With more tariffs, US-China trade outlook looks grim, says data


With seven weeks to go until a deadline that could see the U.S. ramp up tariffs on Chinese goods once again, the economic damage wrought by the months-long trade war is becoming clearer even as a pathway to a lasting resolution remains muddied.

While Chinese goods going to the U.S. initially held up in the face of higher tariffs due to so-called front-loading, their value slumped in the final quarter of 2018, according to the latest available data. For sales going the other direction, the crunch was more immediate. In both cases, further declines are on the cards if the talks fail to produce a resolution.

Negotiators from both the U.S. and China expressed optimism after mid-level talks wrapped in Beijing this week, boosting sentiment across global markets. Still, the path forward remains unclear: Another round of talks hasn’t been scheduled, and the government shutdown in the U.S. has dominated President Donald Trump’s attention.

Both Trump and Chinese Vice President Wang Qishan were slated to appear later this month at the World Economic Forum in Davos, Switzerland, providing an opportunity for high-level dialogue. But the shutdown may yet prevent Trump’s appearance, according to a report in the Wall Street Journal.

Companies in both countries just want to see a deal get done.

“We urge both governments to use the time remaining in the 90-day negotiating period to make tangible progress on the important issues at the core of the current dispute: equal treatment of foreign companies in China, as well as China’s intellectual property and technology transfer policies,” said Jake Parker, vice president of China operations at the U.S.-China Business Council in Beijing. “Uncertainty is bad for business.”

As evidence mounts by the day that the slowdown in China’s economy is worsening, policy makers in Beijing are focusing on getting rid of the duties that Trump has leveled on Chinese goods since last year, according to a former high-level official briefed on the government’s thinking. U.S. officials appear to want to maintain the pressure of tariffs, the official said.

China and the U.S. will move ahead with trade talks as scheduled, Ministry of Commerce Spokesman Gao Feng told reporters in Beijing at a regular weekly briefing Thursday, without giving any further details over when they would take place. He wouldn’t confirm reports that Vice Premier Liu He will visit the U.S. soon to meet U.S. Trade Representative Robert Lighthizer.

Meanwhile, the economic risks are growing. Economists now see the threat of deflation in China after producer price inflation slowed sharply in December, to the weakest pace since 2016.

That would not only squeeze corporate profitability at home, but also put pressure on global price gains, as export prices usually follow those at factory gate. With industrial output and retail sales growth both at the weakest levels in a decade, China’s woes would also mean softer demand for imports, hurting other economies including the U.S.

A reduction in Chinese imports of U.S. goods came quickly after the retaliatory imposition of tariffs, the data show. Without a breakthrough in talks, U.S. corporations are likely to experience a deepening decline in their Chinese sales, with Bank of America Merrill Lynch analysts even seeing an “informal boycott” in place.

The full year numbers will look somewhat different, partly because China has resumed purchases of U.S. soybeans and other goods. Even if the current truce is made permanent and the tariffs are eventually rolled back, the damage to many companies may already be done.

China’s trade data for the full year of 2018 is due to be released on Jan. 14, and economists see year-on-year export growth slowing in December from November.

The Trump administration is pushing for a way to make sure China delivers on its commitments in any deal. Trump and Xi have given their officials until March 1 to reach an accord on “structural changes” to China’s economy on issues such as the forced transfer of American technology, intellectual-property rights and non-tariff barriers.

“The hard work of addressing structural issues to create a level playing field in China do not appear to have been resolved,” said Lester Ross, a policy committee chief at the American Chamber of Commerce and also partner-in-charge at the Beijing office of law firm WilmerHale. “And China going forward will likely still want to increase the diversification of its sources of supply even for agricultural commodities.”

The 90-day time frame is a tight window in which to nail down deep changes to China’s economic model, reforms which past U.S. administrations advocated for years and U.S. lawmakers on both sides of the aisle support.

Even so, progress in talks signals that an interim deal that suspends new tariff hikes is possible, according to Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong.

“The earlier escalation of the trade conflict between the U.S. and China and souring bilateral relations appear to have given way to a more conciliatory approach since early December,” he wrote in a note Thursday. “However, we do not see the U.S. fully removing the specter of tariff hikes any time soon.”


Good to have ties with China, Russia, Japan and India: Donald Trump

US President Donald Trump on Monday said it’s good to have relationship with countries like Russia, China, Japan and India as he expressed hope to reach a trade deal with Beijing.

Trump, addressing reporters at the White House before leaving for Louisiana for a farmers event, said the US is doing very well with China, which is having a hard time with its economy because of the tariffs he has imposed on the import of their items.

“I have a great relationship with President Xi Jinping because it’s good to have relationships with Russia, China, Japan and India and I have relationships with almost everybody. That’s a good thing, not a bad thing,” Trump said.

“I think that we are going to be able to do a deal with China. We are, I can tell you, we are getting things that, before I became president, you would’ve had no chance at getting. They would have laughed at your president’s face,” he said.

The US and China have been locked in an escalating trade spat since early 2018, raising import tariffs on more than US $300 billion of each other’s goods US officials were in Beijing last week for talks to resolve the trade dispute. Trump and Chinese leader Xi agreed on December 1 to a three-month truce in the escalating spat.

The next round of negotiations would be held in Washington between January 30 and 31 Both sides have set March 1 as the deadline to defuse trade tensions.

“We’re doing very well with our economy. We are at records. Our unemployment numbers just hit a record, another record. We’re doing extremely well as a country. We’re doing better than any country right now anywhere in the world. China wants to negotiate,” Trump said.


Trade Wars: China’s 2019 To-Do list includes tackling spat with US

The U.S. president is increasingly eager to strike a deal with China in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations.

China’s 2019 To-Do list includes tackling spat with US (Reuters)

China will work to tackle trade friction with the U.S. this year, Commerce Minister Zhong Shan said in an interview with Chinese state media that followed three days of talks between the nations and perked up troubled financial markets.

The Ministry of Commerce, which has set trade negotiations as one of its priorities in 2019, will push talks forward and boost cooperation with U.S. states, cities, business communities and non-governmental groups in order to promote a stable bilateral trade relationship, the state news service Xinhua reported, citing an interview Zhong granted to it and a number of other Chinese agencies.

Talks between mid-level U.S. and Chinese officials in Beijing concluded on Wednesday. The negotiations were extended for a day, which added to optimism fueled by recent tweets from President Donald Trump that the two sides are making progress toward an agreement.

U.S. and Chinese stocks have advanced in the early days of 2019 on fresh hope for a breakthrough in the showdown between the world’s two largest economies. There are about seven weeks before the U.S.-imposed deadline for a deal, after which Trump may order a resumption of tariff hikes on imports from China.

Washington Talks
The U.S. president is increasingly eager to strike a deal with China in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations.

Chinese Vice Premier Liu He, a key economic adviser to China’s President Xi Jinping, is set to visit Washington late this month for further trade talks, people familiar with the plans said on Friday. Liu would meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, the people said.

Separately, Zhong told Xinhua that China’s goods consumption grew by around 9.1 percent in 2018 to 38 trillion yuan ($5.6 trillion) and inbound foreign direct investment increased by 3 percent last year to $135 billion.

Other priorities for the ministry this year include expanding market access for foreign capital. Such work includes shortening the so-called negative list nationwide, including for free-trade pilot zones, and provides for allowing foreign investors to set up 100 percent-owned companies in more industries. It also entails efforts to open up service sectors more, he said.

The ministry will also focus on hosting the second international import expo and promote the construction of more free-trade pilot zones as well as experimenting with free-trade ports, Zhong said.


Kerala nun slams article against her in newspaper associated with catholic church

She invited the wrath of Church leadership for demanding the arrest of rape accused Bishop Franco Mulakkal

A catholic nun, who took part in a street protest here against a rape-accused bishop some months ago, continued to draw flak with a pro-church daily slamming her on Thursday for violating norms, even as she dubbed it as an “attempt to humiliate” her.

This comes days after the Franciscan Clarist Congregation (FCC) served a notice to Sister Lucy Kalappura accusing her of leading a life, which was against the “principles of religious life“.

The warning notice was issued after the nun had posted her photo wearing a ‘Salwar Kameez’ on her Facebook page, bought a car and published a poetry collection, even after she was denied permission by the church authorities.

Reacting to the article published in the Malayalam newspaper, the nun said she had no regret over whatever she had done.

“I am a person observing all vows and I have no regret in whatever I have done,” the nun, belonging to FCC, said.

“The article is an attempt to humiliate me through the media. But, I will not give up,” she said.

The daily predominately, run by Catholic priests and lay persons, carried a lengthy article in its editorial page against the actions of the nun without naming her.

The article, penned by a Noble Parakkal, accused the nun of insulting the church through her acts, taking part in the protest against the bishop without seeking permission, posting her photo on social media and grabbing media attention by spreading lies.

Accuses male priests

Sister Lucy had invited the wrath of the Church leadership by participating in a street protest here by five nuns belonging to the Catholic religious order Missionaries of Jesus demanding the arrest of Bishop Franco Mulakkal, who was accused of raping a nun.

The nun said the article accused her of violating the law and disciplines of the church at a time when several male priests were continuing to live an “unethical” life, she said.

In its notice sent earlier this week, the FCC had accused Sister Lucy Kalapura belonging to FCC’s St Mary’s province in Mananthavady, of leading a life, which was against the “principles of religious life” and the rule of congregation.

The congregation termed as “grave violations” a nun taking license, buying a car, taking a loan for it and publishing a book spending money without permission and knowledge of her superiors.

The provincial superior had denied permission to Sister Lucy to publish her collection of poems.

Book publishing

She, however, published her book “Snehamazhayil” without seeking permission from her superiors.

The congregation had also called as “grave scandal” the Nun participating in discussions in TV news channels and writing articles for non-Christian newspapers “making false accusations against Catholic leadership and belittling it.”


Maoist Pamphlets Claim Money Deal With Bihar BJP Leader After Notes Ban

Maoist Pamphlets Claim Money Deal With Bihar BJP Leader After Notes Ban

Patna: A Maoist attack in Bihar’s Aurangabad which cost a life, was the fallout of a deal with a BJP lawmaker – one to exchange banned currency notes to the tune of RS 5 crore after demonetisation two years ago, the rebels have claimed. On Saturday, Maoists attacked the house Rajan Kumar Singh, shooting his uncle and setting a number of vehicles on fire.

The posters they left behind claimed the lawmaker and his cousin were to help exchange banned notes. Rajan Singh received old currency to the tune of Rs. 5 crore. Another 2 crore was left with his cousin.

But the leader did not hold up his end of the deal, the posters said. He had neither helped Maoists exchange notes, nor returned the money as promised.


Pamphlets were left behind in Bihar’s Aurangabad after the Maoist attack.

Around 200 people attacked Mr Singh’s house, set the house and around 10 vehicles on fire on Saturday. His 55-year-old uncle, Narendra Singh, was shot dead.

The lawmaker has denied the Maoist allegations. He also held the police and the state government responsible for the attack.

“The Maoist attack in the village is the result of mistakes of both the administration and the state government,” he said.

“I had given an application to Chief Minister Nitish Kumar and the DGP for setting up a police station or at least a police outpost in the village, but no action has been taken. The administration and the state government are responsible for the incident,” Mr Singh said.
The police did not rule out the alleged link between the politician and Maoists.

The sudden ban on Rs. 500 and Rs. 1000 notes by the government in November 2016 was done with the dual purpose of flushing out black money and stopping terror funding. Critics claim the exercise has failed on both heads