariff barriers, zero subsidies on non-auto industrial goods” trade deal.

 Michelle Moons is a White House Correspondent for Breitbart News — follow on Twitter @MichelleDiana and Facebook


China threatens new tariffs on $60 bn worth of US goods — China wants “mutual respect” and a “cool-headed” approach

August 3, 2018

Beijing warned Friday it was prepared to impose new tariffs on $60 billion worth of US goods if Washington ups the ante in the escalating US-China trade war.

© AFP/File | Washington and Beijing are locked in battle over American accusations that China’s export economy benefits from unfair policies and subsidies

The commerce ministry issued a statement saying the new duties would be applied if Washington pulled the trigger on President Donald Trump’s threat to raise tariffs on $200 billion worth of Chinese goods.

The statement said China reserves the right to apply “other countermeasures”.

“China always believes that consultation on the basis of mutual respect, equality and mutual benefit is an effective way to resolve trade differences,” the ministry said.

“Any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties.”

The threat came a day after Chinese officials appealed for dialogue based on “mutual respect”, with Foreign Minister Wang Yi urging the United States to remain “cool-headed”.

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Then U.S. Secretary of State John Kerry (R) talks with Chinese Foreign Minister Wang Yi before the start of a meeting September 18, 2013. Each has a key role in the Iran Nuclear Deal. Credit Win McNamee/Getty Images

US officials said Wednesday that Trump had asked the US Trade Representative Robert Lighthizer to consider increasing the proposed tariffs on $200 billion worth of Chinese goods to 25 percent from the planned 10 percent.

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US Trade Representative Robert Lighthizer with President Trump

Washington and Beijing are locked in battle over American accusations that China’s export economy benefits from unfair policies and subsidies, as well as theft of American technological know-how.

Trump has threatened to slap tariffs on virtually all of China’s exports to the United States in the tit-for-tat trade conflict.


Image: Treasury Secretary Steven Mnuchin Testifies To House Financial Services Committee On The State Of The Int'l Financial System

Steven Mnuchin

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China’s trade negotiator Liu He

Google’s Secret China Project Sparks Fury Among Workers

August 2, 2018

The people that refused to help the Pentagon are now helping censorship in China….


  • Some staff criticize plans to build China ‘censorship engine’
  •  Search app fits with CEO strategy to make Google truly global

Google staff awoke on Wednesday to surprising news: Their company is working on a search app tailored, and censored, for China. The project, kept secret from all but select teams and leaders, sparked a furious internal debate.

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Yet the move couldn’t have been entirely surprising for Googlers.

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Sundar Pichai

Sundar Pichai, chief executive officer since 2015, has made no secret of his desire to take the search giant back to mainland China. The executive is more pragmatic about the world’s largest internet market than Google’s founders, who pulled search from the mainland in 2010 over censorship concerns.

Under Pichai, Google has invested in Chinese companies, met with its leaders and made it a priority to spread Google’s artificial intelligence technology across the country. But bringing search back would be Pichai’s boldest move yet and will put his personal stamp firmly on the company.

Google is embracing evil

Co-founders Larry Page and Sergey Brin built Google to “organize the world’s information and make it universally available.” They viewed China as a threat to the company’s stance as a defender of the open web. Pichai, in contrast, sees China as a hotbed of engineering talent and an appealing market.

Pichai’s new leadership style and priorities haven’t always sat well with the Google rank and file. Within hours of the China search news breaking, several staff privately criticized the plans. Two employees who spoke to Bloomberg News compared it to Project Maven, a Google AI contract with the Pentagon that sparked an internal revolt earlier this year. The company is not renewing that deal.

Another person who has seen some early examples of the Chinese search app, code-named Dragonfly, described it as a “censorship engine.” People trust Google to share true information and the Chinese search app is a betrayal of that, the employee said. The Google workers asked not to be identified because they’re not permitted to discuss internal matters.

One employee transferred to a different role at the company because of ethical concerns with Dragonfly, according to an internal message viewed by Bloomberg News. An unnamed company vice president asked to keep details of the project private so they would not leak to the public, the internal message read.

Google said on Wednesday that the company does not “comment on speculation about future plans” and declined to comment further. In 2010, Brin, now president of parent Alphabet Inc., told the Wall Street Journal, that China’s policies of censorship and surveillance has the “same earmarks of totalitarianism” as Soviet Russia, where he was born. Brin did not respond to an email requesting comment on Wednesday.

Some Googlers, however, posted missives of support for the project on internal message boards on Wednesday. Google’s mission of organizing the world’s information shouldn’t leave out a fifth of the planet, one person wrote in a post viewed by Bloomberg News. Another said that boycotting the country did little to change the Chinese government or “bring any positive change.”

A worker in China lamented their inability to access Google services in the country, such as sharing pictures through Google Photos or even recommending the app engine they are working on. “As a Chinese citizen working for a company that my parents and relatives can’t access is demotivating,” the person wrote on a message board.

Dragonfly was a popular topic on Memegen, an internal online photo messaging board and cultural barometer at the company. One meme cited a popular Google slogan — “Put the user first” — with an asterisk attached: “Chinese users excluded, because we do not agree with your government.” A second post questioned the merits of American staff deciding global policies. Westerners debating Google entering China “feels somehow like men debating regulating women’s bodies,” it read.

Pichai has not directly addressed the issue of Chinese censorship. But he and his deputies often note the international scope of the company’s ambition. Diane Greene, CEO of Google’s cloud-computing unit, would not comment on plans to enter China in an interview with Bloomberg News last week. “We want to be a global cloud. Customers want us to be a global cloud,” she said.

In March, two months after opening an AI lab in Beijing, Pichai visited the city and said he was “looking forward to expanding” research efforts there. Two years before that, at the Code Conference, Pichai said, “Google is for everyone. We want to be in China serving Chinese users.”

Search might not be the only way Google is trying to build a China presence. The company is developing a news aggregation app that would comply with the country’s censorship laws, the Information reported, citing unidentified people familiar with the project.

Even if Google were to launch search in China now, it’s unclear if people would use it. Since its departure, Baidu Inc. has come to dominate traditional search while many users have turned away from desktops in favor of using specific mobile apps. That includes looking through Meituan for food, Alibaba for e-commerce, Toutiao for news and WeChat for most other things.

“While Google was blocked, China’s market continued to develop,” said Brock Silvers, managing director of Kaiyuan Capital in Shanghai. “Google may now set aside principle in exchange for Chinese market access, but it seems unlikely to dominate.”

Pichai has been plotting Google’s search moves in China for months, if not years, with an approach focused more on partnerships. Cooperation with internet leader Tencent Holdings Ltd. stands out. Google struck a long-term patent deal with the Chinese company, the owner of WeChat, and said it would usher in further tie-ups. The U.S. company also launched a game available exclusively on WeChat and invested $550 million in Tencent-backed e-commerce site

Yet relations between China and Google’s home country have soured recently amid trade tensions. Facebook’s attempt to open an innovation hub was rejected while Qualcomm Inc. walked away from the chip industry’s biggest deal when mainland regulators didn’t approve it.

It’s hard to imagine Chinese authorities deciding Google’s fate without considering the political climate, said Charles Mok, a legislative counselor in Hong Kong. “Anything that has to do with big American companies now has to do with the U.S.-China trade war,” he said

— With assistance by Alistair Barr, and Lulu Yilun Chen



US puts export controls on dozens of Chinese firms over ‘threat to national security’ as trade tensions escalate

August 2, 2018

Washington’s latest move targets key elements of Made in China 2025 policy

South China Morning Post

PUBLISHED : Thursday, 02 August, 2018, 1:10pm
UPDATED : Thursday, 02 August, 2018, 2:16pm
 A model of a plane made by China Electronics Technology Group Corporation, one of the firms targeted by the latest US measures, on display in Beijing. Photo: Simon Song

Washington has placed restrictions on dozens of key Chinese companies – including state-owned developers of military-use technologies such as air defence and satellite systems – for reasons of national security.

The US Department of Commerce added 44 Chinese entities onto its export control list on Wednesday for posing a “significant risk” to US national security or foreign policy interests in the midst of the heated trade spat between the world’s two largest economies.

In a direct challenge to China’s ambitions to become a technological superpower, driven by the Made in China 2025 policy, the new restrictions target some of the key elements of the policy including air defence systems, satellite communications systems, semiconductors and aerospace products.

Among the eight companies and dozens of their subsidiaries to be affected were the China Aerospace Science and Industry Corporation Second Academy – a research unit of the largest missile systems developer in China – and communications system manufacturer Hebei Far East Communication System Engineering.

Other research institutes under the state-owned technological giant China Electronics Technology Group Corporation (CETC) developing semiconductors, radar technology and microelectronic devices were also affected.

Others on the list included China Volant Industry, which exports and imports aerospace technologies, and China Hi-Tech Industry Import and Export Corporation.

China’s Foreign Ministry Spokesperson Geng Shuang

The US controls will limit that companies’ access to products that the US commerce department deems could have dual military or civilian use and may deny them key components such as nuclear materials, telecoms equipment, lasers and sensors.

Markets reacted on Thursday morning, sending share prices for businesses related to those on the export control list spinning downwards.

GCI Science & Technology, the parent company of Hebei Far East Communications, and Glarun Technology, a subsidiary of CETC, dropped over 5 per cent on the Shenzhen exchange and 7 per cent on the Shanghai markets respectively in morning trading.

The latest US move comes amid the escalating stand-off over trade between the two sides, where negotiations have stalled and Washington has threatened to levy 25 per cent tariffs on US$200 billion of Chinese goods.

Concerns on the trade front centre on the “Made in China 2025” initiative, which Beijing views as central to its development as a hi-tech powerhouse, but Washington sees as an existential threat to its global technological pre-eminence.

Existing tariffs from the US on Chinese goods have already targeted this industrial policy, with 25 per cent duties placed on products such as machinery and equipment, parts and components in the information and communications technology sector, as well as engine and motor parts.

US trade representative Robert Lighthizer

Announcing the latest measures, US trade representative Robert Lighthizer said that Washington needs to “take strong defensive actions to protect America’s leadership in technology and innovation”.

He added: “China’s government is aggressively working to undermine America’s hi-tech industries and our economic leadership through unfair trade practices and industrial policies like Made in China 2025.”

Washington has previously railed against Chinese intellectual property practises, such as forced technology transfers from US companies, and has tightened visa scrutiny for Chinese students seeking to study in strategic fields in the US.

Earlier this year it imposed crippling penalties on the Chinese telecoms giant ZTE over its alleged breaches of UN sanctions on Iran and North Korea, but lifted them last month.