Posts Tagged ‘trade’

Former US Diplomat in China Says Trade War Nearing End

January 16, 2019

Andy Rothman thinks domestic issues on both sides lead to increased motivation to make an agreement — However, not everybody thinks an agreement is imminent.

Rothman was head of macroeconomics and domestic policy office of the US Embassy in Beijing.

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PUBLISHED : Wednesday, 16 January, 2019, 1:03pm
UPDATED : Wednesday, 16 January, 2019, 1:21pm
South China Morning Post

A former US diplomat and China strategist has added his voice to the growing chorus of experts who believe a short-term resolution to the trade war can be reached within months.

Andy Rothman, who spent 17 years in the US foreign service, focused on China, and is now an investment strategist, thinks a deal could be struck by the summer, with domestic issues leading to increased motivation on both sides to make an agreement.

China is facing an economic slowdown that is beginning to show up in regional growth data, while the US stock market has been under-performing, as the long-running federal government shutdown continues.

China’s Vice-Premier Liu He is set to visit Washington before the end of the month, as both sides look for some good news, as challenging economic data continues to rain in.

Rothman was head of macroeconomics and domestic policy office of the US Embassy in Beijing. In the 1990s, he was involved in US efforts to negotiate China’s accession to the World Trade Organisation. He expects the current negotiating deadline of March 1 to be extended.

“Now that a negotiation is seriously underway, there is no reason for the US to go back and put more tariffs in place, as long as progress is being made towards a deal,” he said. “It is rare that a trade negotiation gets finished on time and President [Donald] Trump can extend the deadline.”

In this respect, he agreed with Robert Zoellick, former US Trade Representative under president George W Bush and former World Bank president who also told the South China Morning Post this week that a deal could be struck.

Zoellick said that such a deal would be “transactional” and implied that it would not address long term structural issues in the Chinese economy.

Rothman, however, thought that some significant changes could be achieved within months.

In an interview in Hong Kong this week, he said that a deal might include better market access for American companies in China; better protection of intellectual property (IP) rights; and an agreement by Beijing to stop requiring American companies to transfer technologies to their Chinese partners.

Rothman, who now works for investment company Matthews Asia, which has US$27.4 billion in assets under management, suggested that these changes would also benefit the Chinese economy.

For one, better market access for foreign companies would likely improve the competitiveness of Chinese firms, he said.

“China’s WTO accession led to foreign competition, which in turn helped Chinese companies become more efficient and innovative,” Rothman said.

The period of WTO negotiations that led to China’s accession in 2001, Rothman recalled, led to foreign companies like General Motors selling more cars in China than in the US. However GM’s success also strengthened China’s automotive industry, as Chinese car makers subsequently improved their own models.

Rothman also claimed that China’s economy suffers because of IP theft, with many Chinese companies stealing from each other. This has prevented China from developing strong software, music, film and pharmaceutical sectors.

Accusations of technology theft by China are not new. Rothman recalled that former US president Barack Obama raised a similar issue with his Chinese counterpart Xi Jinping in 2015.

Obama said he and Xi reached a “common understanding” on curbing economic cyber espionage, with the two leaders agreeing that neither government would knowingly support cyber theft of corporate secrets or business information. The agreement stopped short of any promise to refrain from government-to-government cyber spying for intelligence purposes.

“The US would like the Chinese government to follow the American practise of spying solely for government purposes instead of having the Chinese government stealing technology from foreign companies to give to Chinese companies for commercial reason,” said Rothman.

However, the Trump administration says there has been renewed Chinese hacking over the past two years.

Rothman said that since Xi had previously made an agreement with Obama to end state-sponsored espionage attacks on US corporate secrets, it should be relatively straightforward for him to resume that agreement with Trump, especially since China is also facing pressure from other nations to change its behaviour.

“Xi understands this is not just an American problem. German companies do not like this and Japanese companies do not like this. In the end this is not a sustainable way for Chinese companies to grow,” he said.

President Xi understands that other countries including Japan and Germany also believe that China should develop its own technology or license technology properly for the sustainable growth of Chinese industries, Rothman said.

Eliminating such hurdles would set the framework for the longer-term US-China relationship, Rothman said.

However, not everybody thinks an agreement is imminent. Many believe that nothing of substance can be agreed between the world’s two largest economies within three months, including Tommy Wu, senior economist at Oxford Economics, a research house, who said yesterday: “We are unlikely to see negotiations completed before March 1, but because of the progress expected to be made in these talks, the US is likely to postpone the tariff hike again.”


All-out trade war between China and the US leaves no room for optimism

January 15, 2019

S. George Marano says disputes over trade practices are only part of the larger power struggle between the two. Despite recent conciliatory remarks, the conflict is unlikely to wind down any time soon. Expect it to drag on, if not escalate

South China Morning Post
PUBLISHED : Wednesday, 16 January, 2019, 1:01am
UPDATED : Wednesday, 16 January, 2019, 1:41am

Much is being discussed with regard to the US and China seeking a resolution to the ongoing trade war. With representatives meeting, commentators seem optimistic about a solution. Though the optics look encouraging, any agreements should be viewed as short-lived. A resumption of harsher measures, especially from the US, is the most likely scenario.

First, this trade war should be viewed as a tactic in the overall China containment strategy; the ultimate aim of the US is to halt China’s rise. Yet America has never had an economic peer competitor. Its previous conflict with the USSR was fought on ideological grounds.

What’s more, winning or losing the trade war has different requirements for each party. From a US perspective, to win, it needs full Chinese capitulation. From a Chinese perspective, winning means the ability to remain standing. It is hard to see the latter submitting.

On the whole, the US is in the unenviable position of being damned if it does and damned if it doesn’t, with respect to the rise of China. Fundamentally, the US believes China is stealing from it.

The rhetoric around forced technology transfers is one of the major sticking points,according to the Trump administration. It should be noted that the World Trade Organisation encourages developed economies to transfer technology to developing economies, of which China is one.

Conversely, the Chinese believe it is time for their return as a major global power, previously enjoyed before Western intervention. The US’ actions are seen in China as an attempt to suppress this rise. The memories of the “century of shame” are still vivid for many Chinese. More rhetoric from the US will further stoke such sentiment.

The current round of talks, in which US negotiators visited China, have sent some commentators into a spin with suggestions that the trade war might end soon.

Observers should be careful that their optimism doesn’t turn into a denial of the obvious. With the impending March 1 deadline, meaningful approaches to resolving the trade war are still lacking, with token gestures being presented. Any agreements in the interim can be viewed as mere window dressing.

With the instigation and continuation of the dispute by US President Donald Trump and his administration, and the likelihood of Trump extending his presidency to a second term unless impeached, it appears likely that the trade war will continue into the unforeseen future.

Furthermore, with the US economy beginning to suffer, as is to be expected, such a downturn will be presented as China’s fault. This will provide further ammunition for the Trump administration’s bellicose stance towards China.

Moreover, the extraterritorial reach of US law, the threat of economic sanctions, and exporting the trade war to US allies can be interpreted as the next phase. The Huawei case, involving its isolation by US allies and the arrest by Canadian authorities of its chief financial officer on behalf of the US, has set the direction.

These US allies are also major trading partners with China and thus they are at risk from China inflicting severe economic pain in response, which it has done before. These nations are being forced to choose the politics of the US over the economics of China.

Given all these factors, we should expect a continuation, and even an escalation, of the US-China trade war. The only thing that will reverse the US’ current direction is a harsh realisation that it is fighting a losing battle. Nonetheless, with the current pervasive anti-China sentiment, Washington is likely to keep applying pressure.

Overall, any discussion of an agreement to minimise the trade war will only be short-term. We should expect a long and protracted battle as the US doubles down on its approach to China.

While all parties will suffer immensely, it is the US that faces the greatest risks. The implications include a permanent shift in the global order, along with the possibility of global instability for decades.

S. George Marano holds a PhD from the School of Management at RMIT University, Australia, and has an MBA and Master of Commerce from RMIT University


Liu He Will Attend Next Round of US-China Trade Talks — But U.S. Sees “No Progress” on Structural Trade Issues

January 15, 2019

Chinese Vice-Premier Liu He has accepted an invitation to lead a delegation to Washington at the end of this month with the purpose of reaching a deal to end the trade war, according to a source who has been briefed on the arrangement.

Liu, who is overseeing China’s trade negotiations with the United States, is expected to meet US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin during the two-day visit, the source said.

Liu He.    Photographer: Qilai Shen/Bloomberg

The trip will take place on January 30 and 31, dates first reported by Bloomberg and The Wall Street Journal. Mnuchin subsequently confirmed in an interview that he expected Liu to visit Washington this month. The visit comes on the heels of 2½ days of “vice-ministerial” negotiations in Beijing.

The Office of the US Trade Representative (USTR) didn’t immediately respond to a request seeking comment.

“It’s a positive development to show that enough progress was made in talks earlier this month,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, a Washington-based think tank. “But the chance is still slim that a complete resolution will be reached in this round.”

The fact that the next round of talks is scheduled to take place before the Chinese New Year, when the country takes off for a week in celebration, suggested “that both sides tried to take advantage of the momentum in order to move ahead,” Lardy said. The plans also were made as parts of the US government remain shut down amid a stalemate between US President Donald Trump and Democrats in Congress about funding for a wall along the Mexican border.

Since the two sides wrapped up talks earlier this month, China has made a number of concessions, including addressing intellectual property theft and lifting the maximum in foreign ownership in the financial services sector.

“The most likely outcome [in this round] is that the US accepts all the concessions China has made and takes off the tariffs for a period of time to allow China time to enforce on its promises,” Lardy said. “But most importantly, the US ultimately needs to implicitly accept that China was never going to eliminate ownership restrictions by foreign owners in certain sectors such as media.”

Liu, the top economic aide to President Xi Jinping, made a surprise appearance on the first day of the negotiations in Beijing.

After the talks, China’s Ministry of Commerce said in a statement that they were conducted in a “comprehensive, in-depth and detailed manner” that “laid the foundation” for the two sides to solve their long-standing problems.

The USTR issued a statement saying that the sides had touched on issues of “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft of trade secrets for commercial purposes, services and agriculture”.

Also included was China’s pledge to purchase a substantial amount of agricultural, energy, manufactured goods and other products and services from the US.

Before the negotiations wrapped up, Trump tweeted that “talks with China are going very well!”

It will be Liu’s first visit to Washington since May. Liu told Chinese state media after that trip that Beijing and Washington had reached a consensus on “not fighting a trade war”, but the relationship quickly soured.

The US introduced the first round of punitive tariffs on Chinese products in July, which triggered immediate retaliation from Beijing, starting a trade war that roiled global markets and dampened economic outlooks.

The USTR on Monday said operations including “trade negotiations and enforcement” would continue despite the partial government shutdown.

Liu’s trip is also the latest leg in Beijing’s efforts to flesh out the agreements reached by Trump and Xi on the sidelines of the G20 summit.

The two presidents met in Buenos Aires on December 1 and agreed a 90-day “truce” period, during which they would conduct negotiations.

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U.S. senator: Lighthizer saw no progress on China structural trade issues

January 15, 2019

United States Trade Representative Robert Lighthizer did not see any progress made on structural issues during trade talks with China last week, Republican U.S. Senator Chuck Grassley, who held a meeting with him, said on Tuesday.

In his weekly conference call with reporters, Grassley said Lighthizer commented very positively in the Friday meeting on China’s soybean purchases, which resumed in modest amounts last month after Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

Robert Lighthizer   Photographer: Zach Gibson/Bloomberg

“But he (Lighthizer) said that there hasn’t been any progress made on structural changes that need to be made,” Grassley said, and added that those issues would include intellectual property, stealing trade secrets and putting pressure on corporations to share information.

The meeting came after mid-level U.S. and Chinese officials met in Beijing to discuss China’s offers to address U.S. complaints about intellectual property theft and increase purchases of U.S. goods and services. The two sides are trying to reach a deal that avoids a scheduled March 2 escalation of U.S. tariffs on $200 billion worth of Chinese goods.

Grassley said Chinese officials were due to visit Washington for further trade talks in a couple of weeks. “From my point of view … the economy of China is suffering … there is a chance for progress,” he said.

A USTR spokesman could not be immediately reached for comment on Grassley’s remarks to reporters. U.S. stocks pared gains following the news.

Reporting by Humeyra Pamuk; Additional reporting by David Lawder; Editing by Phil Berlowitz


Trump’s mistakes make a China trade deal harder to seal

January 15, 2019

Donald Trump fancies himself as a great negotiator. But he’s made at least two big mistakes that’ll make it difficult for the US to come to a trade agreement with the Chinese.

Eventually, some sort of deal will be reached. Whether it will be honored is another matter. But whatever it turns out to be the talks would have been easier without these errors:

No. 1: Trump let the world know that he wasn’t happy with the level to which the Federal Reserve had raised interest rates.

No. 2: The president has been a cheerleader for the stock market.

By John Crudele
New York Post

Both of these mistakes are completely understandable. As president, Trump wants the stock market to rise and for Wall Street to pay homage to his economic policies.

And, of course, the guy in charge doesn’t want the Fed to raise the cost of borrowing money. That conflicts with the intent of the tax cuts passed by Congress and the White House and put into effect last year — namely, to make more money available to businesses and taxpayers.

So, US trade negotiators were left vulnerable because the Chinese are able to both cause the stock market to go down in price and interest rates to go up.

Trump, the businessman, would never have tipped his hand in this way. Trump, the president, either felt he had no choice, or he had no willpower to let the topics of rates and the stock market be left unsaid.

A few more details may help to make this clearer.

The stock market has been negatively affected by a lot of factors — the trade talks, a slowing economy, interest rate increases and the government shutdown, just to name a few — over the past few months.

One antidote — the way to get stock prices up — is a news event in which Trump or another government official says trade talks with China are going well.

Whether or not there really is progress, the market reacts positively — especially from trading generated by automatic computer programs — whenever the headline comes across that the “talks are going well.”

I could get stock prices up tomorrow if we put that headline above this column and quoted an anonymous source about the great progress.

Conversely, China could get stock prices to fall in the US by saying the talks aren’t going well. And since the president has shown he is so concerned about stock prices, this gives the Chinese great leverage.

Beijing also has great leverage over American interest rates thanks to its ownership of approximately $1.15 trillion worth of US government bonds.

People argue China would never sell large amounts of these bonds because it’d have to invest the money elsewhere. Maybe that’s true, but the Chinese could certainly disrupt the US bond market — and cause interest rates to rise — by simply threatening to unload their holdings.

That translates into a case in which China has enormous leverage because of Trump’s obsession with keeping rates low.

And if that threat is made, the Fed and the US Treasury would have to scramble to find buyers for the massive amount of new government bonds that our government sells each year. Interest rates would spike and President Trump would certainly be displeased.

I guess negotiating with the Chinese over an issue as difficult as trade and tariffs is different from businessman Trump’s browbeating union leaders in the casino industry.

President Trump must realize that by now.


China’s Annual Trade Surplus With U.S. Hits Record Despite Trump’s Tariff Offensive

January 14, 2019

China recorded a trade surplus of $323.32 billion with the U.S. in 2018

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China’s exports to the U.S. rose 11.3% in 2018, while imports from the U.S. inched up 0.7%, data from China’s General Administration of Customs showed.
China’s exports to the U.S. rose 11.3% in 2018, while imports from the U.S. inched up 0.7%, data from China’s General Administration of Customs showed. PHOTO: STR/AGENCE FRANCE-PRESSE/GETTY IMAGES

BEIJING—China’s trade surplus with the U.S. hit a fresh record last year, as robust American demand for Chinese goods undercut the Trump administration’s tariff offensive aimed at narrowing the countries’ lopsided trade gap.

China recorded $323.32 billion in surplus with the U.S. in 2018, representing a 17% jump from the figure in the previous year, according to Chinese government trade data released Monday.

Abetting the record imbalance were a healthy American economy and a weakening Chinese one, some economists and analysts said, which in turn fed U.S. demand for imports and damped demand in China. The Trump administration’s phased deadlines for tariffs, along with threats of more for this year, also sent Chinese exporters racing to fill orders, and a weakening Chinese currency kept the prices of those goods competitive.

The latest data shows “how the tariffs affected the trading behavior of exporters who accelerated their shipments,” said Liu Yaxin, an analyst at China Merchants Securities .Both exports and imports are likely to slow at least for the first half of the year, Ms. Liu said, as frontloaning effects vanish and domestic economic growth slows.

China’s exports to the U.S. rose 11.3% in 2018, while imports from the U.S. inched up 0.7%, data from China’s General Administration of Customs showed.

Bad BalanceChina’s trade surplus with the U.S. hit a newrecord last year, despite Washington’s tariffoffensive.China’s trade surplus with the U.S.Source: Wind

While Chinese figures show a record surplus with the U.S. for 2018, China’s figures routinely show a smaller imbalance than U.S. ones. The countries’ trade figures don’t match due to different calculation methods. Indirect shipments via Hong Kong and other intermediaries are among the factors cited for the discrepancies. Neither the Chinese nor U.S. figures include trade in services, which when factored in, China’s Commerce Ministry says, gives the U.S. more balanced trade with China.

In either case, China’s widening trade surplus is likely to provide ready ammunition to those in the Trump administration who say that the tariff pressure campaign needs to be sustained to get Beijing to correct what the U.S. sees as unfair trade practices.

China’s government has rejected the criticism, saying the trade gap in particular is more a reflection of differences in savings and investment and other economic factors. Beijing also points to changes in its own economy, which is beginning to generate greater demand for imports as levels of wealth rise.

China’s trade gap with the world narrowed last year to $351.76 billion, smaller than 2017’s surplus $422.51 billion, according to Monday’s customs data. Chinese total exports rose 9.9% for 2018, while imports climbed 15.8%. That compared with growths of 7.9% and 15.9%, respectively, for 2017.

U.S.-China Trade Truce: The Challenges Ahead

U.S.-China Trade Truce: The Challenges Ahead
The meeting between Donald Trump and Xi Jinping in Argentina was a success, according to both governments: China pledged to open its market and Washington agreed to postpone raising tariffs. But can China deliver on its promises? Screenshot: CCTV

U.S. and Chinese negotiators are trying to hammer out an agreement by March 1 to help ease the trade conflict. During the latest round of talks, which took place in Beijing last week, midlevel negotiators on both sides narrowed their differences on purchases of U.S. goods and services and widening access to China’s markets, according to people briefed on the talks. Such steps would attempt to address President Trump’s concerns about the bilateral trade gap.

The two sides remain divided on a number of more challenging issues such as Beijing’s subsidies to domestic firms and better protection of American intellectual property. Both sides are preparing for the next round of negotiations in Washington at the end of this month, between cabinet-level officials including Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer.

The negotiations are part of a temporary tariff truce reached by President Trump and Chinese President Xi Jinping during their meeting in Argentina on Dec. 1. Under that agreement, the U.S. suspended planned tariff increases on $200 billion of Chinese goods until March 1.

If a full trade deal isn’t reached by then, the Trump administration has said it would increase those tariffs to 25% from the current 10%. Such an increase is expected to hurt China’s growth, Chinese officials say, which is already weakening from lackluster industrial output, consumer spending and government investment.

Appeared in the January 14, 2019, print edition as ‘China’s Trade Gap With U.S. Widens.’

US-China trade: Reality is pushing both sides to deal — Trust and verify compliance

January 13, 2019

It’s been 10 months since President Trump shocked the world with a tweet saying that trade wars could be “good, and easy to win.”

Lately, evidence has been accumulating suggesting just the opposite. Tariff Man, as the president described himself in a tweet a month ago, is looking much more like Trade Negotiation Man. And Chinese officials appear less assured that they can weather the two nations’ nascent tariff war.



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Economic pressures. Specifically, US stock markets plunged before Christmas, followed by a warning of slowing revenues from bellwether tech giant Apple. And China’s economy showed signs of deterioration in December, with both factory output and retail sales weakening. Both were caused, in part, by existing tariffs and fears that there were more to come. And they are pushing Washington and Beijing to reach a deal.

“Both sides are finding out that trade wars are painful,” writes Mary Lovely, professor of economics at Syracuse University, in an email. “The Chinese economy is slowing…. Foreign investment into the US is down, and there is concern about domestic investment moving forward.”

For Mr. Trump, the key barometer is the US stock market. When it plunged last month, in part because of concerns about a potential trade war with China, that reportedly got the president’s attention. Since then, he has been sounding increasingly positive about US-China talks, and Wall Street has soared from its Christmas Eve low.

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Trump may also be feeling he has fresh leverage in talks that stalled last year at a time when officials in China appeared more confident of their own economy’s resilience to a trade storm. Now, rougher economic performance there seems to have changed the mind-set.

“I think China wants to get it resolved. Their economy is not doing well,” Trump told reporters Sunday. “I think that gives them a great incentive to negotiate.”

After midlevel negotiations in Beijing were extended unexpectedly to a third day this week, Beijing’s chief trade negotiator is preparing to travel to Washington for higher-level talks. Those could come as early as the end of this month, US Treasury Secretary Steven Mnuchin said.

A good kind of ‘kicking the can’?

Such signs are considered positive.

“It clearly looks like important progress was made as a result of these three days of talks, particularly on issues related to increased purchases [of US goods by China] and maybe some market access” of US firms to Chinese markets, says Wendy Cutler, vice president of the Asia Society Policy Institute and a former trade negotiator. “There is an incentive for both sides to reach an agreement, but I don’t think that means that they’re willing to reach an agreement at any cost.”

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Trade experts say the first step is to reach some kind of deal by March 1 that makes advances in these areas, delays further US tariffs on Chinese goods, and includes a concrete agreement to continue talks on the more difficult structural trade issues that separate the two nations. The administration has threatened that in March it would escalate US tariffs from 10 percent to 25 percent on $200 billion of Chinese goods.

Getting a deal and at least delaying an escalation in tariffs could be a positive, even if it kicks the can down the road on the more difficult issues.

“I can see a good can-kicking scenario and a bad can-kicking scenario,” says Edward Alden, a senior fellow at the Council on Foreign Relations in Washington. “A good can-kicking scenario is that the administration recognizes this is not a three-month negotiation; it’s a three-year negotiation or a 10-year negotiation…. It becomes the beginning of an ongoing negotiation between the United States and China to try to figure out ‘Look, how are the two biggest economies in the world going to reconcile their different systems in a way that allows for greater global stability and prosperity?’ ”

US stock market worries frow. AP photo

He adds: “A bad [scenario] is you get a weak deal, you declare victory, and and then everybody looks the other way.”

Differing goals for trade

The problem with a face-saving deal is that it would allow a festering of tensions caused by the mismatch in strategic aims between the two nations.

For the US, more balanced trade and level playing fields are the end goals. For China, trade is a tool in its push for rapid technological development and parity with the West. That is why Beijing has been willing to disregard trade rules when it heavily subsidizes certain strategic industries, violates intellectual property rights, and engages in cybertheft to acquire certain Western technology.

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Such issues are especially fraught because US officials have been insisting on measures to verify Beijing’s compliance with the promises it makes.

Some trade experts say it’s encouraging that Trump has given charge of the negotiations to Robert Lighthizer, the US trade representative and someone known for pushing for substantive reforms.

“Why trade is fascinating right now is that Trump cares enough about it that he put a serious guy in charge, and therefore we have the possibility of a serious outcome,” Mr. Alden says.

If both sides succeed with an interim deal by March 1, it would take away some of the uncertainty in world markets and lessen US-China tensions, though not eliminate them, says Ms. Cutler. If talks fail, “we’d quickly feel the repercussions. China would feel the repercussions. China would counterretaliate. And I think the global economy would just take a big hit.”

China Vows To Resolve Trade Frictions With US in 2019 — Commerce Minister

January 13, 2019

China will work to straighten out trade frictions with the US this year, the country’s commerce minister told state media, following talks with US negotiators this week.

A large US delegation ended a three-day visit to Beijing Wednesday in the first face to face trade talks since President Donald Trump and Chinese leader Xi Jinping in December pledged a three-month truce in the escalating tariff spat.

China said the talks had “laid the foundation” to resolve mutual concerns on trade.

“We will properly handle the China-US economic and trade frictions” this year, commerce minister Zhong Shan said, according to a Saturday report by state media outlet Xinhua.

A large US delegation ended a three-day visit to Beijing Wednesday in the first face to face trade talks since Xi Jinping and Donald Trump declared a three-month truce in the escalating trade spat

A large US delegation ended a three-day visit to Beijing Wednesday in the first face to face trade talks since Xi Jinping and Donald Trump declared a three-month truce in the escalating trade disagreement. AFP

Zhong said Beijing will also promote outside investment, work to pass a foreign investment law and improve its dispute resolution system, Xinhua reported.

China’s policymakers have long promised a more open and free market with better protections for foreign investors, but officials have been slow to make good on those pledges — leading the European Union Chamber of Commerce in China to coin the term “promise fatigue”.

Zhong said China’s negative list — which restricts investment in certain industries — will be further slimmed down, while Beijing also intends to expand economic sectors open for foreign investment without the need for a Chinese joint-venture partner.

The minister specifically outlined a push for foreign investment in manufacturing, high-tech industries and investment in China’s inner regions — pledges which are similar to promises made last year.

Pushing Beijing to implement economic reforms and further open up areas for US investment is a focus in trade negotiations with Washington.


Cambodia PM says EU holding country ‘hostage’ with tariff threats

January 12, 2019

Cambodian Prime Minister Hun Sen blasted the European Union on Saturday for holding the country “hostage” with threats to axe trade preferences after it held elections with no credible opposition.

The EU threatened in October to withdrawal the duty-free Everything But Arms scheme (EBA), which benefits exports from Cambodia’s garment and footwear sector, the largest formal employer.

The multi-billion dollar sector employs hundreds of thousands of labourers and is seen as one of the 66-year-old’s few vulnerable positions in a country he has run for nearly 34 years by building up vast patronage networks.

In recent months he has requested pardons for activists and eased up on the crippled opposition, which was banned in a Supreme Court ruling ahead of the July vote swept by Hun Sen’s ruling Cambodian People’s Party.

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Cambodia’s Prime Minister Hun Sen

The moves were seen as concessions to avoid any loss of the trade preferences but Hun Sen has baulked at the idea of his hand being forced, and said so in his most direct comments on the issue yet in a meeting with former Irish prime minister Enda Kenny in Phnom Penh.

After bringing up several historical grievances with the bloc he said it was making another mistake by “using EBA as a threat to sanction Cambodia … and take about 16 million Cambodians as hostage of the so-called EBA.”

Hun Sen’s spokesman conveyed the remarks to reporters. They were also posted on the leader’s official Facebook page and quickly picked up by state-friendly media.

He asked Kenny to pass along his message to the EU.

Hun Sen is known for fiery speeches that toss aside diplomatic niceties, but he usually avoids calling out the trade scheme by name.

Last month he rapped Western governments for pushing “democracy and human rights” on the country in comments believed to be tied to the EU threat.

Removing the preferences is a long, drawn out process that would take several months.

The ruling party swept all seats in the July vote turning Cambodia into a one-party state.

The Southeast Asian country enjoys the economic support of China, which in turn relies on its smaller ally to support it in regional disputes over control of the potentially resource-rich South China Sea.


Chinese consumers are starting to ‘take sides’ in the trade war and that’s bad news for US companies

January 12, 2019
  • CNBC’s Jim Cramer flags some pain points in the U.S.-China trade war.
  • He also tells investors how to gauge progress in the ongoing dispute.
  • The best way is by watching “the three As,” the “Mad Money” host says.


Cramer: Chinese consumers taking sides in trade war, and that’s bad news for US

Chinese consumers are starting to “take sides” as the U.S.-China trade dispute rages on, and that could hamper the success of some U.S. companies, CNBC’s Jim Cramer said Friday.

Perhaps it already is: U.S. tech giant Apple recently warned that its fiscal first-quarter results would miss expectations due to weaker-than-anticipated iPhone sales in China. Then, earlier on Friday, Goldman Sachs downgraded the stock of Starbucks, citing “a number of points of caution” in the Chinese market.

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“We know that the Chinese consumer’s beginning to take sides,” Cramer said on “Mad Money.” “That’s not good news for any American companies that do business over there, even if many of their stocks seem to reflect that we might be getting some progress in the trade talks.”

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Cramer was referring to shares of apparel companies like NikeLululemon and Tapestry, all of which do business in China but have not seen their sales slow in a material way. Stocks of industrials with ties to the People’s Republic, like Boeing and Deere, an agricultural play that should be suffering from tariffs on U.S. crops, are also holding firm.

“I wonder if the action in Deere is signaling that maybe we’ll get some progress in these Chinese trade talks, or, at the very least, they’ll make a bunch of ag[ricultural] purchases as a show of good faith,” the “Mad Money” host wondered.

But the best ways to gauge trade talk progress in Cramer’s book are what he called “the three As”: American Express, Apple and aerospace.

If American Express is able to get a license to operate in China, that will signal that China is ready to embrace the U.S. financial sector, Cramer explained. If the Chinese government “starts making nice” with Apple, that would also be “very positive,” he said, much better than the news of iPhone price slashes in China that made waves Friday.

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“But the most important show of good faith would be for China Airlines to place a gigantic order of planes with Boeing, an order that would reverberate throughout the entire aerospace complex, including HoneywellUnited Technologies, and GE, … which is finally starting to [trade] like an aerospace and industrial stock again,” Cramer said.

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For now, though, the “winners and losers in China” are starting to emerge, and there’s no denying that “the Chinese economy’s gotten pretty tricky here, especially for American companies,” he said.

“Frankly, China’s become unfathomable at the moment. We have no idea [what] their government’s doing, what it’s thinking,” Cramer said. “Maybe it’s darkest before the dawn, but I’d argue it’s ill-advised to predict the dawn until we’re further along into the night.”

Stocks sank in Friday’s trading session as worries about an economic slowdown in China took hold. For a timeline of the trade war and tariff exchanges between U.S. and Chinese trade authorities, click here.