Analysis Tracking USA VS China Trade war

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In swipe at Trump, China tells U.N. tariffs could plunge world into recession

In swipe at Trump, China tells U.N. tariffs could plunge world into recession


By David Lawder and David Brunnstrom

ReutersSeptember 27, 2019



Chinese Foreign Minister Wang Yi addresses the 74th session of the United Nations General Assembly at U.N. headquarters in New York

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By David Lawder and David Brunnstrom

UNITED NATIONS (Reuters) - The Chinese government's top diplomat said on Friday that tariffs and trade disputes could plunge the world into recession and Beijing was committed to resolving them in a "calm, rational and cooperative manner."

In a blunt speech to the annual United Nations General Assembly, State Councilor and Foreign Minister Wang Yi said: "Erecting walls will not resolve global challenges, and blaming others for one's own problems does not work. The lessons of the Great Depression should not be forgotten."

Taking a clear swipe at U.S. President Donald Trump, who started a damaging trade war on China nearly 15 months ago, Wang added, without naming the U.S. leader:

"Tariffs and provocation of trade disputes, which upset global industrial and supply chains, serve to undermine the multilateral trade regime and global economic and trade order.

"They may even plunge the world into recession."

In successive rounds of tit-for-tat tariffs, the United States and China have levied punitive duties on hundreds of billions of dollars of each other's goods, roiling financial markets and threatening global growth.

A new round of high-level talks between the world's two largest economies is expected in Washington in the first half of October.

Wang's remarks, unusually pointed for a Chinese diplomat, coincided with word that the Trump administration is considering radical new financial pressure tactics on Beijing, including the possibility of delisting Chinese companies from U.S. stock exchanges.

Sources told Reuters on Friday that the move would be part of a broader effort to limit U.S. investments into Chinese companies, in part because of growing security concerns about their activities.

News of the potential restrictions on portfolio investments restrictions sent U.S. stocks and oil prices lower on Friday on fears that U.S.-China trade tensions would again escalate. An increase in U.S. tariffs to 30% from 25% on $250 billion in Chinese imports is scheduled for Oct. 15 if no progress is made before then.

U.S. and Chinese rhetoric on trade this week had seesawed between harsher and more conciliatory, with Trump issuing a sharp rebuke of China's trade practices and state-led development model in his speech before the General Assembly on Tuesday, adding that he would not accept a "bad deal."

On the same day, Wang warned the United States not to interfere with China's sovereignty. But on Thursday he said China was willing to consider increased purchases of farm products and predicted that talks would lead to a resolution if both sides took more steps to improve goodwill.

Trump said on Wednesday a trade deal with China could come sooner than people think, and praised the Chinese purchases.



NORTH KOREA

At the United Nations, Wang also took aim at Trump's policy on North Korea, in which groundbreaking talks between Pyongyang and Washington have stalled, largely over the U.S. refusal to ease punishing sanctions.

Wang said it was necessary for the United Nations to consider invoking the rollback terms of North Korea-related sanctions resolutions "in the light of new developments" on the Korean Peninsula "to bolster the political settlement of the Peninsula issue."

He said "the realistic and viable way forward" was to promote "parallel progress in denuclearization and the establishment of a peace mechanism" to gradually build trust "through phased and synchronized actions."

Wang criticized the U.S. withdrawal this year from a treaty governing intermediate range nuclear missiles, and said China was against the deployment of such missiles in the Asia-Pacific region.

He said China would continue to take an active role in the international arms control process and added that it has initiated domestic legal procedures to join the Arms Trade Treaty.

Trump has said he intends to revoke the U.S. signature to the treaty, which regulates the $70 billion global cross-border trade in conventional arms and seeks to keep weapons out of the hands of human rights abusers.

So far, 104 countries have joined the pact, which the General Assembly approved in 2013.

Wang reiterated comments made earlier in the week, stressing China's commitment to the principle of non-interference in the internal affairs of another country, an apparent reference to Beijing's displeasure at criticism of its handling of protests in Hong Kong.
 

BMD

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IndoPacific_SCS_Info (@IndoPac_Info) Tweeted:
The $600 bn reason why #China's stock market crash might get a whole lot worse - Chinese stocks have lost more than 30% of their value since the start of 2018.
The $600bn reason why China's stock market crash might get a whole lot worse ( )
It's a bit like a child that copies off his classmate but then his classmate goes off sick and his grades suddenly slip.
 

Gautam

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Trump administration considers hitting China’s Wall Street connections

By ADAM BEHSUDI, 09/27/2019 02:45 PM EDT

There are 159 Chinese firms listed on U.S. stock exchanges, representing a total market capitalization of $1.1 trillion, according to the U.S.-China Economic and Security Review Commission | Spencer Platt/Getty Images

The Trump administration is considering expanding its trade fight against China by targeting Beijing’s ties with Wall Street and American investors, according to two people familiar with internal discussions.

The measures being weighed would force Chinese companies to de-list from U.S. stock exchanges if they don’t meet U.S. auditing requirements. The administration is also contemplating banning U.S. government pension funds from having investments in market indexes that list Chinese companies.

The measures have been in the early stages of consideration for at least a month as U.S. lawmakers on both sides of the aisle have upped the pressure on the administration to take steps that would restrict China’s reach into U.S. capital markets, the people said.

“There’s political pressure for this to be done,” said one of the people, adding that Sen. Elizabeth Warren (D-Mass.), who is emerging as a front-runner among Democratic presidential candidates, “could take this and run with it.”

Top U.S. officials are scheduled to hold a high-level meeting with their Chinese counterparts in early October.

China has made moves to build goodwill by agreeing to purchase U.S. agriculture goods again. But it’s still unclear if China is willing to meet U.S. demands on core concerns related to intellectual property, forced technology transfer, subsidies and other state-directed policies accused of ripping off U.S. innovation.

After numerous, bruising rounds of tariffs, the U.S. could have duties in place by the end of the year on almost all of the roughly $500 billion worth of goods it imports from China. Now, the administration now seems to be considering new ways to pressure China beyond tariffs.

The news that the administration is now considering capital measures was reported by Bloomberg on Friday, but people close to the administration have hinted for weeks that such actions were under consideration.

“We’re at very low levels of pressure compared to what could be done,” Michael Pillsbury, an outside adviser to Trump on China and senior fellow at the Hudson Institute, told POLITICO earlier this month.

Pillsbury described a measure the administration could take to eliminate waivers that allow Chinese companies listed on U.S. stock exchanges to bypass auditing and financial disclosure requirements required for American firms. This could force major Chinese companies like Alibaba and Tencent off U.S. stock exchanges, he said.

“Steps that would inflict pain on China’s national champion companies might bring them around to a binding deal,” Pillsbury said.

There are 159 Chinese firms listed on U.S. stock exchanges, representing a total market capitalization of $1.1 trillion, according to the U.S.-China Economic and Security Review Commission.

Sen. Marco Rubio (R-Fla.) introduced legislation in June that would force Chinese companies to disclose financial information the Chinese government blocks U.S. regulators from reviewing.

Rubio and Sen. Jeanne Shaheen (D-N.H.) also sent a letter in late August to Michael Kennedy, the chairman of the Federal Retirement Thrift Investment Board, to reverse a decision that exposed $50 billion worth of U.S. government workers’ retirement assets to investments in Chinese firms.

The lawmakers said the decision exposed U.S. pension funds to Chinese companies involved in espionage, human rights abuses and Chinese industrial policies, like the “Made in China 2025" initiative, that have been the target of the U.S. tariff actions.

“There are obvious problems that need to be urgently corrected given China’s policies, its use of all companies to achieve them regardless of ownership structure, and its lack of transparency around all such efforts,” said one of the people familiar with the discussions. “Folks have had blinders on for far too long, particularly Wall Street.”

The move could cause major disruptions as portfolio managers try to adjust to a possible ban and new regulations, said Jim Paulsen, chief investment strategist at the Leuthold Group.

“My own guess is this is just a negotiating tactic from the White House aimed at ratcheting up the pressure on China and giving a tangible show of U.S. leverage ahead of the upcoming meeting in October,” he said.

Capital controls and restrictions could also make it more difficult for the two sides to reach a true deal.

“We don’t have confidence in China honoring a deal. China has no confidence in Trump; he appears to them as an unreliable moving target,” said David Kotok, chairman and chief investment officer at Cumberland Advisors. “My best guess is no real trade deal is possible for at least two years.“

Meanwhile, Beijing recently repeated its warning that a further decoupling of the U.S. and Chinese economies would be counterproductive.

During a speech this week to U.S. business executives on the sidelines of the United Nations General Assembly, Chinese Foreign Minister Wang Yi said China will continue efforts to open up its economy.

“Given the size of our economies and the level of interdependence, the so-called ‘decoupling‘ or ‘shutting the door to each other‘ is just like an attempt to build castles in the air,” he said. “It is neither sensible nor realistic.“

Ben White contributed to this report.

Trump administration considers hitting China’s Wall Street connections
 

_Anonymous_

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It's a bit like a child that copies off his classmate but then his classmate goes off sick and his grades suddenly slip.
You mean future Brit politicians who're prospective senior public office bearers have already decided to blame Brekshit for all the ills in the socio economic condition Britain ( winding up of the NHS, the collapse of whatever middle & heavy engineering industry in the UK and the paramount position of the financial sector, etc) will find itself in , say a decade after you're booted out of a no deal Brekshit.
 

BMD

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Since the Maggie Thatcher era, Paddy. The Iron Lady destroyed manufacturing. She threw out the baby with the bathwater.
Common misconception. In 1996 the UK manufacturing index was 20%, in 2011 it was 10%. Tony Blair destroyed it.
 

BMD

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So, Maggie Thatcher & her poodle Major took all of 17 years to destroy manufacturing which was most evident during Blair's tenure who did nothing to arrest the slide. New Labour indeed.
Thatcher barely had an impact on manufacturing, most of the decline was under Blair as a result of the Maastricht and Lisbon Treaties.
 

BMD

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Will closing last Samsung factory hurt China’s role in global value chain?

Samsung’s last China smartphone factory closing, raising questions about China’s role in global value chains
  • Huizhou Samsung is the South Korean electronics giant’s last smartphone factory in China but signs indicate it will follow facilities in Tianjin and Shenzhen
  • Huawei, Xiaomi and Oppo have taken hold of the Chinese market, while the US-China trade war is forcing the company towards production in Vietnam and India




Huizhou Samsung Electronics began production in 2003. Photos: He Huifeng

In its heyday, Samsung’s complex in Huizhou in the northern part of the Pearl River Delta was the South Korean company’s largest Chinese factory, producing one in five smartphones sold in China in 2011.

Now, the small shops and suppliers that surround the vast complex – the focal point for the community for 27 years – have fallen silent and a notice posted on the gate and dated February 28 tells passers-by that recruitment has been suspended.

“Actually, since February after the Chinese Lunar New Year, many – and a growing number – of residents of the [nearby] town of Chenjiang, from businesspeople, hawkers, workers, landlords to security guards at nearby electronics factories, have heard and spread the rumours that Samsung will shut down a large part of its production capacity in the coming months,” said Zhong Ming, a local resident in his 40s who has witnessed the rise of the Samsung factory over the last three decades.

Huizhou Samsung Electronics is Samsung’s last smartphone factory in China after the company closed its facility in Tianjin in December, having already ceased network equipment production earlier in 2018 at its factory in Shenzhen.

Workers in Huizhou talk of colleagues having already accepted voluntary redundancy, while other local residents, workers and suppliers have almost taken it for granted that the factory will close.



A notice at its gate dated February 28 that the factory has stopped hiring. Many big buses are parked inside the compound but none was seen moving in or out of the gate. SCMP / He Huifeng

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“Street lamps here were decorated with Samsung’s eye-catching billboards. Now they are all gone,” said Steve Huang, an engineer who has worked at the plant for 17 years.

Huang is understandably concerned about his own job security, as he says the number of employees at the factory has dropped to about 4,000 from about 9,000 in 2013, when Samsung ranked No 1 in China with 20 per cent of the smartphone market.

Last year, its market share dropped to just 1 per cent in the face of stiff competition from Chinese rivals including Huawei, Xiaomi and Oppo.

The factory was born on August 24, 1992, four days before the establishment of diplomatic relations between China and South Korea, as the electronics giant signed a joint venture contract with the Huizhou city government.

A year later, the company with registered capital of US$32 million began operation, and since then has produced the company’s latest and most popular consumer electronics, from stereos in 1990s, MP3 players in early 2000s and smartphones since 2007.

In 2011, when Samsung’s smartphone sales ranked No 1 in the world, its two factories in Huizhou and Tianjin produced and exported 70.14 million and 55.64 million mobile phones, respectively.



“The rent for a single room has dropped from 500 (US$72) yuan to only 200 or 300 yuan but they are still vacant,” said one landlord.

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“Last month, I heard that a few hundred workers got compensation of between about 10,000 (US$1,400) and over 100,000 yuan (US$14,400) [depending on years of service] and left Samsung,” said a local landlord.

“The rent for a single room has dropped from 500 (US$72) yuan to only 200 or 300 yuan but they are still vacant.”

Samsung China declined to comment despite reports in both Chinese and South Korean media last week that the company was cutting production and laying off workers at the Huizhou factory amid slowing smartphone sales as it continues to shift production to lower-cost locations in Asia.

US-China trade war pushing Vietnam’s manufacturing industry to capacity
In the first quarter of 2019, exports of Samsung smartphones from Huizhou dropped 20.1 per cent from the same period last year, according to Chinese customs data.

The demise of Samsung China also raises wider concerns over China’s economic future and the country’s role in the global value chain, especially at a time when the United States is waging a trade war against China.

And while Samsung has to take a good part of the blame for losing smartphone market share in China, as its marketing and services failed to keep up with the local Chinese brands, the fact that the company is closing its factories in China but expanding its production in Vietnam and India should be a cause for concern.

The shift of production from China to Southeast Asia, India and even Africa, especially for labour-intensive manufacturing and relatively low-end assembly, has been at least a decade in the making due to rising labour and rental costs, high taxes and the economic slowdown.

But the process has shown clear signs of acceleration since US President Donald Trump started to impose tariffs on Chinese products nearly a year ago.

Foxconn, the largest assembler of iPhones and iPads, employs in the region of a million workers in China. It said this week that it has sufficient capacity outside China to accommodate all production of Apple products bound for the US, if needed.

That announcement, plus Samsung’s plans to leave China and news that a number of US tech companies like Cisco and Oracle plan to cut back on production in China, could have serious implications for China’s domestic economic and employment stability as well as its position in global supply chains, according to analysts.

Apple’s US-bound iPhones can all be made outside China if needed, says Foxconn
“Samsung is the world’s leading manufacturing enterprise. If its production is cut back or leaves the mainland completely, at least 100 factories [of suppliers] in Guangdong are going to close down.,” said Liu Kaiming, head of the Institute of Contemporary Observation, which supervises working conditions in hundreds of factories in China.

“They can’t make it without Samsung’s Huizhou factory.”

But the usual trade flows, in which China imports components from South Korea, Japan and Taiwan to assemble and then re-export products to the European and US markets, are already ebbing.

According to China’s customs data, imports from South Korea dropped 13.1 per cent in the first five months of 2019, while its imports from Japan dropped 6.7 per cent and from Taiwan by 6.9 per cent.

Bern Optical, a Hong Kong-invested factory in Huizhou that provides cover glass for Apple and Samsung products, has already been forced to cut 8,000 workers since November due to reduced orders.

Shenzhen-listed Janus, a Dongguan-based precision components maker that receives subsidies from the Guangdong government, reported a 14.25 per cent year-on-year decline sales last year resulting in a net loss of 2.86 billion yuan (US$413 million).

It attributes the huge deficit to Samsung, the company's largest client, which stopped ordering from Janus in the fourth quarter last year, resulting in a decline in orders for consumer electronics precision parts worth 2.408 billion yuan (US$348 million).

Rather than manufacture in China, Samsung opened the world’s largest mobile phone manufacturing facility on the outskirts of the Indian capital of New Delhi last year.



Rather than manufacturing in China, Samsung opened the world’s largest mobile phone manufacturing facility on the outskirts of the Indian capital of New Delhi last year.

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The factory will eventually have the capacity to assemble 120 million smartphones a year, making everything from low-end handsets that cost less than US$100 to its flagship models, according to the company.

In response, the Chinese government has been trying to address complaints by foreign manufacturers by promising that they will be welcomed and protected in China.

Beijing has already rushed through a foreign investment law this year to provide legal protection for foreign intellectual property and prohibiting forced technology transfers.

It is also rolling out the red carpet for big-name investors such as electric carmaker Tesla.

Targeting ‘Made in China 2025’ plan, US rejects Tesla’s tariff relief bid
Its new Shanghai factory, supported with generous lending by Chinese banks and exclusively owned by Tesla, is expected to start producing Model 3 car by the end of 2019, just one year after construction began.

The latest Chinese official data showed foreign direct investment inflows have been largely stable in the first five months this year, posting a rise of 3.7 per cent to US$55 billion. However, this is down from double-digit percentile growth last year.

In the face of changing global supply chains, Wang Jisi, a Sino-US relations expert, wrote in the state-backed Global Times on Thursday that China must avoid falling into the trap of “decoupling” from the US and the rest of the world.

“Some Americans want to see decoupling of the two countries in terms of trade and technology, but China should insist on working with other countries, including the US, in the fields of trade and technology,” Wang said.

Early this month, China’s technology industry ministry granted licenses for 5G wireless telecommunication to China Telecom, China Mobile, China Unicom and China Broadcasting Network Corporation, signalling major new investments in the world’s largest mobile market amid an accelerating technology war with the US.

“It’s only theoretically feasible … but China’s development of next generation of smartphones and next-generation communications have to be connected and compatible with the world,” said James Yan, research director at Hong Kong-based Counterpoint Technology, adding that this makes decoupling impossible.

However, for those in Chenjiang near the Samsung factory, the ship has already sailed.

“I will probably work here till the day when Samsung completely moves out of China,” said Huang.
 
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BMD

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US blacklists 28 Chinese organizations over Xinjiang camps - CNN

US blacklists 28 Chinese organizations and companies over Xinjiang camps

Hong Kong (CNN Business)Washington is adding 28 Chinese companies, government offices and security bureaus to a United States blacklist over their alleged role in facilitating human rights abuses in China's Xinjiang region.

For the last two-and-a-half years, China has been detaining hundreds of thousands of Uyghurs and other predominantly Muslim ethnic minorities in what Beijing alternately describes as "voluntary de-radicalization camps" and "vocational training centers."

Former detainees have described them as closer to internment camps, however, and allegations of abuse are rampant, including in firsthand accounts given to CNN describing torture and forced political re-education under the threat of violence.



Disturbing video shows hundreds of blindfolded prisoners in Xinjiang

In a statement, the United States Commerce Department said "these entities have been implicated in human rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, and high-technology surveillance against Uyghurs, Kazakhs, and other members of Muslim minority groups in (Xinjiang)."

Their addition to the Entity List essentially bars them from buying US products or importing American technology.

"The US Government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China," Secretary of Commerce Wilbur Ross said in a statement. "This action will ensure that our technologies, fostered in an environment of individual liberty and free enterprise, are not used to repress defenseless minority populations."

The more than two dozen organizations listed include 20 government and security bureaus in Xinjiang, and eight companies, including Hikvision, one of the world's largest manufacturers of AI-driven video surveillance products, and Meiya Pico, a leading digital forensics firm.

Hikvision — which has previously been accused by US lawmakers of helping China create a "high-tech police state" — suspended trading following the move, though it did not specifically mention the blacklist in its announcement. Hikvision trades in Shenzhen. Meiya Pico has yet to publicly comment.

Chinese authorities did not immediately respond to the US announcement, but officials have long defended the crackdown in Xinjiang as necessary to tackle extremism. In a statement to CNN on October 4 responding to allegations of human rights abuses, the Xinjiang government said that "cracking down on crimes in accordance with law is the common practice of all countries."


US President Donald Trump speaks during a signing of a US-Japanese trade agreement in the Roosevelt Room of the White House October 7, 2019, in Washington, DC.

The blacklisting of Chinese organizations comes days before high-level trade talks are due to resume in Washington in the hopes of reaching an end to the months-long US-China trade war.

Speaking to reporters at the White House on Monday, US President Donald Trump said "my inclination is to get a big deal. We've come this far. We're doing well."

"Can something happen? I guess, maybe. Who knows? But I think it's probably unlikely. Okay?" Trump added.

The American leader is facing intense scrutiny over his apparent request to Chinese authorities to look into his potential Democratic presidential rival Joe Biden, over the former vice president and his son's business dealings in China.

During a call with Chinese President Xi Jinping about Biden, Trump promised to remain quiet on ongoing anti-government unrest in Hong Kong if trade talks progressed, according to two people familiar with the discussion.

He denied promising to stay quiet Monday, "but I (did) say that we are negotiating. If anything happened bad, I think that would be a very bad for the negotiation."

Trump also referenced Hong Kong, the semi-autonomous Chinese city that has been gripped by 18 weeks of anti-government unrest.

"Hong Kong is very important as a world hub — not just for China, but for the world. And you have great people over there," Trump said. "They have, you know, tremendous signage and tremendous — they have a tremendous spirit for our country. They have a lot of American flags, a lot of Trump signs. I'd just like to see a humane deal be worked out. And I think President Xi has the ability to do it."