Posts Tagged ‘World Trade Organisation’

Don’t expect much from China’s offer to open more sectors of its economy to foreigners

August 19, 2017

The World Trade Organisation is not effective and other international trade initiatives have been heavily politicised, so it is unlikely that Beijing will be leading moves towards any real reform of foreign direct investment

By Jake Van Der Kamp
South China Morning Post

Saturday, August 19, 2017, 11:26pm

… foreign firms operating in China have expressed growing frustration over limited access to markets and government policies that they say discriminate against overseas companies.

SCMP, August 18

You are forgiven if you are puzzled by the initials WTO. Few people any longer have reason to burden their brain cells with the knowledge that this stands for the World Trade Organisation.

The WTO was a fine dream when it was formed 22 years ago as a successor to a talk shop called the GATT Uruguay Round. Diplomats round the world thought GATT Uruguay a big success in breaking down trade barriers and thus formalised it as the WTO.

And then it all stopped. The WTO struggled briefly back into the news in 2001 when China demanded that it be allowed in as this was a big boys club and China had risen to the big boys league, but then things went quiet again.

The move towards a worldwide agreement on loosening trade barriers has failed. The effort now consists only of bilateral agreements between two countries at a time, or as purely political initiatives. Witness the Trans Pacific Partnership, a US scheme to exclude China, and the Belt and Road Initiative, a tit-for-tat China scheme to exclude the US.

The consensus (outside China) is that China carries its share of the blame for the WTO failure as it has failed in practice to meet its WTO obligations.

If this is true, and the charge is not entirely without foundation, it is largely because the mountains are still high and the emperor is still far away.

The will of Beijing tends to be less than perfectly carried out in the provinces, particularly when provincial governments see their own investments at risk from foreigners.

Thus I am not hugely impressed by the latest directives from Beijing that more sections of the economy be opened to foreign investors. Make that work in Kunming first, say I, and then tell us about it again.

What is more, this directive was made in direct response to criticism by US President Donald Trump about unfair trade practices by China. Let’s see the Donald first prove that he has some understanding of the facts here. So far he has done little more than parrot the usual anti-China rant.

The leadership in Beijing has been through this one before with Washington and its usual countermove is a line of talk, followed by a few high profile but not greatly significant concessions. We have the line of talk now. What ho the concessions?

I also have the evidence of the chart. Foreign direct investment into China has declined steadily over the last 10 years as a percentage of China’s gross domestic product. But if this is an offence, what do we make of Japan’s comparable anti-foreign investment stance. Has the Donald mouthed any rants at Japan?

In fact, only over the last two years have the equivalent figures for US FDI inflows been any higher than China’s. Just who keeps foreigners out then?

Of course, what we may have in these FDI inflows to China is nothing more than laundered mainland money taken out and funnelled back in so that it can appear as foreign when it so wishes. But, hush, hush, hush. Hong Kong is the laundry shop.

With the WTO dead, however, and other international trade initiatives heavily politicised, I cannot see Beijing leading the move towards any real reform.

For the moment, call it talk.


Donald Trump sends tough signal to China on unfair IP, tech practices

August 15, 2017

WASHINGTON – The United States in effect served notice on China on Monday (Aug 14) by opening an investigation into unfair trade practices focused on intellectual property (IP) and advanced technology.

But punitive action is still about a year away, and conclusions may also depend on the outcomes of the current international pressure campaign on North Korea led by the US, but in which China has a key role as the Pyongyang regime’s economic lifeline.

While the US administration has not linked trade issues with progress on North Korea, the President has explicitly linked the two. China insists that any action on trade must conform to World Trade Organisation (WTO) rules, and must not be linked to North Korea, where it says Beijing’s influence is limited.

Mr Trump’s memo directs US Trade Representative Robert Lighthizer to determine whether to launch an investigation – which in turn could give the President authority to take measures under Section 301 of its Trade Act, against China if it finds that country is damaging American interests by stealing IP or unfairly forcing transfer of technology.

For the US, this has long been a major bone of contention with China. A 2017 report of the US’s IP Commission on “The Theft of American Intellectual Property” estimated that in 2015 “anywhere from US$58 billion to US$118 billion of counterfeit and pirated tangible goods may have entered the United States.”

Yet the US business community is not entirely united, analysts say.

“Some see the potential for retaliation the Chinese could take against their commercial or market access issues wholly unrelated to IP” Amy Celico, a former senior director for China at the USTR and currently head of the China team at the consultancy Albright Stonebridge Group, told The Straits Times.

“But other industries feel they are facing an existential threat to their ability to operate in the Chinese market and they agree that something has to happen, the administration has to stand up to China on unfair trade practices.”

Mr Trump told journalists at a brief event where he signed the memo “Washington will turn a blind eye no longer.”

“I’m directing the United States Trade Representative to examine China’s policies, practices, and actions with regard to the forced transfers of American technology and the theft of American intellectual property.”

“We will stand up to any country that unlawfully forces American companies to transfer their valuable technology as a condition of market access. We will combat the counterfeiting and piracy that destroys American jobs, we will enforce the rules of fair and reciprocal trade that form the foundation of responsible commerce” he said.

Left unsaid was the question of North Korea. The US has been pressing Beijing which accounts for some 90 per cent of North Korea’s trade, to pull the plug on Pyongyang to force the regime to stop its nuclear missile programme.

On August 11 Mr Trump said “We lose hundreds of billions of dollars a year on trade with China. They know how I feel. It’s not going to continue like that but if China helps us, I feel a lot differently toward trade.”

“Certainly it seems the administration is trying to use every possible tool in dealing with this critical issue of North Korea” Ms Celico said in a phone interview.

“The Chinese have come out quite forcefully as they see it as a stick the administration is using to get China to be more aggressive in dealing with North Korea, and they are disavowing any kind of linkage as destabilising for the bilateral relationship.”

“The problem for President Trump is he’s the one who linked these two issues. Looking into launching an investigation rather than launching an investigation, would seem to be responsive to Chinese pressure.”

Ms Yun Sun, a Fellow at the Stimson Centre in Washington, told The Straits Times: “It’s an investigation at this stage, it could take a year.”

“With the Party Congress coming up President Xi Jinping does not want any major instability in foreign affairs. Also, Jared Kushner and Ivanka Trump are supposed to visit China to pave the way for President Trump’s visit.”

“I think the Chinese will appear to be angry but I don’t see any substantive retaliation on trade” she said.

Qatar tactics seen as failure as crisis enters third month

August 6, 2017

Instead of addressing Quartet concerns, Doha chose instead to protest against the boycott at international organisations

Image Credit: REUTERS
A man walks on the corniche in Doha, Qatar.
Published: 17:23 August 6, 2017Gulf News

Abu Dhabi: The Qatari crisis has entered its third month, but the boycott of Doha imposed by the Arab quartet is set to continue because the Qatari regime fails to comply with their 13 demands and broader UN principles to combat terrorism and stop interference in other countries’ affairs, analysts say.

Although they are ready for talks with Doha, the Arab quartet is fully prepared to confront Qatari intrasigience for the long haul. The situation seems to be heading for a protracted crisis.

The four countries have expressed they are ready for dialogue with Qatar if it declares its “sincere willingness” to stop funding terrorism and extremism, halt interference in other countries’ foreign affairs, and respond to the 13 demands.

On June 5, Saudi Arabia, the UAE, Bahrain and Egypt severed their diplomatic relations with Qatar and closed their airspace and ports to Qatar-registered planes and ships over accusations it was supporting terrorist and extremist groups.

Instead of seriously addressing concerns of the Arab quartet and thus returning to the GCC fold, Doha opted to manoeuvre by protesting against the boycott at international organisations.

First by claiming the quartet’s move was a “blockade”. But the Arab quartet refuted Doha’s claims that a “blockade” has been imposed on Qatar by GCC countries, arguing that it was a boycott in keeping with international laws and motivated by the need to protect their national security.

Following the Manama meeting, Shaikh Abdulla Bin Zayed Al Nahyan, UAE Minister of Foreign Affairs and International Cooperation, said all measures taken by four states were within the jurisdiction of international law and “essential to deter the scourge of terrorism which affected stability of other countries.”

Earlier, Saudi Arabia’s Foreign Minister Adel Al Jubeir said in Washington after a meeting with US Secretary of State Rex Tillerson there is no blockade of Qatar.

“The ports are open, the airports are open … What we have done is we have denied them use of our airspace, and this is our sovereign right. The limitation on the use of Saudi airspace is only limited to Qatar Airways or Qatari-owned aircraft, not anybody else … Qatar’s seaports were open,” Al Jubeir said.

In another failed attempt to politicise the Haj pilgrimage, Qatar accused Saudi Arabia of stopping its citizens from attending the Haj, a false claim that Riyadh called a “declaration of war”.

Qatar took its complaint to the UN special rapporteur, prompting an angry response from the Saudi Foreign Minister.

Despite the deepening row, Saudi Arabia says Qataris are welcome to attend the Haj, which is due to begin this month.

Qatar has also claimed the boycotting countries were in violation of the air travel treaty because they blocked Qatari flights from their airspace, a charge negated by the UN’s aviation authority, the International Civil Aviation Authority.

Saudi Arabia has also provided emergency corridors for Qatar through their airspace.

Desperate to lift the boycott, Qatar also launched a legal process at the World Trade Organisation, requesting consultations with the three Gulf countries and triggering a 60-day deadline for them to settle the complaint or face litigation at the WTO and potential retaliatory trade sanctions.

The wide-ranging legal complaint at the Geneva-based body is set to fail as the economic sanctions imposed on Qatar by the three fellow Gulf states do not violate WTO agreements, the Quartet has said.

Qatar has also accused Egypt of misusing its position on the UN Security Council, but Cairo denied the allegation in a letter to the council on Thursday, and accused Qatar of supporting terrorist groups financially and ideologically in Syria, Iraq and Libya.

Dr. Ayman Salama, a member of the Egyptian Council for Foreign Affairs and professor of international law at Cairo University, believes the boycott and the economic sanctions by the Arab quartet is completely legal that cannot be challenged, especially as Qatar has repeatedly undermined their national security.

“The measures taken by the Arab quartet are sovereign steps to protect the security and the safety of their countries,” Dr Salama told Gulf News.

Qatar’s public relations campaigns have also been dismal failures in making the right impression among Americans, as the Arab News/YouGov poll shows.

Half of respondents said they do not know enough about the Gulf state to pass judgement.

Yet, the next highest response rate — at some 34 per cent — reflects those whom associate Qatar with terror financing.

The poll also shows that most Americans, at 63 per cent, recognise Al Jazeera as a news source, but they do not believe that the network reflects professional journalism standards, which means many Americans do not trust Al Jazeera’s reporting.

UK ‘must prepare a Brexit fallback’ says former Bank of England governor Mervyn King

August 5, 2017

BBC news

Mervyn King

The UK needs a “credible fallback” in case no EU trade deal is reached during Brexit negotiations, former Bank of England governor Mervyn King has said.

Lord King said British negotiators needed to show Brussels the country has an alternative over a bad trade deal post-Brexit.

The former governor, who served between 2003 and 2013, said no deal was “not the first preference of anybody”.

He said the government “probably wasted a year” on its contingency plans.

The first round of Brexit negotiations at the European Commission ended in July.

Brexit Secretary David Davis said Brussels might delay trade talks due to a lack of progress on the cost of the UK’s “divorce” settlement.

Image result for Michel Barnier and david davis photos

David Davis (left) and Michel Barnier — getting nowhere

Brexit: All you need to know

Brexit: What is at stake in EU-UK talks?

The people who will negotiate Brexit

Speaking to BBC Radio 4’s Today programme, Lord King said: “We are where we are, and we are in a negotiation and it’s important that the negotiation succeeds.

“But it cannot succeed without a credible fallback position and that is something which I think is a practical thing that the civil service ought to be taking a lead on.”

Previously Prime Minister Theresa May has said: “No deal is better than a bad deal.”

If the UK left the EU without a trade deal with the 27 other nations it would rely on World Trade Organisation rules, and trade agreements between Europe and other countries may not be available to Britain.

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Households have cut spending since Brexit, says Bank of England’s Mark Carney

On Thursday current governor of the Bank of England Mark Carney announced that uncertainty over Brexit was reducing growth in the British economy.

As a result the bank lowered this year’s growth forecast from 1.9% to 1.7%.

Mr Carney said: “Uncertainties about the [UK’s] eventual relationship [with Europe] are weighing on the decisions of some businesses.”

Lord King said: “I don’t know what the economic consequences of Brexit will be, that’s the only honest answer.”

Previously, Brexit minister Steve Baker said the government was preparing for all possible outcomes over Brexit talks, but added a no-deal with Brussels was unlikely.

Includes video:


Britain faces up to Brexit — Michel Barnier, David Davis Negotiations are Theater of the Absurd (Théâtre de l’Absurde)

July 21, 2017

As long as the government stays in denial about Brexit’s drawbacks, the country is on course for disaster

CRISIS? What crisis? So many have been triggered in Britain by the vote a year ago to leave the European Union that it is hard to keep track. Just last month Theresa May was reduced from unassailable iron lady to just-about-managing minority prime minister. Her cabinet is engaged in open warfare as rivals position themselves to replace her. The Labour Party, which has been taken over by a hard-left admirer of Hugo Chávez, is ahead in the polls. Meanwhile a neurotic pro-Brexit press shrieks that anyone who voices doubts about the country’s direction is an unpatriotic traitor. Britain is having a very public nervous breakdown.

The chaos at the heart of government hardly bodes well for the exit negotiations with the EU, which turned to detailed matters this week and need to conclude in autumn 2018. But the day-to-day disorder masks a bigger problem. Despite the frantic political activity in Westminster—the briefing, back-stabbing and plotting—the country has made remarkably little progress since the referendum in deciding what form Brexit should take. All versions, however “hard” or “soft”, have drawbacks (see article). Yet Britain’s leaders have scarcely acknowledged that exit will involve compromises let alone how damaging they are likely to be. The longer they fail to face up to Brexit’s painful trade-offs, the more brutal will be the eventual reckoning with reality.

Winging it

In the 13 months since the referendum, the awesome complexity of ending a 44-year political and economic union has become clear. Britain’s position on everything from mackerel stocks to nuclear waste is being worked out by a civil service whose headcount has fallen by nearly a quarter in the past decade and which has not negotiated a trade deal of its own in a generation. Responsibility for Brexit is shared—or, rather, fought over and sometimes dropped—by several different departments. Initially Britain’s decision not to publish a detailed negotiating position, as the EU had, was put down to its desire to avoid giving away its hand. It now seems that Britain triggered exit talks before working out where it stood. The head of its public-spending watchdog said recently that when he asked ministers for their plan he was given only “vague” assurances; he fears the whole thing could fall apart “at the first tap”.

As the scale of the task has become apparent, so has the difficulty of Britain’s position. Before the referendum Michael Gove, a leading Brexiteer in the cabinet, predicted that, “The day after we vote to leave, we hold all the cards.” It is not turning out like that. So far, where there has been disagreement Britain has given way. The talks will be sequenced along the lines suggested by the EU. Britain has conceded that it will pay an exit bill, contrary to its foreign secretary’s suggestion only a week ago that Eurocrats could “go whistle” for their money.

The hobbled Mrs May has appealed to other parties to come forward with ideas on how to make Brexit work. Labour, which can hardly believe that it is within sight of installing a radical socialist prime minister in 10 Downing Street, is unsurprisingly more interested in provoking an election. But cross-party gangs of Remainer MPs are planning to add amendments to legislation, forcing the government to try to maintain membership of Euratom, for instance, which governs the transit of radioactive material in Europe. Even within the government, the prime minister’s lack of grip means that cabinet ministers have started openly disagreeing about what shape Brexit should take. Philip Hammond, the chancellor, has been sniped at because he supports a long transition period to make Brexit go smoothly—a sensible idea which is viewed with suspicion by some Brexiteers, who fear the transition stage could become permanent.

The reopening of the debate is welcome, since the hard exit proposed in Mrs May’s rejected manifesto would have been needlessly damaging. But there is a lack of realism on all sides about what Britain’s limited options involve. There are many ways to leave the EU, and none is free of problems. The more Britain aims to preserve its economic relationship with the continent, the more it will have to follow rules set by foreign politicians and enforced by foreign judges (including on the sensitive issue of freedom of movement). The more control it demands over its borders and laws, the harder it will find it to do business with its biggest market. It is not unpatriotic to be frank about these trade-offs. Indeed, it is more unpatriotic to kid voters into thinking that Brexit has no drawbacks at all.

The government has not published any estimates of the impact of the various types of Brexit since the referendum, but academic studies suggest that even the “softest” option—Norwegian-style membership of the European Economic Area—would cut trade by at least 20% over ten years, whereas the “hardest” exit, reverting to trade on the World Trade Organisation’s terms, would reduce trade by 40% and cut annual income per person by 2.6%. As the economy weakens, these concerns will weigh more heavily. Britain’s economy is growing more slowly than that of any other member of the EU. The election showed that its voters are sick of austerity. Our own polling finds that, when forced to choose, a majority now favours a soft Brexit, inside the single market (see article).

Back in play

A febrile mood in the country, and the power vacuum in Downing Street, mean that all options are back on the table. This is panicking people on both sides of the debate. Some hardline Brexiteers are agitating again for Britain to walk away from the negotiations with no deal, before voters have a change of heart. Some Remainers are stepping up calls for a second referendum, to give the country a route out of the deepening mess. As the negotiations blunder on and the deadline draws nearer, such talk will become only more fevered.

So it is all the more crucial that all sides face up to the real and painful trade-offs that Brexit entails. The longer Britain keeps its head in the sand, the more likely it is to end up with no deal, and no preparations for the consequences. That would bring a crisis of a new order of magnitude.

This article appeared in the Leaders section of the print edition under the headline “Facing up to Brexit”
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David Davis (left) and Michel Barnier at their news conference in Brussels. Photograph: Anadolu Agency/Getty Images

Michel Barnier blasts David Davis for ‘lack of clarity’ on EU ‘divorce bill’ as four days of Brexit talks end in deadlock
Updated: 20th July 2017, 

MICHEL Barnier has blasted David Davis for a “lack of clarity” on the so-called EU “divorce bill” as four days of Brexit talks break up with little progress.

But the UK’s Brexit Secretary struck a more positive tone at today’s Brussels press conference, saying he is “encouraged by progress” on a range of key issues.

Mr Davis said he was ‘encouraged by progress’ on key issues

Mr Davis said he was ‘encouraged by progress’ on key issues. EPA photo

The pair will now hold the first meeting on ‘UK soil’, over a lunch of Scottish scallops and British lamb to round off this week’s round of gruelling talks.

However the mood may be frosty after Mr Barnier took a swipe at the British side – telling reporters there are still “fundamental” disagreements between the two sides.

The EU’s chief negotiator said there had been some areas of agreement about how Brits living abroad and EU nationals living in the UK should be treated after Brexit.

But he said Brussels believed citizens’ rights should be backed by the Court of Justice of the European Union.

And there still appears to be a lot of tension surrounding any costs to be paid by the UK when it exits the bloc.

Mr Barnier said: “A clarification of the UK position is indispensable for us to negotiate and for us to make sufficient progress on this financial dossier, which is inseparable from the other withdrawal dossiers.

The pair are now off to have lunch but the mood may be frosty

The pair are now off to have lunch but the mood may be frosty

“What we want – and we are working on this – is an orderly withdrawal for the United Kingdom, that’s decided.

“An orderly withdrawal means accounts must be settled. We know that agreement will not be achieved through incremental steps.”

In a rebuke to the UK’s preparation ahead of the meeting he added: “As soon as the UK is ready to clarify the nature of its commitments, we will be prepared to discuss this with the British negotiators.”

He said the first round of talks had been about organisation, this week had been about presentation – the “third round must be about clarification”.

And the Brussels chief added: “We require this clarification on the financial settlement, on citizens’ rights, on Ireland – with the two key points of the common travel area and the Good Friday Agreement – and the other separation issues where this week’s experience has quite simply shown we make better progress where our respective positions are clear.”

But the UK is understood to think the EU team are being unclear on what they believe the legal obligations are over the divorce bill as well, with frustration on both sides.

But Mr Davis struck a more optimistic tone following the four days of talks

But Mr Davis struck a more optimistic tone following the four days of talks

And Mr Davis struck a more optimistic tone, saying: “Overall I’m encouraged by the progress we have made on understanding each other’s positions.”

He said the talks had demonstrated the UK had made a “fair and serious offer” on citizens’ rights and there were “many concrete areas where we agree, as well as areas where there will be further discussion” which will be a priority in the next round.

On the financial settlement, Mr Davis said: “We both recognise the importance of sorting out the obligations we have to one another, both legally and in a spirit of mutual cooperation.”

In a sign of the difficulties in reaching agreement he added: “We have had robust but constructive talks this week.

“Clearly there’s a lot left to talk about and further work before we can resolve this.

Mr Davis was criticised for appearing unprepared in this photo

Mr Davis was criticised for appearing unprepared in this photo

“Ultimately getting to a solution will require flexibility from both sides.”

But Mr Barnier the EU was not ready to compromise in the negotiations until the UK accepts its financial obligations.

He said: “I know one has to compromise in negotiations but we are not there yet.

“When I say, and I think I was very clear and transparent about that, that there are things that are inseparable from others.

“That’s the financial settlement, let’s be very clear. We want clarity on that because we need to be able work more until we come to areas of compromise.”

The p[air gave a joint press conference but struck very different tones

The pair gave a joint press conference but struck very different tones. Reuters photo

Underlining his position on the “fundamental importance” of citizens’ rights being protected by EU law and the ECJ, Mr Barnier said: “This is not a political point we are making, it’s a legal one.

“Simply, if there is to be continuity of EU law, that has to be framed by case law of the court. Only the court can interpret EU law.

“It’s not a choice, it’s an obligation.”

The pair are now heading to the home of Sir Tim Barrow, the UK’s permanent representative in Brussels.

And given the 19th century terraced house overlooking the Parc Royal in the heart of the Belgian capital comes under British jurisdiction – the meeting will be the first on ‘UK soil’.

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Britain’s Brexit minister David Davis. Photo by Jack Taylor — Getty Images

Donald Trump accepts Xi Jinping’s invitation to visit China

April 7, 2017
By Teddy Ng
South China Morning Post
Friday, April 7, 2017
7 Apr 2017

Donald Trump, China’s Xi Jinping Meet: Suddenly a Summit of Equals — Nuclear Weapons, Chemical Weapons, War, Peace and Trade

April 7, 2017

Palm Beach: US President Donald Trump and Chinese President Xi Jinping sat down together to dine on pan-seared Dover sole and New York strip steak on Thursday, spending some social time before digging into thorny bilateral security and trade issues.

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US President Donald Trump and Chinese President Xi Jinping shaking hands during a dinner at Mr Trump’s Mar-a-Lago resort, on April, 6, 2017, watched by Mr Trump’s senior adviser Jared Kushner and China’s First Lady Peng Liyuan. PHOTO: NYTIMES

Trump has said he wants to raise concerns about China`s trade practices and urge Xi to do more to rein in North Korea`s nuclear ambitions during his first talks with the Chinese leaders, though no major deals on either issue were expected.

The summit at Trump`s Spanish-style Mar-a-Lago resort in Palm Beach, Florida, got off to a cordial start. Xi and his wife, Peng Liyuan, joined Trump and his wife, Melania, at a long table in a candle-lit ornate private dining room festooned with red and yellow floral centrepieces.

Trump, a New York real estate magnate before he ran for office, joked before dinner: “We’ve had a long discussion already, and so far I have gotten nothing, absolutely nothing, but we have developed a friendship – I can see that – and I think long term we are going to have a very, very great relationship and I look very much forward to it.”

The fanfare over the summit on Thursday was overshadowed by another pressing foreign policy issue: the U.S. response to a deadly poison gas attack in Syria. A U.S. official said on Thursday the White House and Pentagon were discussing military options.

Trump and Xi were expected to get into more detailed discussions about trade and foreign policy issues on Friday, concluding their summit with a working lunch.

Trump promised during the 2016 presidential campaign to stop what he called the theft of American jobs by China and rebuild the country`s manufacturing base. Many blue-collar workers helped propel him to his unexpected election victory in November and Trump wants to deliver for them.

“We have been treated unfairly and have made terrible trade deals with China for many, many years. That’s one of the things we are going to be talking about,” Trump told reporters ahead of the meeting.

Trump is still finding his footing in the White House and has yet to spell out a strategy for what his advisers called a trade relationship based on “the principle of reciprocity.”

He brought his top economic and national advisers to Florida for the meeting, including Defence Secretary Jim Mattis, Treasury Secretary Steven Mnuchin, and Commerce Secretary Wilbur Ross.

“Even as we share a desire to work together, the United States does recognise the challenges China can present to American interests,” said Secretary of State Rex Tillerson, also in Florida for the meeting.

Trump`s daughter Ivanka and her husband Jared Kushner, who both work at the White House, also were among the dinner guests.

Differing personalities

Their summit brings together two leaders who could not seem more different: the often stormy Trump, prone to angry tweets, and Xi, outwardly calm, measured and tightly scripted, with no known social media presence.

What worries the protocol-conscious Chinese more than policy clashes is the risk that the unpredictable Trump could publicly embarrass Xi, after several foreign leaders experienced awkward moments with the new US President.

“Ensuring President Xi does not lose face is a top priority for China,” a Chinese official said.

The most urgent problem facing Trump and Xi is how to persuade nuclear-armed North Korea to halt unpredictable behaviour like missile test launches that have heightened tensions in South Korea and Japan.

North Korea is working to develop an intercontinental ballistic missile capable of hitting the United States.

Trump has threatened to use trade to try to force China to exert influence over Pyongyang.

“I think China will be stepping up,” Trump told reporters on Thursday. Beijing says its influence is limited and that it is doing all it can.

The White House is reviewing options to pressure Pyongyang economically and militarily, including “secondary sanctions” against Chinese banks and firms that do the most business with Pyongyang.

A long-standing option of pre-emptive strikes remains on the table, but despite the tougher recent US talk, the internal review “de-emphasizes direct military action,” the US official said, speaking on condition of anonymity.

Analysts believe any military action would likely provoke severe North Korean retaliation and massive casualties in South Korea and Japan and among US troops stationed there.

No grand bargain on trade

On trade, US labour leaders say Trump needs to take a direct, unambiguous tone in his talks with Xi.

“President Trump needs to come away from the meeting with concrete deliverables that will restore production and employment here in the US in those sectors that have been ravaged by China`s predatory and protectionist practices,” said Holly Hart, legislative director for the United Steelworkers union.

A US administration official told Reuters that Washington expects to have to use legal tools to fight for US companies, such as pursuing World Trade Organisation lawsuits.

“I don’t expect a grand bargain on trade. I think what you are going to see is that the president makes very clear to Xi and publicly what we expect on trade,” a US official told Reuters, speaking on condition of anonymity.

Trump has often complained Beijing undervalues its currency to boost trade, but his administration looks unlikely to formally label China as a currency manipulator in the near term – a designation that could come with penalties.


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China`s Xi arrives in Florida for summit with Trump

AFP | Last Updated: Thursday, April 6, 2017 – 23:35
China`s Xi arrives in Florida for summit with Trump

Florida: Chinese President Xi Jinping arrived in Florida on Thursday for his first face-to-face meeting with US President Donald Trump, taking place amid tensions over North Korea, trade and other issues.

The Boeing 747 aircraft carrying the Chinese leader and his delegation landed at around 1730 GMT at Palm Beach International airport, where it was greeted by a military honor guard.

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US President Donald Trump and Chinese President Xi Jinping meet at Mr Trump’s Mar-a-Lago resort, on April, 6, 2017

Germany calls for EU help in steel showdown with US

March 24, 2017


© AFP | The US Department of Commerce has launched “dumping” proceedings against foreign steel firms, including two German producers — suspecting they may be selling stock at unfairly low prices to undercut US producers
FRANKFURT AM MAIN (AFP) – Germany on Friday called on the European Commission to back its steelmakers by insisting on global trade rules in a dispute with US competitors.The US Department of Commerce has launched “dumping” proceedings against foreign steel firms, including two German producers — suspecting they may be selling stock at unfairly low prices to undercut US producers.

German manufacturers “have nothing to fear from fair competition,” foreign minister Sigmar Gabriel countered in a letter to trade commissioner Cecilia Malmstrom, urging Brussels to push the US to respect World Trade Organisation (WTO) rules when judging the case.

“US competitors may hope that the new US government would be ready to allow them unfair dumping competition, even when that infringes the rules. We Europeans can’t allow that,” Gabriel said.

“In my judgement it’s extremely important to take a clear position and not to start transatlantic trade dialogue with the new US government with a negative and unjustified decision,” he went on, according to extracts from the letter released by the foreign ministry.

If EU steelmakers are found to be selling steel at unfair prices and forced to pay high tariffs in the US, they could face “massive disadvantages in international competition,” the foreign ministry statement said.

Berlin “has already lobbied for the use of recognised, fair rules in the proceedings with different levels of the US government,” it went on.

President Donald Trump has vowed to bring manufacturing jobs back to the US, if necessary by imposing heavy tariffs on imported goods — a plan that runs counter to long-standing global consensus on free trade.

G20 finance ministers failed to get Washington to sign off on a traditional pledge to reject protectionism at a meeting in Baden-Baden, Germany last week.

Meanwhile, both the US and the EU have sought to protect domestic steelmakers in recent months by slapping tariffs on some Chinese steel products.

China makes more than half the world’s steel but a slowdown in its economy and sagging global demand has left the industry with huge excess capacity.

It has been accused of dumping its production on world markets, sinking prices and violating international trade agreements.

Trump’s commerce secretary, billionaire Wilbur Ross, stepped down from the board of steel and mining giant ArcelorMittal to take up his cabinet post.

A private equity financier, he made his fortune through his investment company, which acquired failing steel and coal firms and then sold them for profit.

China Says It Will Be World’s ‘Anchor of Stability’ — China maintaining domestic reform and championing economic openness

January 26, 2017

Echoing President Xi Jinping at Davos, Premier Li Keqiang says China will stay the course of economic openness and globalisation

By Frank Tang
South China Morning Post
Thursday, January 26, 2017
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Premier Li Keqiang pledged that China will give the world “an anchor of stability” by maintaining domestic reform and championing economic openness, putting on a brave face to counter the rising tide of protectionism started by the world’s leading economy across the Pacific Ocean.

Li’s comment is the latest effort by Beijing to call for openness and defending globalisation, in stark contrast to US President Donald Trump’s “America first” agenda.

“This is a testing time,” Li wrote in latest edition of Bloomberg Businessweek. “Above all, we remain convinced that economic openness serves [the interests of] everyone better, at home and abroad.”

“It’s far preferable for countries to trade goods and services and bond through investment partnerships than to trade barbs and build barriers.”

The remarks echoed President Xi Jinping’s speech at the World Economic Forum in Davos earlier this month, in which he said globalisation should not be blamed for the Syrian refugee crisis and financial problems.

Xi’s speech and Li’s article contrast with the protectionist sentiments and domestic focus of the newly sworn-in US president.

Trump, on his third day in office, signed an executive order to pull out of the Trans-Pacific Partnership, a trade deal spearheaded by his predecessor Barack Obama that included 12 Pacific Rim countries excluding China after eight years of hard negotiations.

China is widely considered to be a major beneficiary of economic globalisation. Since its accension to the World Trade Organisation in 2001, its export-oriented growth model lead the country’s economic take-off in the first few years of the new millennium to become the world’s top exporter.

 The world’s largest container ship, CSCL Globe. Photo: Reuters

During the presidential campaign, Trump threatened to label China a currency manipulator and slap a 45 per cent tariff on all goods of Chinese origin.

Although the Trump administration has yet to address China issues, his decisions to withdraw from TPP, revoke Obamacare and build a wall along the Mexican border point to further trade frictions, if not a full-scale trade war.

“Should differences arise, it behooves us all to discuss them with respect and a keen sense of equality,” Li wrote.

Amid such global uncertainties, the Chinese premier pledged to “offer an anchor of stability and growth with [a] consistent message of support for reform, openness and free trade”.

The Chinese government is expected to maintain a growth target of about 6.5 per cent this year, after securing a “healthy 6.7 per cent” in 2016, and will continue its structural reform to find new engines of growth.

The country will “open new sectors”, “widen access” and “ensure all businesses registered in China are treated equally”, Li said.

It has started a negative list for investment in its several free-trade pilot zones, which will be extended nationwide in the future.

China is also expected to push forward the Regional Comprehensive Economic Partnership, a China-led trade block, and its One Belt, One Road initiative to advance trade and investment.

Is the world’s factory ‘hollowing out’ as manufacturers pack up and leave China?

December 30, 2016

Concerns raised as increasing tax and labour costs prompt Chinese producers to move business offshore

By Sidney Leng
South China Morning Post

Friday, December 30, 2016, 2:31 p.m.

Fears are being raised of a “hollowing out” in China, formerly thought of as the world’s factory, after a mainland tycoon explained his rationale to set up factories in the United States and Foxconn, the world’s largest contract electronics manufacturer, also suggested it might move some operations across the Pacific.

“Hollowing out” refers to the deterioration of a country’s manufacturing sector when producers move to low-cost facilities overseas. Some economists believe the world’s leading developed economies are being hollowed out, threatening full employment in those locales.

Since China’s opening up in the 1980s and ’90s, and particularly so since it joined the World Trade Organisation in 2001, China has been a key destination for manufacturing to relocate from advanced economies, in the process making it the world’s second-largest economy.

 Workers stand at the gate of a Foxconn factory in the township of Longhua in Shenzhen, Guangdong province. Foxconn plans to move some operations to the United States. Photo: Reuters

Academics and Chinese workers have sensed a sea change in this situation after US president-elect Donald Trump began urging – and even bullying – American businesses to bring jobs back to the US at a time when China’s tax and regulatory regimes are becoming hostile to private manufacturers.

The central government has also encouraged many labour-intensive businesses to move elsewhere as it tries to steer the economy towards higher value-added services and high technology.

In its haste to effect such changes, Beijing barely bothered to aid firms such as footwear maker Stella International, which decided a year ago to close its 13-year-old factory in the southern industrial hub of Dongguan, sacking thousands of workers.

Last week, Cao Dewang – the founder of Fuyao Glass, a leading global supplier of automotive glass – said that the US offers better conditions for his North American plant than China does for those at home. His remarks triggered heated debate about Beijing policies, including a corporate tax system described by some as “death tax”. Taiwan-owned Foxconn Technology Group, which employs about a million workers across China to makes iPhones and other leading electronics under contract, earlier confirmed it was looking to set up factories in the US.

“Don’t let Foxconn run away” ran a headline that went viral on Chinese social media. The entreaty was in stark contrast to a few years earlier, when Chinese media were describing Foxconn as a sweatshop that drove its employees to suicide.

 Workers make shoes in the Huajian factory in Dongguan, Guangdong province, in September. Once a thriving manufacturing hub, Dongguan now has many idle factories. Photo: AFP

Lu Zhengwei, chief economist at Industrial Bank, said China’s own hollowing out probably started in 2012 when the country’s services sector overtook manufacturing for the first time as the biggest contributor to nominal gross domestic product. This was praised by Beijing as a milestone towards industrial restructuring.

“The process began to get serious a long time ago … When we spoke highly of the increasing role of the service industry in our economic structure, it had already kicked in. That was 2012,” Lu said, adding that China’s high taxes and high land costs are now turning business away.

When there is a serious lack of domestic demand, there is no return on investment because people don’t buy products

Meanwhile, the exodus of manufacturing from China continues. Outbound investment surged more than 50 per cent in the first 11 months of 2016 from a year earlier, with manufacturers involved in more than a third of China’s overseas mergers during that period. At the same time, China’s private sector investment at home rose just 3.1 per cent.

Factories funded by Hong Kong and Taiwanese money, which helped China’s boom in past decades, were among the first to retreat. Eclat Textile, Taiwan’s largest apparel company, said earlier this month it would pull out of China completely due to deteriorating business conditions and surging wage costs.

Only a few years ago, Changping district in Dongguan was home to hundreds of low-end electronics factories that hummed day and night to meet delivery deadlines, but today many factory compounds stand idle and the streets are quiet.

Xu Chenggang, a Hong Kong-based China economist, argued that poor domestic demand caused by low household incomes was the fundamental reason Chinese manufacturers are looking for investment opportunities abroad.

“When there is a serious lack of domestic demand, there is no return on investment because people don’t buy products,” Xu said.

Today’s China resembles 1980s industrial Japan in many ways, according to Arthur Kroeber, head of research at Gavekal Dragonomics. China is dealing with an ageing workforce just as Japan did in the ’80s, and both countries used their powerful exports to rise in the global economic rankings to threaten US political and economic dominance.

The difference is that Japan dealt with its hollowing out by moving quickly up the supply chain while keeping its core technology at home. China, however, still lags behind in innovation, according to Lu from Industrial Bank.

 Workers assemble electronic devices at an Alco Electronics factory in Houjie, Dongguan. Photo: AP

China’s machinery manufacturing, the most advanced and investment-intensive part of its manufacturing economy, saw losses expand by 2 per cent in 2015 in a downward spiral, which has reflected in overcapacity and a short supply of high-end machines, according to a report from the Research Institute of Machinery Industry Economic and Management in Beijing.

Without doubt, China remains a powerful player in global manufacturing that enjoys a good infrastructure, an army of skilled and disciplined workers and a large domestic market.

“It’s premature to worry about manufacturing in China being hollowed out just because a number of China-based manufacturers are shifting some operations to the US,” said Leslie Young, a professor of economics at the Cheung Kong Graduate School of Business in Beijing.

“The most important measures to boost manufacturing in China are political – to assure Chinese manufacturers of a predictable business environment, transparent regulations, a level playing field and secure property rights.”