China challenged the United States Friday to show evidence to support charges that Beijing backed a scheme by Chinese and Taiwanese companies to steal trade secrets from a US-based semiconductor firm.

US Attorney General Jeff Sessions accused the companies on Thursday of stealing an estimated $8.75 billion worth of know-how from semiconductor giant Micron.

The Justice Department unveiled criminal charges against Chinese state-owned Fujian Jinhua Integrated Circuit Co., and United Microelectronics Corporation (UMC) of Taiwan, along with three UMC officials.

It said they conspired to steal US-based Micron's advanced designs to turn Fujian Jinhua into a major player in the global computer chip market.

"If the US side is really concerned, they should provide concrete examples that can withstand the test of evidence and facts," Chinese foreign ministry spokesman Lu Kang told a regular press briefing.

The charges were the latest in a series of cases targeting what Washington calls an ongoing Beijing programme to steal valuable US industrial and commercial secrets in order to advance the Chinese economy.

"Taken together, these cases and many others like them paint a grim picture of a country bent on stealing its way up the ladder of economic development and doing so at American expense," Sessions said.

"This behaviour is illegal. It is wrong. It is a threat to our national security. And it must stop."

US President Donald Trump has cited China's alleged theft of US technological know-how among a litany of grievances in his trade war with the Asian power.

Trump and Xi spoke on the phone about trade and other issues hours after the charges were announced, and the US leader tweeted that the pair had a "very good" conversation.

Xi said he was "very happy" to talk to Trump again and that he would like to see him at the G20 summit in Buenos Aires later this month, adding that the two countries should "push for a mutually acceptable solution to China-US economic and trade issues", according to state media.

- Chip designs - 
The indictment released in the US district court in San Jose, California alleges that three former Micron employees in Taiwan -- Stephen Chen Zhengkun, He Jianting and Kenny Wang Yungming -- joined UMC in 2015 and 2016 with the express plan to hand over to the company Micron's design and manufacturing processes for specific dynamic random access memory (DRAM) semiconductors.

Those would then be transferred to Fujian Jinhua under an contract set by Chen.

Prior to the plot, US prosecutors said, neither the Chinese nor the Taiwanese company had any DRAM production capability.

But China had set out the goal of acquiring DRAM capability in its current strategic economy plan.

Chen was originally a top executive at Micron's Taiwan operation. He moved in 2015 to lead UMC, a contract chip manufacturer listed on the New York Stock Exchange, and subsequently became president of Fujian Jinhua.

- Competitive threat to Micron - 
The theft posed a major threat to Micron, a company valued at around $100 billion and which controls 20-25 percent of the global market for DRAM chips.

The indictment came four months after Fujian Jinhua won a patent dispute with Micron in a Chinese court, gaining an order for the US company to stop sales in China of more than a dozen solid-state drives, memory sticks and chips.

In retaliation, the US Commerce Department on Monday placed heavy restrictions on Fujian Jinhua's ability to buy US machinery and materials for its factories that would boost its DRAM production capabilities.

In addition to the criminal charges announced Thursday, the Justice Department filed a civil lawsuit to block imports of any UMC and Fujian Jinhua products using stolen Micron technology.

In recent years Washington has stepped up its fight against China's alleged ongoing economic espionage programme to obtain all sorts of advanced technologies, from agriculture to heavy manufacturing.

"China is probably, over the long term, the biggest challenge, national security challenge that faces our country," Secretary of State Mike Pompeo said Wednesday in an interview with Fox News' Laura Ingraham.

"Where the semiconductor piece fits in is, it's part of a mosaic of our strategic effort to push back against this continued Chinese effort."

China challenged the United States Friday to show evidence to support charges that Beijing backed a scheme by Chinese and Taiwanese companies to steal trade secrets from a US-based semiconductor firm.

China challenged the United States Friday to show evidence to support charges that Beijing backed a scheme by Chinese and Taiwanese companies to steal trade secrets from a US-based semiconductor firm. US Attorney General Jeff Sessions accused the companies on Thursday of stealing an estimated $8.75 billion worth of know-how from semiconductor giant Micron. The Justice Department unveiled criminal charges against Chinese state-owned Fujian Jinhua Integrated Circuit Co., and United Microelectronics Corporation (UMC) of Taiwan, along with three UMC officials. It said they conspired to steal US-based Micron's advanced designs to turn Fujian Jinhua into a major player in the global computer chip market. "If the US side is really concerned, they should provide concrete examples that can withstand the test of evidence and facts," Chinese foreign ministry spokesman Lu Kang told a regular press briefing. The charges were the latest in a series of cases targeting what Washington calls an ongoing Beijing programme to steal valuable US industrial and commercial secrets in order to advance the Chinese economy. "Taken together, these cases and many others like them paint a grim picture of a country bent on stealing its way up the ladder of economic development and doing so at American expense," Sessions said. "This behaviour is illegal. It is wrong. It is a threat to our national security. And it must stop." US President Donald Trump has cited China's alleged theft of US technological know-how among a litany of grievances in his trade war with the Asian power. Trump and Xi spoke on the phone about trade and other issues hours after the charges were announced, and the US leader tweeted that the pair had a "very good" conversation. Xi said he was "very happy" to talk to Trump again and that he would like to see him at the G20 summit in Buenos Aires later this month, adding that the two countries should "push for a mutually acceptable solution to China-US economic and trade issues", according to state media. - Chip designs - The indictment released in the US district court in San Jose, California alleges that three former Micron employees in Taiwan -- Stephen Chen Zhengkun, He Jianting and Kenny Wang Yungming -- joined UMC in 2015 and 2016 with the express plan to hand over to the company Micron's design and manufacturing processes for specific dynamic random access memory (DRAM) semiconductors. Those would then be transferred to Fujian Jinhua under an contract set by Chen. Prior to the plot, US prosecutors said, neither the Chinese nor the Taiwanese company had any DRAM production capability. But China had set out the goal of acquiring DRAM capability in its current strategic economy plan. Chen was originally a top executive at Micron's Taiwan operation. He moved in 2015 to lead UMC, a contract chip manufacturer listed on the New York Stock Exchange, and subsequently became president of Fujian Jinhua. - Competitive threat to Micron - The theft posed a major threat to Micron, a company valued at around $100 billion and which controls 20-25 percent of the global market for DRAM chips. The indictment came four months after Fujian Jinhua won a patent dispute with Micron in a Chinese court, gaining an order for the US company to stop sales in China of more than a dozen solid-state drives, memory sticks and chips. In retaliation, the US Commerce Department on Monday placed heavy restrictions on Fujian Jinhua's ability to buy US machinery and materials for its factories that would boost its DRAM production capabilities. In addition to the criminal charges announced Thursday, the Justice Department filed a civil lawsuit to block imports of any UMC and Fujian Jinhua products using stolen Micron technology. In recent years Washington has stepped up its fight against China's alleged ongoing economic espionage programme to obtain all sorts of advanced technologies, from agriculture to heavy manufacturing. "China is probably, over the long term, the biggest challenge, national security challenge that faces our country," Secretary of State Mike Pompeo said Wednesday in an interview with Fox News' Laura Ingraham. "Where the semiconductor piece fits in is, it's part of a mosaic of our strategic effort to push back against this continued Chinese effort."

China challenges US to provide 'evidence' in trade secrets case

The US Commerce Department on Monday targeted a Chinese tech company with restrictions to cut off access to US technology, saying the firm could harm US security.

President Donald Trump has painted China as an economic threat to the United States and American companies and based his aggressive tariff strategy on the goal of preventing the country from becoming dominant in key technology sectors.

The new restrictions mean US firms will need special approval to export products intended for use by state-owned Fujian Jinhua Integrated Circuit Company, Ltd., according to a statement.

The firm is nearing completion of substantial production capacity for dynamic random access memory (DRAM) integrated circuits, likely to be based on US-technology.

However, that production "threatens the long term economic viability of US suppliers of these essential components of US military systems," the Commerce Department said.

"When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security," Commerce Secretary Wilbur Ross said in a statement.

He said the export restrictions would limit Jinhua's "ability to threaten the supply chain for essential components in our military systems."

China established Jinhua in February 2016 in a bid to make its own home-produced chips, with the firm investing 37 billion yuan ($5.6 billion) that year to build a production line.

Semiconductors are among China's biggest imports, rivaling oil, and have become a stark reminder of its dependence on US technology.

Earlier this year, Washington banned Chinese telecom and smartphone giant ZTE from purchasing crucial US components for seven years, threatening its survival, as punishment for breaking US export controls.

In a politically charged settlement, Washington then allowed ZTE to resume imports under tough conditions.

The US Commerce Department on Monday targeted a Chinese tech company with restrictions to cut off access to US technology, saying the firm could harm US security.

The US Commerce Department on Monday targeted a Chinese tech company with restrictions to cut off access to US technology, saying the firm could harm US security. President Donald Trump has painted China as an economic threat to the United States and American companies and based his aggressive tariff strategy on the goal of preventing the country from becoming dominant in key technology sectors. The new restrictions mean US firms will need special approval to export products intended for use by state-owned Fujian Jinhua Integrated Circuit Company, Ltd., according to a statement. The firm is nearing completion of substantial production capacity for dynamic random access memory (DRAM) integrated circuits, likely to be based on US-technology. However, that production "threatens the long term economic viability of US suppliers of these essential components of US military systems," the Commerce Department said. "When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security," Commerce Secretary Wilbur Ross said in a statement. He said the export restrictions would limit Jinhua's "ability to threaten the supply chain for essential components in our military systems." China established Jinhua in February 2016 in a bid to make its own home-produced chips, with the firm investing 37 billion yuan ($5.6 billion) that year to build a production line. Semiconductors are among China's biggest imports, rivaling oil, and have become a stark reminder of its dependence on US technology. Earlier this year, Washington banned Chinese telecom and smartphone giant ZTE from purchasing crucial US components for seven years, threatening its survival, as punishment for breaking US export controls. In a politically charged settlement, Washington then allowed ZTE to resume imports under tough conditions.

US imposes restrictions on Chinese tech firm

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<h5>“The supreme art of war is to subdue the enemy without fighting.” ― Sun Tzu, The Art of War</h5>
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Chinese philosopher Sun Tzu's famous military classic written over 1,500 year ago sheds light on how to take on an enemy in the field of battle and vanquishing him through "all means necessary" - applying force is explicitly stated as the "last option".

US president Donald Trump it seems has read the book inside out, more than President Xi for even the IMF now believes China will be hit hard due to the escalating trade war. Trump has no doubt realised it is no use taking on China with weapons but to subdue it without fighting - just like Sun Tzu suggested.

India headed by Narendra Modi should perhaps take a leaf out of Trump, or maybe even read up Sun Tzu if it wants to slay the Dragon which looks at its weakest point in decades.

The trade war has definitely started to bite, not only does it show in the growth figures with China now under 7 per cent, the fact that Chinese government has been holding daily press conferences to threaten, beg and plead the US shows the Dragon has begun to lose its fire.

The current situation presents India with a great economic soft spot to strangle China - without confronting it militarily.

China has suddenly realised US is a "big bully" after crushing tariffs imposed by Trump. The Chinese ambassador, in fact, went one step ahead and requested India for enhanced trade ties.

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<h5>"If you know neither the enemy nor yourself, you will succumb in every battle" - Sun Tzu</h5>
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Last year India's trade deficit with China was highest at over $60 billion. Interestingly, China's fertilizer export to India grew nearly 17 per cent in 2017 worth over $1 billion.

China has in fact rightly targeted the biggest growth areas in India - agriculture and electrical products. China's machinery exports to India rose to a mammoth $21 billion last year, an increase of over 28 per cent.

India, however, refuses to address trade deficit as a matter of pressing concern with Chinese authorities while playing up the issue of Doklam &amp; Arunachal - political issues which is likely to be a lose-lose game for India.

In July, the Indian government had escalated the burgeoning trade deficit at the World Trade Organization calling it "unsustainable" while pressing China to lower trade barriers in Pharma, IT, rice and meat to address the trade imbalance, however, it has shied away from raising the issue directly to Chinese officials, nor has it sent any official delegation to Beijing in order to press its case.

Clearly, India's outlook towards trade is not like the Trump administration, however, it must be noted that trade is directly linked to job creation, an area famously milked by Trump but India has failed to address the issue altogether.

President Trump has ordered China to cut its deficit with the US by $200 billion which may be impossible but it has made everyone, including Americans aware about China's imbalance in trade with the United States.&nbsp; 
&nbsp;

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<h5>"We cannot enter into alliances until we are acquainted with the designs of our neighbours," Sun Tzu</h5>
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China is India's largest trading partner accounting for nearly $90 billion share of the trade pie, eclipsing the US by over $15 billion. Although India and China had signed the Most Favored Nation Treatment agreement under the 1984 pact but clearly China has taken the lead in targeting India. Even though India is known as an "IT superpower" but it is China which has exported IT and machinery to India flattening India's chances and key growth driver.

Recently, India's Industry minister Suresh Prabhu had said China has become India's key trading partner in a relatively small duration but India's trade deficit has been growing.

During the event, the minister said industry associations want the government to pursue "defensive approach" to Free Trade Agreements(FTAs) and raise tariffs on goods in order to protect domestic producers. The minister released a study on China's trade policy vis a vis other countries, possible negotiations under Asia Pacific Free Trade Agreement(APTA) and a separate section deals with opportunities arising out of US-China trade standoff.&nbsp; 
&nbsp; 
The Indian government is still trying to study the report and is yet to form a "line of attack" or strategy as Sun Tzu would say. No timeline has been set on how to take advantage of the current trade war between China and the US.&nbsp;

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<h5>"Let your rapidity be that of the wind, your compactness that of the forest" Sun Tzu</h5>
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PM Modi will be meeting Chinese President Xi Jinping in Argentina next month on the sidelines of the G20 summit, no doubt there will be photo-ops and India-China friendship slogans raised but India should be mindful of its place in the world economy and look to seize the moment.&nbsp;

India has already lost the first-mover advantage as far as trade is concerned but like the US, it should devise a Sun Tzu-like forward strategy to scare and strangle the Middle Kingdom if it wants to be taken seriously in the economic high table.&nbsp;

India in the 21st century can no longer afford to be a mere market but has to seize other markets in order to grow and compete or risk being taken over by foreign companies which are aggressive, focused and more importantly - ruthless.

Trump had recently called India a "Tariff King", it is time India lived up to its label.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

“The supreme art of war is to subdue the enemy without fighting.” ― Sun Tzu, The Art of War × Chinese philosopher Sun Tzu's famous military classic written over 1,500 year ago sheds light on how to take on an enemy in the field of battle and vanquishing him through "all means necessary" - applying force is explicitly stated as the "last option".

“The supreme art of war is to subdue the enemy without fighting.” ― Sun Tzu, The Art of War × Chinese philosopher Sun Tzu's famous military classic written over 1,500 year ago sheds light on how to take on an enemy in the field of battle and vanquishing him through "all means necessary" - applying force is explicitly stated as the "last option". US president Donald Trump it seems has read the book inside out, more than President Xi for even the IMF now believes China will be hit hard due to the escalating trade war. Trump has no doubt realised it is no use taking on China with weapons but to subdue it without fighting - just like Sun Tzu suggested. India headed by Narendra Modi should perhaps take a leaf out of Trump, or maybe even read up Sun Tzu if it wants to slay the Dragon which looks at its weakest point in decades. The trade war has definitely started to bite, not only does it show in the growth figures with China now under 7 per cent, the fact that Chinese government has been holding daily press conferences to threaten, beg and plead the US shows the Dragon has begun to lose its fire. The current situation presents India with a great economic soft spot to strangle China - without confronting it militarily. China has suddenly realised US is a "big bully" after crushing tariffs imposed by Trump. The Chinese ambassador, in fact, went one step ahead and requested India for enhanced trade ties. "If you know neither the enemy nor yourself, you will succumb in every battle" - Sun Tzu × Last year India's trade deficit with China was highest at over $60 billion. Interestingly, China's fertilizer export to India grew nearly 17 per cent in 2017 worth over $1 billion. China has in fact rightly targeted the biggest growth areas in India - agriculture and electrical products. China's machinery exports to India rose to a mammoth $21 billion last year, an increase of over 28 per cent. India, however, refuses to address trade deficit as a matter of pressing concern with Chinese authorities while playing up the issue of Doklam & Arunachal - political issues which is likely to be a lose-lose game for India. In July, the Indian government had escalated the burgeoning trade deficit at the World Trade Organization calling it "unsustainable" while pressing China to lower trade barriers in Pharma, IT, rice and meat to address the trade imbalance, however, it has shied away from raising the issue directly to Chinese officials, nor has it sent any official delegation to Beijing in order to press its case. Clearly, India's outlook towards trade is not like the Trump administration, however, it must be noted that trade is directly linked to job creation, an area famously milked by Trump but India has failed to address the issue altogether. President Trump has ordered China to cut its deficit with the US by $200 billion which may be impossible but it has made everyone, including Americans aware about China's imbalance in trade with the United States. "We cannot enter into alliances until we are acquainted with the designs of our neighbours," Sun Tzu × China is India's largest trading partner accounting for nearly $90 billion share of the trade pie, eclipsing the US by over $15 billion. Although India and China had signed the Most Favored Nation Treatment agreement under the 1984 pact but clearly China has taken the lead in targeting India. Even though India is known as an "IT superpower" but it is China which has exported IT and machinery to India flattening India's chances and key growth driver. Recently, India's Industry minister Suresh Prabhu had said China has become India's key trading partner in a relatively small duration but India's trade deficit has been growing. During the event, the minister said industry associations want the government to pursue "defensive approach" to Free Trade Agreements(FTAs) and raise tariffs on goods in order to protect domestic producers. The minister released a study on China's trade policy vis a vis other countries, possible negotiations under Asia Pacific Free Trade Agreement(APTA) and a separate section deals with opportunities arising out of US-China trade standoff. The Indian government is still trying to study the report and is yet to form a "line of attack" or strategy as Sun Tzu would say. No timeline has been set on how to take advantage of the current trade war between China and the US. "Let your rapidity be that of the wind, your compactness that of the forest" Sun Tzu × PM Modi will be meeting Chinese President Xi Jinping in Argentina next month on the sidelines of the G20 summit, no doubt there will be photo-ops and India-China friendship slogans raised but India should be mindful of its place in the world economy and look to seize the moment. India has already lost the first-mover advantage as far as trade is concerned but like the US, it should devise a Sun Tzu-like forward strategy to scare and strangle the Middle Kingdom if it wants to be taken seriously in the economic high table. India in the 21st century can no longer afford to be a mere market but has to seize other markets in order to grow and compete or risk being taken over by foreign companies which are aggressive, focused and more importantly - ruthless. Trump had recently called India a "Tariff King", it is time India lived up to its label. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Why India should borrow from Trump's trade playbook and impose tariffs against China

American lawmakers recently created the International Development Finance Corporation (IDFC) to finance infrastructure projects in low-income countries. The IDFC’s primary aim is to counter China’s growing influence, and it signals a dramatic new chapter in the fragile relationship between the US and China.

Tensions between the two countries have been high, as they struggle over trade, intellectual property rights and military control of the South China Sea. They are now also racing to connect the world by financing large-scale infrastructure projects such as highways, railways and ports.

The IDFC enjoyed bipartisan support and was rushed through Congress as a matter of urgency. It was initially part of the BUILD Act, which was passed by the House of Representatives. The Senate then incorporated it into the FAA Reauthorization Act and passed it by a margin of 93-6 (with one abstention). The US president, Donald Trump, signed the IDFC into law while Capitol Hill was gripped by the bitter feud over the confirmation of Brett Kavanaugh to the Supreme Court.

The 2008 financial crisis destabilised the so-called Chimerica order of the global economy, which balanced China’s export-led growth with a period of overconsumption in the US. Following the financial crisis, the Chinese government countered slackening demand from the US by financing infrastructure projects in low-income countries.

And so over the past decade, China has quietly become a leader in the construction sector and, according to some commentators, is poised to establish a global monopoly. Indeed, its signature Belt and Road Initiative (BRI) aims to integrate Asia, Africa and Europe via large-scale infrastructure projects. The World Bank has even suggested that the BRI may constitute “a new approach” to development.

Infrastructure-led connectivity 
 
The BRI is consistent with a global trend to enhance infrastructure-led connectivity. This prioritises long-distance and cross-border connections and infrastructure to link resource extraction, agribusiness and manufacturing with global markets and supply chains.

In addition to the BRI, examples from low and middle-income countries include the Greater Mekong Subregion in South-East Asia, and the Lamu Port, South Sudan, Ethiopia Transport Corridor (LAPSSET), in East Africa. While enhanced connectivity can indeed foster economic growth, it can also have harmful consequences, such as in South America where the extension of infrastructure networks in remote areas has caused rapid environmental degradation.

Nevertheless, from a realpolitik perspective, whichever country funds connective infrastructure initiatives can benefit by determining how territories are integrated into the global economy. Control of overseas ports, airports, railways and roadways can enable a country to align parts of the global economy with their own.

This explains why the race to connect the world is not limited to the US and China. The European Union has launched an initiative to invest in infrastructure that enhances its connectivity with Asia. Similarly, Japan, Australia, the UK and others in the G20 are active in the Global Infrastructure Hub, which was created to encourage private investment in connective infrastructure around the world.

The US strikes back 
 
The American IDFC differs from the EU and G20 initiatives because it signals that US policymakers intend to contain rather than compete with China. It has been granted an initial budget of $60 billion to invest in infrastructure projects in low-income countries, and this is designed to “provide countries with a robust alternative to state-directed investments by authoritarian governments”.

So how does it work? The IDFC is loosely modelled on the Chinese approach to infrastructure finance. Chinese development assistance is typically bilateral and prioritises long-term political objectives over profit. This explains why China funds infrastructure projects that institutional investors in the OECD deem too risky. The US is now taking on China by allowing the IDFC to operate in a similar fashion. Unencumbered by shareholder demands, the IDFC’s mandate is “to complement and be guided by overall United States foreign policy, development, and national security objectives”. In other words, it is meant to put politics before profit.

The question is whether this strategy really will contain China’s expanding sphere of influence.

Certainly, the IDFC needs a significantly larger budget to threaten China’s growing influence. After all, China finances multiple infrastructure projects beyond the BRI. In a recent summit with African leaders in Beijing, for example, Xi Jinping committed to invest $60 billion in the continent, independent of the BRI. Furthermore, China is the largest shareholder in the Asian Infrastructure Investment Bank and enjoys influence in the New Development Bank – both of which also pursue objectives consistent with the BRI. Multilateral investment banks such as the World Bank have also already invested in infrastructure projects that complement the BRI.

Making growth sustainable and inclusive 
 
Ultimately, then, the IDFC will be unable to limit China’s growing influence with a mere $60 billion, and China’s sphere of influence will continue to expand regardless.

But the race to connect the world is significant because it will have tremendous impacts on emerging economies that suffer from inadequate infrastructure. Indeed, this scramble between the US and China will likely accelerate economic integration in places that have historically been isolated.

Both countries prioritise geopolitical objectives over developmental outcomes, so the challenge for recipient countries is to ensure such funding and initiatives foster sustainable, inclusive growth.

Chinese investment is required by Beijing to comply with local social and environmental laws, yet many low-income countries lack strong regulations. The IDFC, meanwhile, is required to “annually evaluate and report to the Board and Congress regarding compliance with environmental, social, labor, human rights, and transparency standards”. But it is unclear what standards the IDFC will embrace in any of these fields.

The quickening race between China and the US to connect the world does present opportunities for low-income countries held back by poor infrastructure. The question is whether the “beneficiaries” can ensure that the projects are sustainable and equitable in the long-run. If they can’t, much of the infrastructure will likely just further line American and Chinese pockets.

(Seth Schindler is Senior Lecturer in Urban Development &amp; Transformation, University of Manchester; &nbsp;Juan Miguel Kanai is Lecturer in Human Geography, University of Sheffield)

(This article was originally published on DNA. Read the <a href="https://theconversation.com/us-sparks-new-development-race-with-china-but-can-it-win-105203">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

American lawmakers recently created the International Development Finance Corporation (IDFC) to finance infrastructure projects in low-income countries. The IDFC’s primary aim is to counter China’s growing influence, and it signals a dramatic new chapter in the fragile relationship between the US and China.

American lawmakers recently created the International Development Finance Corporation (IDFC) to finance infrastructure projects in low-income countries. The IDFC’s primary aim is to counter China’s growing influence, and it signals a dramatic new chapter in the fragile relationship between the US and China. Tensions between the two countries have been high, as they struggle over trade, intellectual property rights and military control of the South China Sea. They are now also racing to connect the world by financing large-scale infrastructure projects such as highways, railways and ports. The IDFC enjoyed bipartisan support and was rushed through Congress as a matter of urgency. It was initially part of the BUILD Act, which was passed by the House of Representatives. The Senate then incorporated it into the FAA Reauthorization Act and passed it by a margin of 93-6 (with one abstention). The US president, Donald Trump, signed the IDFC into law while Capitol Hill was gripped by the bitter feud over the confirmation of Brett Kavanaugh to the Supreme Court. The 2008 financial crisis destabilised the so-called Chimerica order of the global economy, which balanced China’s export-led growth with a period of overconsumption in the US. Following the financial crisis, the Chinese government countered slackening demand from the US by financing infrastructure projects in low-income countries. And so over the past decade, China has quietly become a leader in the construction sector and, according to some commentators, is poised to establish a global monopoly. Indeed, its signature Belt and Road Initiative (BRI) aims to integrate Asia, Africa and Europe via large-scale infrastructure projects. The World Bank has even suggested that the BRI may constitute “a new approach” to development. Infrastructure-led connectivity The BRI is consistent with a global trend to enhance infrastructure-led connectivity. This prioritises long-distance and cross-border connections and infrastructure to link resource extraction, agribusiness and manufacturing with global markets and supply chains. In addition to the BRI, examples from low and middle-income countries include the Greater Mekong Subregion in South-East Asia, and the Lamu Port, South Sudan, Ethiopia Transport Corridor (LAPSSET), in East Africa. While enhanced connectivity can indeed foster economic growth, it can also have harmful consequences, such as in South America where the extension of infrastructure networks in remote areas has caused rapid environmental degradation. Nevertheless, from a realpolitik perspective, whichever country funds connective infrastructure initiatives can benefit by determining how territories are integrated into the global economy. Control of overseas ports, airports, railways and roadways can enable a country to align parts of the global economy with their own. This explains why the race to connect the world is not limited to the US and China. The European Union has launched an initiative to invest in infrastructure that enhances its connectivity with Asia. Similarly, Japan, Australia, the UK and others in the G20 are active in the Global Infrastructure Hub, which was created to encourage private investment in connective infrastructure around the world. The US strikes back The American IDFC differs from the EU and G20 initiatives because it signals that US policymakers intend to contain rather than compete with China. It has been granted an initial budget of $60 billion to invest in infrastructure projects in low-income countries, and this is designed to “provide countries with a robust alternative to state-directed investments by authoritarian governments”. So how does it work? The IDFC is loosely modelled on the Chinese approach to infrastructure finance. Chinese development assistance is typically bilateral and prioritises long-term political objectives over profit. This explains why China funds infrastructure projects that institutional investors in the OECD deem too risky. The US is now taking on China by allowing the IDFC to operate in a similar fashion. Unencumbered by shareholder demands, the IDFC’s mandate is “to complement and be guided by overall United States foreign policy, development, and national security objectives”. In other words, it is meant to put politics before profit. The question is whether this strategy really will contain China’s expanding sphere of influence. Certainly, the IDFC needs a significantly larger budget to threaten China’s growing influence. After all, China finances multiple infrastructure projects beyond the BRI. In a recent summit with African leaders in Beijing, for example, Xi Jinping committed to invest $60 billion in the continent, independent of the BRI. Furthermore, China is the largest shareholder in the Asian Infrastructure Investment Bank and enjoys influence in the New Development Bank – both of which also pursue objectives consistent with the BRI. Multilateral investment banks such as the World Bank have also already invested in infrastructure projects that complement the BRI. Making growth sustainable and inclusive Ultimately, then, the IDFC will be unable to limit China’s growing influence with a mere $60 billion, and China’s sphere of influence will continue to expand regardless. But the race to connect the world is significant because it will have tremendous impacts on emerging economies that suffer from inadequate infrastructure. Indeed, this scramble between the US and China will likely accelerate economic integration in places that have historically been isolated. Both countries prioritise geopolitical objectives over developmental outcomes, so the challenge for recipient countries is to ensure such funding and initiatives foster sustainable, inclusive growth. Chinese investment is required by Beijing to comply with local social and environmental laws, yet many low-income countries lack strong regulations. The IDFC, meanwhile, is required to “annually evaluate and report to the Board and Congress regarding compliance with environmental, social, labor, human rights, and transparency standards”. But it is unclear what standards the IDFC will embrace in any of these fields. The quickening race between China and the US to connect the world does present opportunities for low-income countries held back by poor infrastructure. The question is whether the “beneficiaries” can ensure that the projects are sustainable and equitable in the long-run. If they can’t, much of the infrastructure will likely just further line American and Chinese pockets. (Seth Schindler is Senior Lecturer in Urban Development & Transformation, University of Manchester; Juan Miguel Kanai is Lecturer in Human Geography, University of Sheffield) (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

US sparks new development race with China – but can it win?

Harley-Davidson Inc reported its steepest decline in domestic sales in eight years on Tuesday, and warned that motorcycle shipments for the year will be at the lower end of its forecast as it faces higher tariff-related costs.

Milwaukee-based Harley's shares reversed course and were down 5 percent, giving up premarket gains after company the recorded its best quarterly profit in two years.

"We expect U.S. industry to remain challenged into 2019 and will continue to proactively address the weak U.S. industry," Chief Financial Officer John Olin said on a conference call with analysts.

Harley's demographic challenges in the domestic market are well documented - core customers are growing older and efforts to attract new and young riders have yet to show results.

In addition, President Donald Trump's call to boycott the motorcycle manufacturer for its decision to move production for European markets overseas has only compounded the company's troubles.

Harley said on Tuesday it could see up to $48 million in costs from tariffs in 2018.

Rising costs and a tit-for-tat tariff war with China have weighed on the shares of most U.S. manufacturers. Harley's shares are down about 30 percent so far this year and have underperformed the broader S&amp;P 500 index.

Analysts at Goldman Sachs last week cut their 12-month price target for the stock, while BMO Capital Markets downgraded the company's shares on Friday, citing its poor performance.

To be sure, the company still dominates the local heavyweight motorcycle market, but rivals such as Polaris are chipping away at its market share.

To counter weak demand at home, Harley plans to make deeper inroads into some of the fastest growing two-wheeler markets in Asia through lightweight motorcycles.

Retail sales in the United States, which accounts for more than half of the company's sales, fell 13.3 percent in the three months ended Sept. 30 from a year ago. Total retail sales were down 7 percent. Analysts expect 2018 to be the third straight year of declining sales.

International retail sales, however, rose about 3 percent, led by Europe.

"First look (EPS beat) looks good, but when you dig further you see that retail was worse than expected, especially in the United States," Wedbush analyst James Hardiman said.

The company's net income jumped 67 percent to $113.86 million for the third quarter, helped by cost-cutting and higher international sales. Excluding manufacturing optimization costs, the company earned 78 cents a share.

Revenue from motorcycles and related products rose 16.8 percent to $1.12 billion.

Analysts on average expected a profit of 53 cents a share and revenue of $1.07 billion, according to data from Refinitiv.

The company now expects 2018 shipments forecast to be at the low end of its guidance of between 231,000 and 236,000 motorcycles.

Harley-Davidson Inc reported its steepest decline in domestic sales in eight years on Tuesday, and warned that motorcycle shipments for the year will be at the lower end of its forecast as it faces higher tariff-related costs.

Harley-Davidson Inc reported its steepest decline in domestic sales in eight years on Tuesday, and warned that motorcycle shipments for the year will be at the lower end of its forecast as it faces higher tariff-related costs. Milwaukee-based Harley's shares reversed course and were down 5 percent, giving up premarket gains after company the recorded its best quarterly profit in two years. "We expect U.S. industry to remain challenged into 2019 and will continue to proactively address the weak U.S. industry," Chief Financial Officer John Olin said on a conference call with analysts. Harley's demographic challenges in the domestic market are well documented - core customers are growing older and efforts to attract new and young riders have yet to show results. In addition, President Donald Trump's call to boycott the motorcycle manufacturer for its decision to move production for European markets overseas has only compounded the company's troubles. Harley said on Tuesday it could see up to $48 million in costs from tariffs in 2018. Rising costs and a tit-for-tat tariff war with China have weighed on the shares of most U.S. manufacturers. Harley's shares are down about 30 percent so far this year and have underperformed the broader S&P 500 index. Analysts at Goldman Sachs last week cut their 12-month price target for the stock, while BMO Capital Markets downgraded the company's shares on Friday, citing its poor performance. To be sure, the company still dominates the local heavyweight motorcycle market, but rivals such as Polaris are chipping away at its market share. To counter weak demand at home, Harley plans to make deeper inroads into some of the fastest growing two-wheeler markets in Asia through lightweight motorcycles. Retail sales in the United States, which accounts for more than half of the company's sales, fell 13.3 percent in the three months ended Sept. 30 from a year ago. Total retail sales were down 7 percent. Analysts expect 2018 to be the third straight year of declining sales. International retail sales, however, rose about 3 percent, led by Europe. "First look (EPS beat) looks good, but when you dig further you see that retail was worse than expected, especially in the United States," Wedbush analyst James Hardiman said. The company's net income jumped 67 percent to $113.86 million for the third quarter, helped by cost-cutting and higher international sales. Excluding manufacturing optimization costs, the company earned 78 cents a share. Revenue from motorcycles and related products rose 16.8 percent to $1.12 billion. Analysts on average expected a profit of 53 cents a share and revenue of $1.07 billion, according to data from Refinitiv. The company now expects 2018 shipments forecast to be at the low end of its guidance of between 231,000 and 236,000 motorcycles.

Harley-Davidson reports steepest decline in sales in 8 years

For the better part of five years, the Indian economy has had it good with international energy prices being comparatively low, the global economy in shades of recovery and the geopolitics affecting energy being mostly stable. In spite of the situation in the Middle East being somewhat turbulent, with wars raging in Syria and Yemen, major energy sources have been largely unaffected while the sea lanes facilitating shipping have remained open. 
 
The Iran Nuclear Deal of July 15, 2015, struck under the leadership of former US President Barack Obama, gave Iran a reprieve from sanctions and thus largely freed up its energy trade facilitating nations such as India, the third largest consumer of hydrocarbons in the world. Since oil prices are cyclical, they are now peaking again.

How did the price rise re-commence after the progressive fall occurring till 2014? Firstly, the Organisation of Petroleum Exporting Countries (OPEC) and its allies, including Russia, decided to withhold output from January 2017 in order to dry up the surplus stock. There was a consensus to give an impetus to prices which had started to fall in 2014 just before the NDA government came to power. In fact, the reduction amounted to approximately 750,000 barrels per day (bpd) from the higher ceiling production. 
 
Prices have continued to rise on the back of the second major factor, the resumption of sanctions on Iran after the US pulled out of the Iran Nuclear Deal in 2018. Iran exported 2.5 million bpd after sanctions were last lifted. In 2012, this had been halved when sanctions were first imposed. India imports 83 per cent of its energy needs and is, therefore, one of the first to be affected by the price rise. As the Iran issue ratchets up further, the potential of prices of Brent crude touching 100 USD per barrel is high and there also remains the risk of a trigger sending it even higher if the US and its Middle East allies attempt to do anything offensive in military terms against Iran.

There have been two immediate effects on the Indian economy due to the oil price rise. As per a Goldman Sachs report, India’s current account deficit could be 2.4 per cent of GDP in 2018-19 as compared to an earlier forecast of 2.1 per cent. A high deficit means the country has to sell rupees and buy dollars to pay its bills. The value of the rupee then falls as it has over the last six months. The Rupee has depreciated by 14 per cent against the dollar in the last 10 months. The rupee depreciation and high oil prices adversely affect sectors such as aviation, transportation and consumables besides a host of others. Higher crude oil prices, trade deficit, and the exit of foreign investors from India pull the rupee down. US Fed’s interest rate hike combined with protectionist measures has hit currencies in emerging markets, including India.

A brief review of the trade wars between the US and China is necessary to get an idea of the havoc potential, which is being predicted by many. In a second round, there have been tariff hikes on 200 billion dollars&nbsp;worth of Chinese imports; it’s currently only 10 per cent but could go up to 25 per cent once the Chinese retaliate. India being thus far relatively free of the turbulence from tariff increases, except in the area of steel and aluminium exports to the US, senses an opportunity to step in to replace China in the supply of many of the goods slapped with increased tariffs. If India can resolve the issues connected to imports of some US goods through the generalized system of preferences (GSP), it may be able to gain much greater access. However, at the end of it all, it is President Trump’s reaction and response which will dictate the course.

China, Russia and Iran are the three countries around which the dynamics of India’s relationships will dictate the course of its foreign policy; the eco-strategic considerations being extremely high. The links with each of the above will need to be orchestrated in such a way that the relationship with the US is not adversely affected. The US badly needs India to balance the none too peaceful rise of China. It also knows that there are huge economic stakes in the Sino-Indian relationship.&nbsp;

However, it is the Iran equation which the US probably takes most seriously. In a recent meeting with major oil producers, Prime Minister Narendra Modi sought a review of payment terms as part of the Indian government’s strategy to help counter a depreciating rupee and provide more flexibility in the purchase of energy from Iran. However, not much is likely to change on this front as the dollar trade system is well embedded and the US has no intention of changing it despite its own stakes in Middle Eastern energy having reduced to almost nought. India’s interest clearly lies in continuing to purchase Iran’s oil so as to pursue other strategic interests such as the Chabahar port and access to Afghanistan. However, it is likely to become an early victim of Countering America’s Adversaries through Sanctions Act (CAATSA) being invoked to coerce it into withholding all economic ties with Iran, thus placing it in a strategic quandary. However, it can balance the relationship with the US and Russia through diversion of some of the arms and technology purchases to the US arms market and hope for waivers to CAATSA.&nbsp;

The waiver for S-400 continues to be used as a coercive tool to influence India’s strategic behaviour. As India approaches its own general elections, the compulsions of domestic politics, dynamic economic factors and the geopolitics revolving around the US, Russia, China and Iran equations, are going to create an environment of thorough unpredictability. The government will need to wade through this very gingerly. 
 
(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-negotiating-the-fault-lines-2677090">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

For the better part of five years, the Indian economy has had it good with international energy prices being comparatively low, the global economy in shades of recovery and the geopolitics affecting energy being mostly stable.

For the better part of five years, the Indian economy has had it good with international energy prices being comparatively low, the global economy in shades of recovery and the geopolitics affecting energy being mostly stable. In spite of the situation in the Middle East being somewhat turbulent, with wars raging in Syria and Yemen, major energy sources have been largely unaffected while the sea lanes facilitating shipping have remained open. The Iran Nuclear Deal of July 15, 2015, struck under the leadership of former US President Barack Obama, gave Iran a reprieve from sanctions and thus largely freed up its energy trade facilitating nations such as India, the third largest consumer of hydrocarbons in the world. Since oil prices are cyclical, they are now peaking again. How did the price rise re-commence after the progressive fall occurring till 2014? Firstly, the Organisation of Petroleum Exporting Countries (OPEC) and its allies, including Russia, decided to withhold output from January 2017 in order to dry up the surplus stock. There was a consensus to give an impetus to prices which had started to fall in 2014 just before the NDA government came to power. In fact, the reduction amounted to approximately 750,000 barrels per day (bpd) from the higher ceiling production. Prices have continued to rise on the back of the second major factor, the resumption of sanctions on Iran after the US pulled out of the Iran Nuclear Deal in 2018. Iran exported 2.5 million bpd after sanctions were last lifted. In 2012, this had been halved when sanctions were first imposed. India imports 83 per cent of its energy needs and is, therefore, one of the first to be affected by the price rise. As the Iran issue ratchets up further, the potential of prices of Brent crude touching 100 USD per barrel is high and there also remains the risk of a trigger sending it even higher if the US and its Middle East allies attempt to do anything offensive in military terms against Iran. There have been two immediate effects on the Indian economy due to the oil price rise. As per a Goldman Sachs report, India’s current account deficit could be 2.4 per cent of GDP in 2018-19 as compared to an earlier forecast of 2.1 per cent. A high deficit means the country has to sell rupees and buy dollars to pay its bills. The value of the rupee then falls as it has over the last six months. The Rupee has depreciated by 14 per cent against the dollar in the last 10 months. The rupee depreciation and high oil prices adversely affect sectors such as aviation, transportation and consumables besides a host of others. Higher crude oil prices, trade deficit, and the exit of foreign investors from India pull the rupee down. US Fed’s interest rate hike combined with protectionist measures has hit currencies in emerging markets, including India. A brief review of the trade wars between the US and China is necessary to get an idea of the havoc potential, which is being predicted by many. In a second round, there have been tariff hikes on 200 billion dollars worth of Chinese imports; it’s currently only 10 per cent but could go up to 25 per cent once the Chinese retaliate. India being thus far relatively free of the turbulence from tariff increases, except in the area of steel and aluminium exports to the US, senses an opportunity to step in to replace China in the supply of many of the goods slapped with increased tariffs. If India can resolve the issues connected to imports of some US goods through the generalized system of preferences (GSP), it may be able to gain much greater access. However, at the end of it all, it is President Trump’s reaction and response which will dictate the course. China, Russia and Iran are the three countries around which the dynamics of India’s relationships will dictate the course of its foreign policy; the eco-strategic considerations being extremely high. The links with each of the above will need to be orchestrated in such a way that the relationship with the US is not adversely affected. The US badly needs India to balance the none too peaceful rise of China. It also knows that there are huge economic stakes in the Sino-Indian relationship. However, it is the Iran equation which the US probably takes most seriously. In a recent meeting with major oil producers, Prime Minister Narendra Modi sought a review of payment terms as part of the Indian government’s strategy to help counter a depreciating rupee and provide more flexibility in the purchase of energy from Iran. However, not much is likely to change on this front as the dollar trade system is well embedded and the US has no intention of changing it despite its own stakes in Middle Eastern energy having reduced to almost nought. India’s interest clearly lies in continuing to purchase Iran’s oil so as to pursue other strategic interests such as the Chabahar port and access to Afghanistan. However, it is likely to become an early victim of Countering America’s Adversaries through Sanctions Act (CAATSA) being invoked to coerce it into withholding all economic ties with Iran, thus placing it in a strategic quandary. However, it can balance the relationship with the US and Russia through diversion of some of the arms and technology purchases to the US arms market and hope for waivers to CAATSA. The waiver for S-400 continues to be used as a coercive tool to influence India’s strategic behaviour. As India approaches its own general elections, the compulsions of domestic politics, dynamic economic factors and the geopolitics revolving around the US, Russia, China and Iran equations, are going to create an environment of thorough unpredictability. The government will need to wade through this very gingerly. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Negotiating the fault lines

US&nbsp;trade policy towards China over the next few years will become more confrontational, according to a majority of economists in a Reuters poll who remain convinced US&nbsp;growth has peaked and will slow substantially next year.

The same survey showed the Federal Reserve will raise rates three times next year compared with just two in a poll taken only a month ago. That brings the consensus among Fed watchers in line with the central bank`s "dot plot" forecasts.

The economy is currently expanding at a brisk pace, in part from aggressive tax cuts passed into law late last year, and so economists have revised up some of their near-term growth forecasts.

But the latest October 10-18 survey of over 100 economists suggests tightening financial conditions and the trade war with China will soon start to slow growth.

After surging to an annualized 4.2 per cent in the second quarter, growth is forecast to have lost momentum to 3.3 per cent in the quarter just gone by and then to 2.7 per cent in the current period ending in December.

Those are slightly higher than the September poll. But by end-2019, growth will have slowed to 2.1 per cent.

"The fiscal support for the US&nbsp;economy will start to fade through 2019," noted James Knightley, chief international economist at ING. "Moreover, the strong US&nbsp;dollar and gradual increases in interest rates will act as a brake on growth while trade uncertainty and emerging market fragility could also contribute to a gradual slowdown."

That said, the median probability of a recession in the next two years also slipped from the previous poll, to 30 per cent from 35 per cent.

More than half of over 50 economists who answered an additional question said US&nbsp;economic policy towards China in the next few years will become more punitive and confrontational, countering a lingering view that US&nbsp;President Donald Trump`s administration will soften its tone.

"US&nbsp;and China trade disputes are spilling over into other areas of the bilateral relationship between the two countries. The policy differences that are coming to a head today will not be easily or quickly resolved," said Scott Anderson, chief economist at Bank of the West in San Francisco.

Last month, the administration threatened duties on another US $267 billion of Chinese goods, on top of tariffs already levied on US $200 billion and US $50 billion previously. Beijing retaliated.

The trade war "will continue to escalate," said Andrew Hunter, economist at Capital Economics.

"There are potential talks between President Trump and (Chinese President) Xi (Jinping) planned for the G20 summit next month, but at the moment we wouldn`t hold much hope" for a deal, he added.

Just seven respondents in the poll predicted an improvement in US-China trade relations.

Economists polled by Reuters have consistently said putting up trade barriers will do more harm than good.&nbsp;

Economists said they believed that a deteriorating US&nbsp;fiscal position will give Washington fewer policy options to cushion the next downturn. They noted that tax cuts have widened the federal budget deficit to the highest in six years, expected to touch US $1 trillion in the current fiscal year.&nbsp;

Without robust growth, "the deficit could rise sharply," said ING`s Knightley. "Given the polarization of views on Capitol Hill this runs the real threat of government shutdowns, which could add to political, economic and market uncertainty."&nbsp;

Economists also expect the Fed to hike rates once more this year, probably at the December meeting, taking the fed funds rate to 2.25-2.50 per cent.&nbsp;

Despite a tame US&nbsp;inflation outlook, Reuters poll medians show three Fed rate hikes next year, one more than the two predicted in the September poll and in every survey since the complete 2019 Fed outlook was first polled in March.

US trade policy towards China over the next few years will become more confrontational, according to a majority of economists in a Reuters poll who remain convinced US growth has peaked and will slow substantially next year.

US trade policy towards China over the next few years will become more confrontational, according to a majority of economists in a Reuters poll who remain convinced US growth has peaked and will slow substantially next year. The same survey showed the Federal Reserve will raise rates three times next year compared with just two in a poll taken only a month ago. That brings the consensus among Fed watchers in line with the central bank`s "dot plot" forecasts. The economy is currently expanding at a brisk pace, in part from aggressive tax cuts passed into law late last year, and so economists have revised up some of their near-term growth forecasts. But the latest October 10-18 survey of over 100 economists suggests tightening financial conditions and the trade war with China will soon start to slow growth. After surging to an annualized 4.2 per cent in the second quarter, growth is forecast to have lost momentum to 3.3 per cent in the quarter just gone by and then to 2.7 per cent in the current period ending in December. Those are slightly higher than the September poll. But by end-2019, growth will have slowed to 2.1 per cent. "The fiscal support for the US economy will start to fade through 2019," noted James Knightley, chief international economist at ING. "Moreover, the strong US dollar and gradual increases in interest rates will act as a brake on growth while trade uncertainty and emerging market fragility could also contribute to a gradual slowdown." That said, the median probability of a recession in the next two years also slipped from the previous poll, to 30 per cent from 35 per cent. More than half of over 50 economists who answered an additional question said US economic policy towards China in the next few years will become more punitive and confrontational, countering a lingering view that US President Donald Trump`s administration will soften its tone. "US and China trade disputes are spilling over into other areas of the bilateral relationship between the two countries. The policy differences that are coming to a head today will not be easily or quickly resolved," said Scott Anderson, chief economist at Bank of the West in San Francisco. Last month, the administration threatened duties on another US $267 billion of Chinese goods, on top of tariffs already levied on US $200 billion and US $50 billion previously. Beijing retaliated. The trade war "will continue to escalate," said Andrew Hunter, economist at Capital Economics. "There are potential talks between President Trump and (Chinese President) Xi (Jinping) planned for the G20 summit next month, but at the moment we wouldn`t hold much hope" for a deal, he added. Just seven respondents in the poll predicted an improvement in US-China trade relations. Economists polled by Reuters have consistently said putting up trade barriers will do more harm than good. Economists said they believed that a deteriorating US fiscal position will give Washington fewer policy options to cushion the next downturn. They noted that tax cuts have widened the federal budget deficit to the highest in six years, expected to touch US $1 trillion in the current fiscal year. Without robust growth, "the deficit could rise sharply," said ING`s Knightley. "Given the polarization of views on Capitol Hill this runs the real threat of government shutdowns, which could add to political, economic and market uncertainty." Economists also expect the Fed to hike rates once more this year, probably at the December meeting, taking the fed funds rate to 2.25-2.50 per cent. Despite a tame US inflation outlook, Reuters poll medians show three Fed rate hikes next year, one more than the two predicted in the September poll and in every survey since the complete 2019 Fed outlook was first polled in March.

US economic policy toward China to get tougher, say economists: Reuters poll

President Donald Trump on Wednesday said it is hard for China to have a trade deal with America claiming the US has rebuilt the country but at the cost of a massive trade deficit.

<a href="http://www.wionews.com/world/concerned-over-chinas-lack-of-currency-transparency-us-172036">Also</a><a href="http://www.wionews.com/world/concerned-over-chinas-lack-of-currency-transparency-us-172036"> Read:&nbsp;Concerned over China's lack of currency transparency, says US Treasury&nbsp;</a>

"We have rebuilt China, just so you understand. Our country has rebuilt China, with their hard work and genius also. But how our country has allowed itself to lose $500 billion a year, and much more than that, is ridiculous, is ridiculous," Trump told reporters during a Cabinet meeting at the White House.

"So, it's hard for them to do a deal, because they've had it so good for so long; it's a very hard thing for them to do," said the US president when asked why he told the Chinese that they are not ready for a trade deal yet.

"You said the Chinese want to make a deal, but you told them they're (not ready yet)," he was asked.&nbsp;

"I told them they're not ready yet. No, because they've had -- they've made too much.." he said as he went to explain that Chinese have benefited a lot from the current trade relationship with the US and that is why they do not want any change.

"But we have a very good relationship with China. I have a great relationship with President Xi, and I think you'll see something happen that's going to be good for both countries," Trump said.

President Donald Trump on Wednesday said it is hard for China to have a trade deal with America claiming the US has rebuilt the country but at the cost of a massive trade deficit.

President Donald Trump on Wednesday said it is hard for China to have a trade deal with America claiming the US has rebuilt the country but at the cost of a massive trade deficit. Also Read: Concerned over China's lack of currency transparency, says US Treasury "We have rebuilt China, just so you understand. Our country has rebuilt China, with their hard work and genius also. But how our country has allowed itself to lose $500 billion a year, and much more than that, is ridiculous, is ridiculous," Trump told reporters during a Cabinet meeting at the White House. "So, it's hard for them to do a deal, because they've had it so good for so long; it's a very hard thing for them to do," said the US president when asked why he told the Chinese that they are not ready for a trade deal yet. "You said the Chinese want to make a deal, but you told them they're (not ready yet)," he was asked. "I told them they're not ready yet. No, because they've had -- they've made too much.." he said as he went to explain that Chinese have benefited a lot from the current trade relationship with the US and that is why they do not want any change. "But we have a very good relationship with China. I have a great relationship with President Xi, and I think you'll see something happen that's going to be good for both countries," Trump said.

Our country has rebuilt China, says Trump

Beijing is not a currency manipulator but China's exchange rate practices and the yuan's recent decline are of "particular concern," US Treasury Steven Mnuchin said.

<a href="http://www.wionews.com/business-economy/full-blown-us-china-trade-war-will-slow-global-growth-by-less-than-1-imf-170313">Also Read:&nbsp;Full-blown US-China trade war will slow global growth by less than 1%, declares&nbsp;IMF</a>

In putting Beijing and five other US trading partners on notice, the Treasury again refrained from escalating a fight over China's currency as US President&nbsp;Trump had once pledged to do on the campaign trail.

"Of particular concern are China's lack of currency transparency and the recent weakness in its currency," Mnuchin said in releasing a twice-yearly report to Congress on how country's manage exchange rates and trade.

"These pose major challenges to achieving fairer and more balanced trade and we will continue to monitor and review China's currency practices, including through ongoing discussions with the People's Bank of China."

Washington has long argued that China keeps its currency artificially low to make its exports more competitive but in recent years the yuan or renminbi (RMB) has strengthened and is viewed by economists as more in line with economic fundamentals.

Still, as US interest rates have risen, the US dollar has strengthened further, which makes American exports more expensive.

Washington and Beijing are locked in a&nbsp;battle over the yawning US-China trade deficit, which Trump describes as a "job killer".&nbsp;

Washington has slapped punishing tariffs on about half of all China's goods exports to the United States, with talks to resolve the matter at an apparent impasse.

Trump in April 2017 dropped his campaign pledge to label Beijing a currency manipulator, telling The Wall Street Journal that Beijing was not intervening to weaken its currency.

Beijing is not a currency manipulator but China's exchange rate practices and the yuan's recent decline are of "particular concern," US Treasury Steven Mnuchin said.

Beijing is not a currency manipulator but China's exchange rate practices and the yuan's recent decline are of "particular concern," US Treasury Steven Mnuchin said. Also Read: Full-blown US-China trade war will slow global growth by less than 1%, declares IMF In putting Beijing and five other US trading partners on notice, the Treasury again refrained from escalating a fight over China's currency as US President Trump had once pledged to do on the campaign trail. "Of particular concern are China's lack of currency transparency and the recent weakness in its currency," Mnuchin said in releasing a twice-yearly report to Congress on how country's manage exchange rates and trade. "These pose major challenges to achieving fairer and more balanced trade and we will continue to monitor and review China's currency practices, including through ongoing discussions with the People's Bank of China." Washington has long argued that China keeps its currency artificially low to make its exports more competitive but in recent years the yuan or renminbi (RMB) has strengthened and is viewed by economists as more in line with economic fundamentals. Still, as US interest rates have risen, the US dollar has strengthened further, which makes American exports more expensive. Washington and Beijing are locked in a battle over the yawning US-China trade deficit, which Trump describes as a "job killer". Washington has slapped punishing tariffs on about half of all China's goods exports to the United States, with talks to resolve the matter at an apparent impasse. Trump in April 2017 dropped his campaign pledge to label Beijing a currency manipulator, telling The Wall Street Journal that Beijing was not intervening to weaken its currency.

Concerned over China's lack of currency transparency: US

Donald Trump has escalated his feud with China into a full-press offensive that has drawn comparisons to the Cold War. Now the question on both sides of the Pacific is, how will it end?

In recent weeks, Trump has slapped $250 billion worth of tariffs, boosted military support for rival Taiwan, accused China of interfering in US elections, stepped up denunciations of Beijing's human rights record and <a href="http://www.wionews.com/world/us-tightens-controls-on-china-imports-of-nuclear-components-170965">curtailed its access to US nuclear technology</a>.

The real estate mogul, who early in his tenure had described Chinese President Xi Jinping as a friend, was generally presumed to be most interested in trade as he has repeatedly vowed to ramp up US factory production by fighting back the flow of cheaper manufactured imports.&nbsp;

But his administration has expanded its pressure campaign to virtually all fronts, a strategy unprecedented since the time the United States and China established diplomatic relations four decades ago.

"It is a full-frontal assault by the US on China," said Elizabeth Economy, director for Asia studies at the Council on Foreign Relations.

"There is a general sense in Washington that China is simply too big now, it's simply too large as a country and as an economy, to allow it to continue to violate all sorts of expected international trade and investment norms," she said.

Economy said that the United States was also struck at how Xi has "presented a very different China to the world" with a "much more ambitious and expansive foreign policy."

"The US and other countries say, 'Okay, this is the China we have to deal with, not what we anticipated ten years ago.'"

China ready for 'marathon'

Hua Po, a political commentator in Beijing, agreed that trade was only the "superficial" source of friction.

He believed that the underlying concern of the United States was the Made in China 2025 plan, under which Beijing has set a goal of rapidly ensuring that a majority of its industry is sourced domestically.

The United States accuses China of rampantly stealing technology and seeking an unfair trade advantage by forcing foreign businesses to work with local partners.

"Even if the trade issue is resolved, other problems between China and the United States will continue to exist," Hua said.

Hua said that Trump seemed to want "to fight a new cold war." But Hua doubted that the United States would enjoy the support of its allies, especially in Europe, which do not see China as the same type of threat as the former Soviet Union.

And amid turbulence on Wall Street, China is expecting the US economy to see growing strains as negative effects emerge from Trump's signature domestic policy of tax cuts, Hua said.

"China does believe that this dispute will last for some time. The United States wants to run a 100-meter race with China, but China wants a marathon with the United States," he said.

Diplomacy through confrontation

Tensions soared between the world's two largest economies last month at the annual UN General Assembly session.&nbsp;

A closed-door meeting of foreign ministers from the five permanent members of the Security Council turned "icy" as US Secretary of State Mike Pompeo lashed out aggressively against China, whose foreign minister, Wang Yi, responded with similar intensity, according to a witness.

Vice President Mike Pence a week later delivered a speech in which he took China to task and made the headline-grabbing claim, a month ahead of congressional elections, that Beijing was intervening in US politics, citing the Asian power's purchase of newspaper advertisements and its imposition of counter tariffs in politically crucial states.

The two countries have still kept in contact on resolving the nuclear crisis with North Korea, a top priority for both powers, with Pompeo visiting Beijing after a stop in Pyongyang.

Ryan Hass, the director for China policy on the White House's National Security Council under Obama, said that Trump had taken a new course by emphasizing public pressure over diplomacy with China.

He said that Trump had gambled "on the assumption that Beijing needs a stable relationship with Washington" and that Beijing is ready to moderate its policies both at home and abroad.

"Beijing believes Washington is organizing itself to contest China's rise. As such, Beijing sees little incentive to accommodate Trump's demands on trade or other issues, because doing so would not resolve the underlying source of intensifying rivalry -- Washington's efforts to hold back China's rise," said Hass, now a fellow at the Brookings Institution.

"Given these dynamics, it is unlikely that either side will moderate its approach in the foreseeable future," he said.

Donald Trump has escalated his feud with China into a full-press offensive that has drawn comparisons to the Cold War. Now the question on both sides of the Pacific is, how will it end?

Donald Trump has escalated his feud with China into a full-press offensive that has drawn comparisons to the Cold War. Now the question on both sides of the Pacific is, how will it end? In recent weeks, Trump has slapped $250 billion worth of tariffs, boosted military support for rival Taiwan, accused China of interfering in US elections, stepped up denunciations of Beijing's human rights record and curtailed its access to US nuclear technology. The real estate mogul, who early in his tenure had described Chinese President Xi Jinping as a friend, was generally presumed to be most interested in trade as he has repeatedly vowed to ramp up US factory production by fighting back the flow of cheaper manufactured imports. But his administration has expanded its pressure campaign to virtually all fronts, a strategy unprecedented since the time the United States and China established diplomatic relations four decades ago. "It is a full-frontal assault by the US on China," said Elizabeth Economy, director for Asia studies at the Council on Foreign Relations. "There is a general sense in Washington that China is simply too big now, it's simply too large as a country and as an economy, to allow it to continue to violate all sorts of expected international trade and investment norms," she said. Economy said that the United States was also struck at how Xi has "presented a very different China to the world" with a "much more ambitious and expansive foreign policy." "The US and other countries say, 'Okay, this is the China we have to deal with, not what we anticipated ten years ago.'" China ready for 'marathon' Hua Po, a political commentator in Beijing, agreed that trade was only the "superficial" source of friction. He believed that the underlying concern of the United States was the Made in China 2025 plan, under which Beijing has set a goal of rapidly ensuring that a majority of its industry is sourced domestically. The United States accuses China of rampantly stealing technology and seeking an unfair trade advantage by forcing foreign businesses to work with local partners. "Even if the trade issue is resolved, other problems between China and the United States will continue to exist," Hua said. Hua said that Trump seemed to want "to fight a new cold war." But Hua doubted that the United States would enjoy the support of its allies, especially in Europe, which do not see China as the same type of threat as the former Soviet Union. And amid turbulence on Wall Street, China is expecting the US economy to see growing strains as negative effects emerge from Trump's signature domestic policy of tax cuts, Hua said. "China does believe that this dispute will last for some time. The United States wants to run a 100-meter race with China, but China wants a marathon with the United States," he said. Diplomacy through confrontation Tensions soared between the world's two largest economies last month at the annual UN General Assembly session. A closed-door meeting of foreign ministers from the five permanent members of the Security Council turned "icy" as US Secretary of State Mike Pompeo lashed out aggressively against China, whose foreign minister, Wang Yi, responded with similar intensity, according to a witness. Vice President Mike Pence a week later delivered a speech in which he took China to task and made the headline-grabbing claim, a month ahead of congressional elections, that Beijing was intervening in US politics, citing the Asian power's purchase of newspaper advertisements and its imposition of counter tariffs in politically crucial states. The two countries have still kept in contact on resolving the nuclear crisis with North Korea, a top priority for both powers, with Pompeo visiting Beijing after a stop in Pyongyang. Ryan Hass, the director for China policy on the White House's National Security Council under Obama, said that Trump had taken a new course by emphasizing public pressure over diplomacy with China. He said that Trump had gambled "on the assumption that Beijing needs a stable relationship with Washington" and that Beijing is ready to moderate its policies both at home and abroad. "Beijing believes Washington is organizing itself to contest China's rise. As such, Beijing sees little incentive to accommodate Trump's demands on trade or other issues, because doing so would not resolve the underlying source of intensifying rivalry -- Washington's efforts to hold back China's rise," said Hass, now a fellow at the Brookings Institution. "Given these dynamics, it is unlikely that either side will moderate its approach in the foreseeable future," he said.

The Trump-China trade war: How will it end? 

President Trump in an interview to a TV channel said the US tariffs on Chinese products have had a big impact even as he attacked China saying "they have lived too well for too long".

<a href="http://www.wionews.com/world/fresh-200-billion-us-tariffs-chinese-goods-take-effect-167350">Also</a><a href="http://www.wionews.com/world/fresh-200-billion-us-tariffs-chinese-goods-take-effect-167350"> Read:&nbsp;Fresh $200 billion US tariffs on Chinese goods take effect</a>

"They lived too well for too long and, frankly, I guess they think that the Americans are stupid people. Americans are not stupid people," Trump told the US TV channel.

Trump's comments come amid reports of the International Monetary Fund(IMF) lowering China's growth forecast to 6.2 per cent next year, down from 6.4 predicted earlier. "The forecast does not incorporate the impact of further tariffs on Chinese and other imports threatened by the United States, the IMF had said while releasing the report.

"Their economy has gone down very substantially," he US president said. "I have a lot more to do if I want to do it. I don't want to do it but they have to come to the table," the US president said.

The US and China have been involved in a tit-for-tat trade war with President Trump declaring that he may impose tariffs on all Chinese goods entering the US if the Xi government did not comply with US demands allowing lowering of current account deficit among other conditions.

"We are not going to pay $500 billion a year to China and rebuild China, he said adding,"we have helped rebuild China more than any other factor. We have helped rebuild it. I said it's over."

Trump had imposed tariffs on nearly $200 billion of Chinese imports last month and then threatened more levies if China retaliated. China then hit back with tariffs $60 billion of US imports.

Trump said China wanted to negotiate but he does not believe they are ready and he told them so.

The Monetary Fund had cautioned in its report that China's growth could fall by as much as a full percentage point or more next year if the "worst-case" scenario materialises, involving more tariffs by the US, a Chinese counter-response and collapse in business confidence.

President Trump in an interview to a TV channel said the US tariffs on Chinese products have had a big impact even as he attacked China saying "they have lived too well for too long".

President Trump in an interview to a TV channel said the US tariffs on Chinese products have had a big impact even as he attacked China saying "they have lived too well for too long". Also Read: Fresh $200 billion US tariffs on Chinese goods take effect "They lived too well for too long and, frankly, I guess they think that the Americans are stupid people. Americans are not stupid people," Trump told the US TV channel. Trump's comments come amid reports of the International Monetary Fund(IMF) lowering China's growth forecast to 6.2 per cent next year, down from 6.4 predicted earlier. "The forecast does not incorporate the impact of further tariffs on Chinese and other imports threatened by the United States, the IMF had said while releasing the report. "Their economy has gone down very substantially," he US president said. "I have a lot more to do if I want to do it. I don't want to do it but they have to come to the table," the US president said. The US and China have been involved in a tit-for-tat trade war with President Trump declaring that he may impose tariffs on all Chinese goods entering the US if the Xi government did not comply with US demands allowing lowering of current account deficit among other conditions. "We are not going to pay $500 billion a year to China and rebuild China, he said adding,"we have helped rebuild China more than any other factor. We have helped rebuild it. I said it's over." Trump had imposed tariffs on nearly $200 billion of Chinese imports last month and then threatened more levies if China retaliated. China then hit back with tariffs $60 billion of US imports. Trump said China wanted to negotiate but he does not believe they are ready and he told them so. The Monetary Fund had cautioned in its report that China's growth could fall by as much as a full percentage point or more next year if the "worst-case" scenario materialises, involving more tariffs by the US, a Chinese counter-response and collapse in business confidence.

China's economy has gone down very substantially, Americans are not stupid people: Trump

WION Dispatch: China needs India to corner U.S ?

US Secretary of State Mike Pompeo’s stopover at Beijing on October 8 may not have been a pleasant experience, more so in the backdrop of accusation of US Vice President Mike Pence about China attempting to interfere in US elections. 
 
The agenda of North Korean denuclearisation, wherein the US and China were broadly agreeing earlier, seems to have also taken a back seat.

China braving the threats&nbsp;

China is putting a brave front despite being badly hit at some of its most vulnerable spots in the tit-for-tat trade war with both sides imposing tariffs on a wide range of each others’ trade items. Taiwan, which is another sensitivity of Beijing, is witnessing visit of US officials after Taiwan Travel Act was signed by President Trump with a promise to arm it further with the latest weaponry.&nbsp;

The US has continued military posturing in the South China Sea, along with the appearance of UK warship, ignoring Chinese repeated warning.

China has recently injected over $110 billion into its economy. Some of its BRI partners want to get out of the 'debt trap' by refusing/reducing Chinese investments, which is adversely affecting the Chinese dream project (BRI), after five years of its announcement.

Not a smooth sail for the US&nbsp;

The US, on the other hand, cannot be celebrating either with China digging in its heels and refusing to give up either on trade war or the South China Sea. On the North Korean front, the policy of good optics continues with Kim managing to get a lot of goodies from South Korea. Kim, in fact, has been an outright winner, managing to get another Summit with President Trump, which helps him in convincing his countrymen of his sound leadership, as well as boosting his status internationally.&nbsp;

Moreover, China has relaxed the sanctions on North Korea, without any worthwhile denuclearisation/reduction in his nuclear/military arsenal. The US realises that knocking out China financially is the key to its global dominance, hence, is unlikely to soften up to China.&nbsp;

The US also faces another challenge of keeping its allies like Japan and South Korea satisfied while negotiating with North Korea and asking ASEAN to make choices of partners.

It will take some time to see that whoever has greater resilience to withstand the economic stand-off and appetite to take setbacks will have an upper edge, which seems to be the US at this point of time. As per IMF assessment, China’s GDP size will be 1.6 per cent lower in 2019 than it otherwise would be, if the US slaps tariffs on all Chinese imports. &nbsp;

How is India affected? &nbsp;

The Indian economy has survived some global slowdowns earlier and should be able to sail through the present one. The bigger problem is the sanction under CAATSA in dealing with Russia for urgently needed military hardware like S-400 and Iran for cheaper crude oil being paid in rupee terms, for which India has adequate refineries. The US option of buying shale oil does not suit India as it does not have adequate refineries and will have to purchase finished product in dollar terms. 
 
The port of Chabahar is also crucial for India for connectivity to Afghanistan. The silver lining is that the US being our strategic partner will like to have well equipped Indian Forces to balance China and for Afghanistan's connectivity, in case Pakistan does not serve their strategic interest. On both counts, I am hopeful that the US will find a way out not to hurt its strategic partner. &nbsp; &nbsp; 
 
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

US Secretary of State Mike Pompeo’s stopover at Beijing on October 8 may not have been a pleasant experience, more so in the backdrop of accusation of US Vice President Mike Pence about China attempting to interfere in US elections.

US Secretary of State Mike Pompeo’s stopover at Beijing on October 8 may not have been a pleasant experience, more so in the backdrop of accusation of US Vice President Mike Pence about China attempting to interfere in US elections. The agenda of North Korean denuclearisation, wherein the US and China were broadly agreeing earlier, seems to have also taken a back seat. China braving the threats China is putting a brave front despite being badly hit at some of its most vulnerable spots in the tit-for-tat trade war with both sides imposing tariffs on a wide range of each others’ trade items. Taiwan, which is another sensitivity of Beijing, is witnessing visit of US officials after Taiwan Travel Act was signed by President Trump with a promise to arm it further with the latest weaponry. The US has continued military posturing in the South China Sea, along with the appearance of UK warship, ignoring Chinese repeated warning. China has recently injected over $110 billion into its economy. Some of its BRI partners want to get out of the 'debt trap' by refusing/reducing Chinese investments, which is adversely affecting the Chinese dream project (BRI), after five years of its announcement. Not a smooth sail for the US The US, on the other hand, cannot be celebrating either with China digging in its heels and refusing to give up either on trade war or the South China Sea. On the North Korean front, the policy of good optics continues with Kim managing to get a lot of goodies from South Korea. Kim, in fact, has been an outright winner, managing to get another Summit with President Trump, which helps him in convincing his countrymen of his sound leadership, as well as boosting his status internationally. Moreover, China has relaxed the sanctions on North Korea, without any worthwhile denuclearisation/reduction in his nuclear/military arsenal. The US realises that knocking out China financially is the key to its global dominance, hence, is unlikely to soften up to China. The US also faces another challenge of keeping its allies like Japan and South Korea satisfied while negotiating with North Korea and asking ASEAN to make choices of partners. It will take some time to see that whoever has greater resilience to withstand the economic stand-off and appetite to take setbacks will have an upper edge, which seems to be the US at this point of time. As per IMF assessment, China’s GDP size will be 1.6 per cent lower in 2019 than it otherwise would be, if the US slaps tariffs on all Chinese imports. How is India affected? The Indian economy has survived some global slowdowns earlier and should be able to sail through the present one. The bigger problem is the sanction under CAATSA in dealing with Russia for urgently needed military hardware like S-400 and Iran for cheaper crude oil being paid in rupee terms, for which India has adequate refineries. The US option of buying shale oil does not suit India as it does not have adequate refineries and will have to purchase finished product in dollar terms. The port of Chabahar is also crucial for India for connectivity to Afghanistan. The silver lining is that the US being our strategic partner will like to have well equipped Indian Forces to balance China and for Afghanistan's connectivity, in case Pakistan does not serve their strategic interest. On both counts, I am hopeful that the US will find a way out not to hurt its strategic partner. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

More twists and turns in US-China trade war

By Lorenzo Carrieri

China’s economic growth over the last 30 years has astounded the world. Since 1978, under the tenure of Deng Xiaoping, China has embarked on a process of transformation that enabled it to escape economic isolation. Beijing’s government has de-collectivised agriculture and freed foreign exchange transactions in addition to allowing private entities to trade and permitting some foreign investment. Ever since, Beijing has dismissed Maoism and ushered in a new era of capitalism and market reforms, enjoying a sustainable growth rate year after year.

However, notwithstanding the achievements in terms of economic prowess, China seems to be stuck in what is called a “middle-income trap,” and its economy suffers from several shortcomings: high level of corporate debt, an over-reliance on export-driven manufacturing and a high degree of financial repression, to name but a few.

Where is China headed? Where will China’s economy be in 10 years? Is China going to be more integrated into the world economy, either in terms of international trade and investment, or will progress be reversed, especially in light of a trade war with the US and emerging markets’ volatility to a rising dollar?

The main assumption we have to make in order to tackle this question is that China’s economic policy revolves around a slow but steady approach to market-driven reforms. Its transitional post-communist economy maintains the Chinese Communist Party’s (CCP) monopoly on political power while it pursues a more market-driven and services-oriented economic strategy. A tightly controlled political structure alongside a dynamic economy, where economic growth is the key feature that legitimizes political power, China’s approach to international trade and investment has several unique features that allow us to grasp the dynamics of change the country has undergone.

Lessons Learned

As far as economic international trade and investment are concerned, China’s interest groups sustain economic openness. State-owned enterprises (SOEs) were making the decisions when China began opening up in 1979. At that time, all assets were state-owned, and officials were in charge of regulating — via the enterprises they controlled — corporate governance. Thus, Communist Party officials both deduced and aggregated interests over economic policy, which eventually resulted in bureaucrats having a lot of influence on all economic organized activity and a high stake in maintaining an open system. In addition, China has been developing a vast stock market for decades, which helps SOEs to obtain financing and contribute to the state’s fiscal revenues.

China has learned from the failure of other communist states. While the USSR collapsed in 1991, and all its satellites were crumbling around it, shaken by the 1989 Tiananmen Square protests and squeezed by international sanctions, China decided to adjust its economic policy according to the external constraints of the systemic structure — namely, to depoliticise macroeconomic policies and adjust them to the rule of basic economic equilibria: existence of budget constraints, fiscal and monetary responsibility, a system of market-clearing prices and inflation under check.

Therefore, with the support of the military and the bureaucracy, Deng committed to build a dynamic economy. For him, the only way to preserve the support for the Communist Party was to embark upon a process of overarching economic reforms that would change China’s economy and uplift the well-being at home and increase China’s international prestige and leverage abroad. Economic reforms ahead of political reforms — this assumption continues to be pressed into the Chinese policy-makers’ playbook.

Thus, in the coming years, it seems unlikely that this key feature of the CCP will fade away, especially because it provides the political power with leverage on decentralized economic activity. The party’s legitimacy is strengthened by the fact that the CCP becomes widely recognized for an improvement in living standards, which in turn reinforces its grip on power and raises the cost of opposing it. In regard to this, the last political moves under President Xi Jinping seem to follow in Deng’s footsteps. Xi has been steadily consolidating his grip over the party as he pursues economic reforms aimed at increasing China’s domestic fortunes.

Capital Flows

Nevertheless, as far as capital inflows are concerned, China lags behind its peers. On the one hand, although it has implemented new inflow liberalization measures in 2016, its capital account continues to be relatively closed. On the other hand, foreign investment is still restricted to the extent that intangible assets, such as human capital and management techniques for supply chains, are hard to absorb without a more liberalized foreign direct investment (FDI) and foreign portfolio investment (FPI) policy. In regard to this, China’s central bank is carefully loosening control on cross-border capital flows, while policy responses are taking into account domestic financial conditions and stability of the exchange rate.

It is difficult to predict what is going to happen in this regard, but it is likely that China will move forward carefully with an actual floating exchange rate, simultaneously eating into foreign reserves to curb high volatility in order to shore up financial stability. Plus, it is likely that Beijing will follow through with a controlled capital-account liberalization. Thus, China will continue to use what Kevin Gallacher calls “countervailing monetary power” — a string of measures that has helped Beijing (and other emerging markets such as Brazil and South Korea) to offset against the structural power of global markets. From countercyclical regulations to macro-prudential measures, China’s financial institutions will likely continue on the path of curbing the negative externalities of a surge in capital inflow — especially in times of expansionary policy in the US and the EU — and capital flight.

In the coming years, all these measures would likely ease inward FDI, generating positive externalities and knowledge spillovers by importing foreign technology. This could create a situation where Beijing could set up an investment-friendly environment where forces of agglomeration, such as a world-class system of property rights, a sophisticated industrial base, vast labour markets, a high-skilled workforce and specialized service providers will lead China closer to its technological ambitions.

International Trade

As for trade, China remains a net exporter on the international stage. Plus, it has one of the highest national saving rates worldwide, known as the “Chinese Saving Puzzle.” The two factors are intrinsically correlated. On the one hand, high savings bring about excessive investment domestically, which in turn leads to supply dwarfing demand, low level of consumption, plus a risk of a credit-boom cycle and low growth of income. On the other hand, a high savings rate has engendered a “saving glut” abroad, with large global imbalances and low-interest rates.

Nonetheless, current account surplus to GDP has been falling steadily since 2007. Amongst the main reasons have been a high import volume, more investment, nominal effective exchange rate appreciation, weak demand in major advanced economies and, more recently, a widening of the services deficit. These trends signal that China is opening its massive market to foreign products and services, getting rid of barriers and tariffs on imports. In addition, a current account surplus shrinking is the result of higher consumption by households. Even though private consumption remains very low compared to the global average, the rise of a sophisticated and vibrant urban middle-class keen on foreign goods and services could lead to a huge shift in the Chinese and world trade balance in the years ahead.

Another important sign that suggests a more “integrated” China is the exchange-rate regime. China’s yuan follows a band with a fixed floor and ceiling, inside which the exchange rate is allowed to float with respect to the US dollar and other currencies. Over the last decades, China has pursued a “beggar-thy-neighbor” currency policy to keep the sales price of exports at a low level while maintaining a high-level price of imports. This has brought about a low rate of consumption and an over-reliance on an export-driven economy.

Simultaneously, the Chinese authorities have also taken advantage of currency depreciation and FX intervention through open-market operations and other measures to respond to large capital outflows in 2015-16 that were putting depreciation pressures on the exchange rate. The bottom line is that China has been pursuing a “slow but steady” market-oriented strategy to let its currency float, even in the light of domestic pressures.

In relation to this, the implementation of a proactive monetary policy — including interest rate cuts, open-market operations such as US Treasury securities purchase and stiff financial regulation — are a sign of Beijing’s determination to be integrated within the International Monetary Fund’s Special Drawing Right (SDR) basket of reserve currencies. This elite club of currencies confers members the right to purchase domestic currency in FX markets in order to maintain exchange rates. This move, coherent with market fundamentals, seems consistent with the idea that Beijing will be more and more integrated into the international trade and investment regime in the coming decade, and that preferential trade agreements and investment policies will continue to shape its exchange rate policy.

Trade War 
 
However, the current trade war with the US could end up hurting China’s economy. With regard to this, several forces come into play. Indirect or direct effects of higher tariffs and barriers might take their toll on international and domestic demand for services such as logistics and wholesale trade, and might also negatively affect business sentiment and investment as a whole.

In tackling this situation, the People’s Bank of China should undertake more aggressive accommodative monetary in order to support demand being hit and promote investment. This could also help to absorb the shocks of trade tariffs, with a declining exchange rate of the yuan that offsets the loss in export competitiveness.

Nevertheless, as a JPMorgan strategists stress, a more accommodative monetary policy could backfire. Not just in terms of downward pressure on the yuan, but also in spoiling Beijing’s attempts to fix macroeconomic imbalances with tighter regulations such as high level of corporate leverage, rapid build-up in debt, and credit distortions. Therefore, the only way out would be to resort to fiscal measures to support exporters and boost domestic demand, while in the meantime taking for granted a cheaper yuan.

The real dilemma for a more globalised China in the years ahead is the so-called Mundell-Fleming trilemma: the impossibility to enjoy simultaneously an independent monetary policy, a liberalized capital account and a fixed exchange rate. Thus far, China’s trade-off has been a mixture of low-interest rates, a loose monetary policy, a de jure monitored capital account liberalization and a currency-managed floating exchange rate. In the years to come, China will find it more desirable to move toward an independent monetary policy and pick one out of capital account openness and exchange rate flexibility. On the one hand, a floating exchange rate could help dampen shocks and address capital flow pressure, while cross-border capital flows regulation could be relaxed instead of being used as tool for macroeconomic policy adjustments.

A Convergence of Problems

In the next decade, China will become increasingly more “globalized.” However, the integration into the world economy will not be as smooth as many scholars think. That’s why the rise of China poses quite a few problems. First of all, there’s an economic order problem. As perfectly addressed by Benjamin Cohen, experts have to account for the issue of systemic flexibility and of China’s intentions. Cohen asserts that monetary systems don’t seem to lack the flexibility to accommodate a newcomer, as demonstrated in the past. However, the question remains whether China will adjust to the status quo and abide by the laws or not.

Second is the question of democracy. In dealing with economic change, China is currently undergoing a process of convergence of problems: the challenge that globalization poses for national sovereignty, popular legitimacy, democracy and economic change. According to Dani Rodrik, this is the global dilemma that every economy faces when entering the global stage. Like in Mundell-Fleming’s trilemma, two out of three are permitted. Since the crackdown on the Tiananmen’s protests, China seems to have undermined the emergence of democracy, maintaining at the same time a national sovereignty in terms of leaving room for maneuver in capital-account liberalisation and monetary policy.

However, an increasingly integrated economy engaged with the international standards might cause China to go easy on national sovereignty, which could eventually be downplayed as compliance with a range of transnational regulatory regimes. In regard to this, China in the coming years will likely be more locked in globalisation and economic change than a decade ago. Think of the accession to the World Trade Organization in 2001 or joining SDR. Beijing has thus decided to achieve economic integration through what Robert Holton calls the golden straitjacket: a tight control of the political structure of the society eschewing mass politics and democratic participation, where national sovereignty and economic change are maintained as the main driving forces.

However, the greatest unknown factor is at home. In fact, the greatest risk for China would be the incapacity of the ruling class to manage the extraordinary economic, social, political, but also urban and environmental, transformations toward which the country is headed. This could eventually lead the Communist Party elite to give up on more economic integration and turn inward to maintain its draconian control over society. At that time, the world will understand in which direction China is going.

(Lorenzo Carrieri is a postgraduate student in economics at the School of Advanced International Studies, Johns Hopkins)

(This article was originally published on The Conversation. Read the <a href="https://www.fairobserver.com/region/asia_pacific/china-economic-growth-trade-war-asia-pacific-news-analysis-19001/">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

 
&nbsp;

By Lorenzo Carrieri China’s economic growth over the last 30 years has astounded the world. Since 1978, under the tenure of Deng Xiaoping, China has embarked on a process of transformation that enabled it to escape economic isolation.

By Lorenzo Carrieri China’s economic growth over the last 30 years has astounded the world. Since 1978, under the tenure of Deng Xiaoping, China has embarked on a process of transformation that enabled it to escape economic isolation. Beijing’s government has de-collectivised agriculture and freed foreign exchange transactions in addition to allowing private entities to trade and permitting some foreign investment. Ever since, Beijing has dismissed Maoism and ushered in a new era of capitalism and market reforms, enjoying a sustainable growth rate year after year. However, notwithstanding the achievements in terms of economic prowess, China seems to be stuck in what is called a “middle-income trap,” and its economy suffers from several shortcomings: high level of corporate debt, an over-reliance on export-driven manufacturing and a high degree of financial repression, to name but a few. Where is China headed? Where will China’s economy be in 10 years? Is China going to be more integrated into the world economy, either in terms of international trade and investment, or will progress be reversed, especially in light of a trade war with the US and emerging markets’ volatility to a rising dollar? The main assumption we have to make in order to tackle this question is that China’s economic policy revolves around a slow but steady approach to market-driven reforms. Its transitional post-communist economy maintains the Chinese Communist Party’s (CCP) monopoly on political power while it pursues a more market-driven and services-oriented economic strategy. A tightly controlled political structure alongside a dynamic economy, where economic growth is the key feature that legitimizes political power, China’s approach to international trade and investment has several unique features that allow us to grasp the dynamics of change the country has undergone. Lessons Learned As far as economic international trade and investment are concerned, China’s interest groups sustain economic openness. State-owned enterprises (SOEs) were making the decisions when China began opening up in 1979. At that time, all assets were state-owned, and officials were in charge of regulating — via the enterprises they controlled — corporate governance. Thus, Communist Party officials both deduced and aggregated interests over economic policy, which eventually resulted in bureaucrats having a lot of influence on all economic organized activity and a high stake in maintaining an open system. In addition, China has been developing a vast stock market for decades, which helps SOEs to obtain financing and contribute to the state’s fiscal revenues. China has learned from the failure of other communist states. While the USSR collapsed in 1991, and all its satellites were crumbling around it, shaken by the 1989 Tiananmen Square protests and squeezed by international sanctions, China decided to adjust its economic policy according to the external constraints of the systemic structure — namely, to depoliticise macroeconomic policies and adjust them to the rule of basic economic equilibria: existence of budget constraints, fiscal and monetary responsibility, a system of market-clearing prices and inflation under check. Therefore, with the support of the military and the bureaucracy, Deng committed to build a dynamic economy. For him, the only way to preserve the support for the Communist Party was to embark upon a process of overarching economic reforms that would change China’s economy and uplift the well-being at home and increase China’s international prestige and leverage abroad. Economic reforms ahead of political reforms — this assumption continues to be pressed into the Chinese policy-makers’ playbook. Thus, in the coming years, it seems unlikely that this key feature of the CCP will fade away, especially because it provides the political power with leverage on decentralized economic activity. The party’s legitimacy is strengthened by the fact that the CCP becomes widely recognized for an improvement in living standards, which in turn reinforces its grip on power and raises the cost of opposing it. In regard to this, the last political moves under President Xi Jinping seem to follow in Deng’s footsteps. Xi has been steadily consolidating his grip over the party as he pursues economic reforms aimed at increasing China’s domestic fortunes. Capital Flows Nevertheless, as far as capital inflows are concerned, China lags behind its peers. On the one hand, although it has implemented new inflow liberalization measures in 2016, its capital account continues to be relatively closed. On the other hand, foreign investment is still restricted to the extent that intangible assets, such as human capital and management techniques for supply chains, are hard to absorb without a more liberalized foreign direct investment (FDI) and foreign portfolio investment (FPI) policy. In regard to this, China’s central bank is carefully loosening control on cross-border capital flows, while policy responses are taking into account domestic financial conditions and stability of the exchange rate. It is difficult to predict what is going to happen in this regard, but it is likely that China will move forward carefully with an actual floating exchange rate, simultaneously eating into foreign reserves to curb high volatility in order to shore up financial stability. Plus, it is likely that Beijing will follow through with a controlled capital-account liberalization. Thus, China will continue to use what Kevin Gallacher calls “countervailing monetary power” — a string of measures that has helped Beijing (and other emerging markets such as Brazil and South Korea) to offset against the structural power of global markets. From countercyclical regulations to macro-prudential measures, China’s financial institutions will likely continue on the path of curbing the negative externalities of a surge in capital inflow — especially in times of expansionary policy in the US and the EU — and capital flight. In the coming years, all these measures would likely ease inward FDI, generating positive externalities and knowledge spillovers by importing foreign technology. This could create a situation where Beijing could set up an investment-friendly environment where forces of agglomeration, such as a world-class system of property rights, a sophisticated industrial base, vast labour markets, a high-skilled workforce and specialized service providers will lead China closer to its technological ambitions. International Trade As for trade, China remains a net exporter on the international stage. Plus, it has one of the highest national saving rates worldwide, known as the “Chinese Saving Puzzle.” The two factors are intrinsically correlated. On the one hand, high savings bring about excessive investment domestically, which in turn leads to supply dwarfing demand, low level of consumption, plus a risk of a credit-boom cycle and low growth of income. On the other hand, a high savings rate has engendered a “saving glut” abroad, with large global imbalances and low-interest rates. Nonetheless, current account surplus to GDP has been falling steadily since 2007. Amongst the main reasons have been a high import volume, more investment, nominal effective exchange rate appreciation, weak demand in major advanced economies and, more recently, a widening of the services deficit. These trends signal that China is opening its massive market to foreign products and services, getting rid of barriers and tariffs on imports. In addition, a current account surplus shrinking is the result of higher consumption by households. Even though private consumption remains very low compared to the global average, the rise of a sophisticated and vibrant urban middle-class keen on foreign goods and services could lead to a huge shift in the Chinese and world trade balance in the years ahead. Another important sign that suggests a more “integrated” China is the exchange-rate regime. China’s yuan follows a band with a fixed floor and ceiling, inside which the exchange rate is allowed to float with respect to the US dollar and other currencies. Over the last decades, China has pursued a “beggar-thy-neighbor” currency policy to keep the sales price of exports at a low level while maintaining a high-level price of imports. This has brought about a low rate of consumption and an over-reliance on an export-driven economy. Simultaneously, the Chinese authorities have also taken advantage of currency depreciation and FX intervention through open-market operations and other measures to respond to large capital outflows in 2015-16 that were putting depreciation pressures on the exchange rate. The bottom line is that China has been pursuing a “slow but steady” market-oriented strategy to let its currency float, even in the light of domestic pressures. In relation to this, the implementation of a proactive monetary policy — including interest rate cuts, open-market operations such as US Treasury securities purchase and stiff financial regulation — are a sign of Beijing’s determination to be integrated within the International Monetary Fund’s Special Drawing Right (SDR) basket of reserve currencies. This elite club of currencies confers members the right to purchase domestic currency in FX markets in order to maintain exchange rates. This move, coherent with market fundamentals, seems consistent with the idea that Beijing will be more and more integrated into the international trade and investment regime in the coming decade, and that preferential trade agreements and investment policies will continue to shape its exchange rate policy. Trade War However, the current trade war with the US could end up hurting China’s economy. With regard to this, several forces come into play. Indirect or direct effects of higher tariffs and barriers might take their toll on international and domestic demand for services such as logistics and wholesale trade, and might also negatively affect business sentiment and investment as a whole. In tackling this situation, the People’s Bank of China should undertake more aggressive accommodative monetary in order to support demand being hit and promote investment. This could also help to absorb the shocks of trade tariffs, with a declining exchange rate of the yuan that offsets the loss in export competitiveness. Nevertheless, as a JPMorgan strategists stress, a more accommodative monetary policy could backfire. Not just in terms of downward pressure on the yuan, but also in spoiling Beijing’s attempts to fix macroeconomic imbalances with tighter regulations such as high level of corporate leverage, rapid build-up in debt, and credit distortions. Therefore, the only way out would be to resort to fiscal measures to support exporters and boost domestic demand, while in the meantime taking for granted a cheaper yuan. The real dilemma for a more globalised China in the years ahead is the so-called Mundell-Fleming trilemma: the impossibility to enjoy simultaneously an independent monetary policy, a liberalized capital account and a fixed exchange rate. Thus far, China’s trade-off has been a mixture of low-interest rates, a loose monetary policy, a de jure monitored capital account liberalization and a currency-managed floating exchange rate. In the years to come, China will find it more desirable to move toward an independent monetary policy and pick one out of capital account openness and exchange rate flexibility. On the one hand, a floating exchange rate could help dampen shocks and address capital flow pressure, while cross-border capital flows regulation could be relaxed instead of being used as tool for macroeconomic policy adjustments. A Convergence of Problems In the next decade, China will become increasingly more “globalized.” However, the integration into the world economy will not be as smooth as many scholars think. That’s why the rise of China poses quite a few problems. First of all, there’s an economic order problem. As perfectly addressed by Benjamin Cohen, experts have to account for the issue of systemic flexibility and of China’s intentions. Cohen asserts that monetary systems don’t seem to lack the flexibility to accommodate a newcomer, as demonstrated in the past. However, the question remains whether China will adjust to the status quo and abide by the laws or not. Second is the question of democracy. In dealing with economic change, China is currently undergoing a process of convergence of problems: the challenge that globalization poses for national sovereignty, popular legitimacy, democracy and economic change. According to Dani Rodrik, this is the global dilemma that every economy faces when entering the global stage. Like in Mundell-Fleming’s trilemma, two out of three are permitted. Since the crackdown on the Tiananmen’s protests, China seems to have undermined the emergence of democracy, maintaining at the same time a national sovereignty in terms of leaving room for maneuver in capital-account liberalisation and monetary policy. However, an increasingly integrated economy engaged with the international standards might cause China to go easy on national sovereignty, which could eventually be downplayed as compliance with a range of transnational regulatory regimes. In regard to this, China in the coming years will likely be more locked in globalisation and economic change than a decade ago. Think of the accession to the World Trade Organization in 2001 or joining SDR. Beijing has thus decided to achieve economic integration through what Robert Holton calls the golden straitjacket: a tight control of the political structure of the society eschewing mass politics and democratic participation, where national sovereignty and economic change are maintained as the main driving forces. However, the greatest unknown factor is at home. In fact, the greatest risk for China would be the incapacity of the ruling class to manage the extraordinary economic, social, political, but also urban and environmental, transformations toward which the country is headed. This could eventually lead the Communist Party elite to give up on more economic integration and turn inward to maintain its draconian control over society. At that time, the world will understand in which direction China is going. (Lorenzo Carrieri is a postgraduate student in economics at the School of Advanced International Studies, Johns Hopkins) (This article was originally published on The Conversation. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

The dilemmas of China’s economic rise

An all-out trade war would slow the growth of the global economy, but not stop its expansion, with the United States and China also escaping a recession, according to forecasts published Tuesday by the International Monetary Fund.

In its latest World Economic Outlook report, the IMF conducted a series of calculations of the impact from the trade tariffs that the administration of US President Donald Trump has already implemented and has threatened to impose, as well as reprisals from China and other nations.

Yet, even in its worst-case scenario, the IMF found that the disruption won't kill off growth and drag the global economy into recession.

The IMF's baseline forecast for the global economy is 3.7 percent growth in 2018, 2019 and 2020.

At the worst, which includes Trump pushing through with tariffs on all Chinese goods and on imports of cars and car parts that spark a round of reprisals, as well as denting confidence and provoking a negative market reaction, the impact would be less than one percentage point on global growth.

Thus the expansion of the global economy would be reduced to around 2.9 percent both next year and in 2020.

The near-term impact of a full-fledged trade war on growth in China will be nearly double that of the United States, according to the IMF's estimates.

With a 1.6 percentage point drop in growth in 2019, the expansion in China would slow from 6.2 percent in the baseline forecast to 4.6 percent, according to an IMF table.

Meanwhile, the United States would see a roughly 0.9 percentage point hit, damping growth from 2.5 percent next year to 1.6 percent.

The IMF only published country forecasts through 2019.

Japan would see its 2019 growth rate more than halved, from 0.9 percent to 0.4 percent, under the worst case scenario.

The eurozone would see its growth rate drop from 1.9 percent to 1.5 percent.

Over the medium term, both the China and the United States would see a 0.6 percentage point impact on their economies.

For Japan it would be around 0.4 percentage points and 0.2 for the eurozone.

Over the longer term the impact to the US economy will be nearly one percentage point, while to China it will be half that.&nbsp;

While the damage from an all-out trade war wouldn't be catastrophic, slow growth can also pose problems.&nbsp;

Growth of less than five percent would be unprecedented for China since it began its economic reforms in the 1970s, and complicate its efforts to move towards a more balanced economy with a greater role for services.

For the eurozone, slow growth means less reductions in high unemployment rates in several countries and difficulty keeping on top of high debt levels, while Japan needs growth to ward off dangerous deflation.

The United States has already imposed tariffs on $250 billion of Chinese imports, about half the annual total, and has threatened to slap levies on the full amount.

Washington has also imposed tariffs on steel and aluminium, citing national security concerns, and has also warned it could impose a 25 percent levy on imported cars and car parts.

An all-out trade war would slow the growth of the global economy, but not stop its expansion, with the United States and China also escaping a recession, according to forecasts published Tuesday by the International Monetary Fund.

An all-out trade war would slow the growth of the global economy, but not stop its expansion, with the United States and China also escaping a recession, according to forecasts published Tuesday by the International Monetary Fund. In its latest World Economic Outlook report, the IMF conducted a series of calculations of the impact from the trade tariffs that the administration of US President Donald Trump has already implemented and has threatened to impose, as well as reprisals from China and other nations. Yet, even in its worst-case scenario, the IMF found that the disruption won't kill off growth and drag the global economy into recession. The IMF's baseline forecast for the global economy is 3.7 percent growth in 2018, 2019 and 2020. At the worst, which includes Trump pushing through with tariffs on all Chinese goods and on imports of cars and car parts that spark a round of reprisals, as well as denting confidence and provoking a negative market reaction, the impact would be less than one percentage point on global growth. Thus the expansion of the global economy would be reduced to around 2.9 percent both next year and in 2020. The near-term impact of a full-fledged trade war on growth in China will be nearly double that of the United States, according to the IMF's estimates. With a 1.6 percentage point drop in growth in 2019, the expansion in China would slow from 6.2 percent in the baseline forecast to 4.6 percent, according to an IMF table. Meanwhile, the United States would see a roughly 0.9 percentage point hit, damping growth from 2.5 percent next year to 1.6 percent. The IMF only published country forecasts through 2019. Japan would see its 2019 growth rate more than halved, from 0.9 percent to 0.4 percent, under the worst case scenario. The eurozone would see its growth rate drop from 1.9 percent to 1.5 percent. Over the medium term, both the China and the United States would see a 0.6 percentage point impact on their economies. For Japan it would be around 0.4 percentage points and 0.2 for the eurozone. Over the longer term the impact to the US economy will be nearly one percentage point, while to China it will be half that. While the damage from an all-out trade war wouldn't be catastrophic, slow growth can also pose problems. Growth of less than five percent would be unprecedented for China since it began its economic reforms in the 1970s, and complicate its efforts to move towards a more balanced economy with a greater role for services. For the eurozone, slow growth means less reductions in high unemployment rates in several countries and difficulty keeping on top of high debt levels, while Japan needs growth to ward off dangerous deflation. The United States has already imposed tariffs on $250 billion of Chinese imports, about half the annual total, and has threatened to slap levies on the full amount. Washington has also imposed tariffs on steel and aluminium, citing national security concerns, and has also warned it could impose a 25 percent levy on imported cars and car parts.

Full-blown US-China trade war will slow global growth by less than 1%: IMF

The United States will confront Tehran at the UN's top court on Monday over billions in frozen assets, in a case that could deepen the Trump administration's rift with international justice.

Iran had dragged Washington before the International Court of Justice in June 2016 to oppose a US Supreme Court ruling that the $2 billion should go to victims of terror attacks blamed on the Islamic republic.

Monday's hearing of US objections against Iran's appeal comes a week after the ICJ in a separate case ordered the United States to ease sanctions reimposed after President Donald Trump pulled out of the 2015 nuclear deal with Iran.

Both the assets and the sanctions cases are based on a 1955 "Treaty of Amity" between Washington and Tehran that predates Iran's Islamic revolution.

Last Wednesday the Trump administration announced it was not only tearing up the 1955 treaty but also that it was quitting the international accord relating to the UN top court's jurisdiction.

It remained unclear how Washington will respond to the latest case before the court but US officials confirmed that its lawyers will be present at the hearing on Monday.

The ICJ was set up after World War II to rule on disputes between United Nations member states. Its rulings are binding but it has no power to enforce them.

'Full reparations'

At Monday's hearing a 15-judge bench is to listen to arguments by Washington's lawyers over whether the ICJ can take up the case under its strict rules governing its procedure.

The US Supreme Court ruled in April 2016 that $2 billion in Iran's frozen assets must go to American victims of terror attacks.

These included the 1983 bombing of a US Marine barracks in Beirut in which 241 soldiers were killed and the 1996 Khobar Towers bombing in Saudi Arabia. In total the decision affects more than 1,000 Americans.

Iran angrily accused Washington of breaking the 1955 treaty -- even though it was signed at the time with the pro-US regime of the Shah -- and called for the US "to make full reparations to Iran for the violation of its international legal obligations."

Tehran said that because the US has maintained its designation of Iran as a major state sponsor of terrorism, its assets including the Central Bank also known as the Bank Markazi, have been "subjected to enforcement proceedings in the United States" even if they should benefit from immunity under the 1955 treaty.

A decision by the ICJ's judges could take weeks or even months before being made public.

'Compulsory jurisdiction'

Iran won a shock victory last week when the ICJ ruled that the US must lift sanctions against Tehran targeting humanitarian goods like food and medicine.

In response, US Secretary of State Mike Pompeo said the United States was terminating the 1955 friendship treaty.&nbsp;

But Trump's national security advisor John Bolton also announced that the United States was pulling out of the 1961 Optional Protocol and Dispute Resolution of the Vienna Convention.

The protocol establishes the ICJ as the "compulsory jurisdiction" for disputes unless nations decide to settle them elsewhere.

The step also comes after the Palestinians went to the ICJ to challenge the US move of its Israel embassy to Jerusalem.&nbsp;

Trump last month at the United Nations virulently rejected the authority of the International Criminal Court -- a separate court based in The Hague that the US is not a member of -- over a probe into US forces in Afghanistan.

The United States will confront Tehran at the UN's top court on Monday over billions in frozen assets, in a case that could deepen the Trump administration's rift with international justice.

The United States will confront Tehran at the UN's top court on Monday over billions in frozen assets, in a case that could deepen the Trump administration's rift with international justice. Iran had dragged Washington before the International Court of Justice in June 2016 to oppose a US Supreme Court ruling that the $2 billion should go to victims of terror attacks blamed on the Islamic republic. Monday's hearing of US objections against Iran's appeal comes a week after the ICJ in a separate case ordered the United States to ease sanctions reimposed after President Donald Trump pulled out of the 2015 nuclear deal with Iran. Both the assets and the sanctions cases are based on a 1955 "Treaty of Amity" between Washington and Tehran that predates Iran's Islamic revolution. Last Wednesday the Trump administration announced it was not only tearing up the 1955 treaty but also that it was quitting the international accord relating to the UN top court's jurisdiction. It remained unclear how Washington will respond to the latest case before the court but US officials confirmed that its lawyers will be present at the hearing on Monday. The ICJ was set up after World War II to rule on disputes between United Nations member states. Its rulings are binding but it has no power to enforce them. 'Full reparations' At Monday's hearing a 15-judge bench is to listen to arguments by Washington's lawyers over whether the ICJ can take up the case under its strict rules governing its procedure. The US Supreme Court ruled in April 2016 that $2 billion in Iran's frozen assets must go to American victims of terror attacks. These included the 1983 bombing of a US Marine barracks in Beirut in which 241 soldiers were killed and the 1996 Khobar Towers bombing in Saudi Arabia. In total the decision affects more than 1,000 Americans. Iran angrily accused Washington of breaking the 1955 treaty -- even though it was signed at the time with the pro-US regime of the Shah -- and called for the US "to make full reparations to Iran for the violation of its international legal obligations." Tehran said that because the US has maintained its designation of Iran as a major state sponsor of terrorism, its assets including the Central Bank also known as the Bank Markazi, have been "subjected to enforcement proceedings in the United States" even if they should benefit from immunity under the 1955 treaty. A decision by the ICJ's judges could take weeks or even months before being made public. 'Compulsory jurisdiction' Iran won a shock victory last week when the ICJ ruled that the US must lift sanctions against Tehran targeting humanitarian goods like food and medicine. In response, US Secretary of State Mike Pompeo said the United States was terminating the 1955 friendship treaty. But Trump's national security advisor John Bolton also announced that the United States was pulling out of the 1961 Optional Protocol and Dispute Resolution of the Vienna Convention. The protocol establishes the ICJ as the "compulsory jurisdiction" for disputes unless nations decide to settle them elsewhere. The step also comes after the Palestinians went to the ICJ to challenge the US move of its Israel embassy to Jerusalem. Trump last month at the United Nations virulently rejected the authority of the International Criminal Court -- a separate court based in The Hague that the US is not a member of -- over a probe into US forces in Afghanistan.

United States in new global court showdown with Iran

China and the United States are set to hold high-level talks here on Monday to reduce the spiralling trade and military tensions between the world's two largest economies.

US Secretary of State Mike Pompeo is scheduled to hold talks with top Chinese leaders and officials in a bid to halt the ongoing trade war in which both countries slapped additional tariffs on billions of dollars of their exports.

Announcing Pompeo's visit, Foreign Ministry spokesperson Hua Chunying last week said that China and the US would exchange views on bilateral ties and regional and international issues of common concern.

US Defence Secretary Jim Mattis too was due to visit but it was cancelled which China said was at the behest of Washington.

The news of cancellation of his visit came after US allegations that Chinese naval ship conducted unsafe manoeuvres near its destroyer Decatur when it passed through the islands off the disputed South China Sea to assert freedom of navigation.

China claims almost all of the South China Sea. Vietnam, Philippines, Malaysia, Brunei and Taiwan have counter claims.

Pompeo's visit was expected to provide an opportunity to both sides to lower the tensions between them. Besides slapping additional tariffs on Chinese exports, US has also imposed sanctions on a Chinese military unit for securing Russian weapon systems like S-400 missiles and Su-35&nbsp; 
fighters.

Also, ahead of the visit both the countries had heated exchanges. 
US Vice President Mike Pence Thursday accused China of interfering in US internal affairs and elections policies.

Pence said China wants a "different American President" and is using more "proactive and coercive" methods to interfere in America's domestic policies and politics.

China has refuted Pence's allegation terming them as "malicious slander". 
Reacting to Pence's allegations, Hua on Friday said, "the relevant speech made unwarranted accusations against China's domestic and foreign policies and slandered China by claiming that China meddles in US internal affairs and elections".

"It is very ridiculous for the US side to stigmatise its normal exchanges and cooperation with China as China interfering in its internal affairs and elections," she said.

Significantly ahead of Pompeo's visit, Chinese Ambassador to Washington Cui Tiankai said China wants to end the trade war with the US, but that the US position keeps changing "so we don't know exactly what the US would want as priorities".

"We are ready to make a deal. We are ready to make some compromise, but it needs the goodwill from both sides," Cui said in an interview on Wednesday with America's National Public Radio, official Chinese media reported on Friday.

"We want to solve it through negotiation and consultation between the two sides. But in order for the negotiation, the consultation to succeed, we do need goodwill and good faith from both sides," Cui said.

"We offered to reduce the trade deficit of the US States, for instance. And we also presented a very good proposal to the US side about the further reform and opening up in China, some of the so-called structural issues," he said.

"We are ready to work on the issues. Then I think more than once we had some tentative agreement between the two working teams. Then just overnight the tentative agreement was rejected and the demand from US changed. So this is very confusing, and this is making things very difficult," he said.&nbsp;

China and the United States are set to hold high-level talks here on Monday to reduce the spiralling trade and military tensions between the world's two largest economies.

China and the United States are set to hold high-level talks here on Monday to reduce the spiralling trade and military tensions between the world's two largest economies. US Secretary of State Mike Pompeo is scheduled to hold talks with top Chinese leaders and officials in a bid to halt the ongoing trade war in which both countries slapped additional tariffs on billions of dollars of their exports. Announcing Pompeo's visit, Foreign Ministry spokesperson Hua Chunying last week said that China and the US would exchange views on bilateral ties and regional and international issues of common concern. US Defence Secretary Jim Mattis too was due to visit but it was cancelled which China said was at the behest of Washington. The news of cancellation of his visit came after US allegations that Chinese naval ship conducted unsafe manoeuvres near its destroyer Decatur when it passed through the islands off the disputed South China Sea to assert freedom of navigation. China claims almost all of the South China Sea. Vietnam, Philippines, Malaysia, Brunei and Taiwan have counter claims. Pompeo's visit was expected to provide an opportunity to both sides to lower the tensions between them. Besides slapping additional tariffs on Chinese exports, US has also imposed sanctions on a Chinese military unit for securing Russian weapon systems like S-400 missiles and Su-35 fighters. Also, ahead of the visit both the countries had heated exchanges. US Vice President Mike Pence Thursday accused China of interfering in US internal affairs and elections policies. Pence said China wants a "different American President" and is using more "proactive and coercive" methods to interfere in America's domestic policies and politics. China has refuted Pence's allegation terming them as "malicious slander". Reacting to Pence's allegations, Hua on Friday said, "the relevant speech made unwarranted accusations against China's domestic and foreign policies and slandered China by claiming that China meddles in US internal affairs and elections". "It is very ridiculous for the US side to stigmatise its normal exchanges and cooperation with China as China interfering in its internal affairs and elections," she said. Significantly ahead of Pompeo's visit, Chinese Ambassador to Washington Cui Tiankai said China wants to end the trade war with the US, but that the US position keeps changing "so we don't know exactly what the US would want as priorities". "We are ready to make a deal. We are ready to make some compromise, but it needs the goodwill from both sides," Cui said in an interview on Wednesday with America's National Public Radio, official Chinese media reported on Friday. "We want to solve it through negotiation and consultation between the two sides. But in order for the negotiation, the consultation to succeed, we do need goodwill and good faith from both sides," Cui said. "We offered to reduce the trade deficit of the US States, for instance. And we also presented a very good proposal to the US side about the further reform and opening up in China, some of the so-called structural issues," he said. "We are ready to work on the issues. Then I think more than once we had some tentative agreement between the two working teams. Then just overnight the tentative agreement was rejected and the demand from US changed. So this is very confusing, and this is making things very difficult," he said.

US, China to hold key talks to reduce trade, military tensions

For the second time within days, US President Donald Trump has lashed out at India’s high tariffs on various American products and asserted that the Government of India (GoI) is desperately seeking a trade deal with the US to keep him happy. Chances are that Trump is speaking the truth, at least about India having approached the US for negotiating a trade agreement.

Talk of a trade deal gained credence not only because Trump said so. Only last week, Assistant US Trade Representative Mark Linscott was in New Delhi for detailed talks with officials about a possible agreement on bilateral trade. Earlier in June, Linscott had come at the head of a US delegation for a discussion of issues related to trade and tariffs that have been points of bilateral contention.

Yet, in spite of Trump’s taunts of India being a “Tariff King”, if the Government of India has not been forthcoming on a trade deal apparently in the offing, it could be because of concerns over domestic reactions, especially among industry and business.

With the threats of a trade war, particularly between the US and China on the rise, the question is, what should India do. Former Foreign Secretary Lalit Mansingh, who was also ambassador to the US, says India should lose no time in signing a trade agreement with the US. Trump is challenging the WTO and he may well render the current international trading regime irrelevant, if not obsolete.

In such a scenario, India has no option but to work on regional and bilateral trade pacts to safeguard and advance its interests, says Mansingh. India, which is part of the RCEP — Regional Comprehensive Economic Partnership (RCEP), between the ASEAN and the Indo-Pacific nations of China, Australia, New Zealand, Japan and South Korea — should now similarly protect its economic and commercial interests by signing a bilateral agreement with the US, which is its largest trading partner.

In Mansingh’s view, also shared by other observers of India-US relations, India would be justified in going to the US for a special bilateral deal because it has not been able to take advantage of the WTO system in the aggressive way China has been able to do. Besides, the US opposition to China’s trade strategy under the prevalent world trading system is not limited to Trump; there is a political consensus in the US on redefining the terms of trade with China. Mansingh’s prescription is more by way of a safeguard in the event of a trade war breaking out between the US and China.

So far, India has not suffered as a result of Trump’s trade offensive and slapping of tariffs across continents. It is true that Trump struck India with tariffs on steel and aluminium after New Delhi failed in its attempts to get an exemption. Even so, India is not affected as it is not a big exporter of either steel or aluminium comparable, for example, to China, Japan and South Korea. However, if a US-China trade war breaks out, the international system could be in serious trouble like in 2008, and India would suffer more than collateral damage. Right now it is a war of words and wits. But a trade war between the world’s two largest trading nations will certainly affect India severely. At this stage, it would be hard to foretell all the grim consequences. For the same reason, it is not possible for India to protect its economic and trade interests against the tide of oncoming events.

At the same time, it should not be difficult for India, to secure some of its interests, such as ensuring oil supplies and stabilising the rupee-dollar equation.

Petroleum prices are high and going higher because of US sanctions against Russia and its retraction from the nuclear deal with Iran. This is affecting the Indian economy as well as eroding the value of the rupee. In addition, the US sanctions against Russia is also likely to inflict collateral damage on India, which is facing rough weather from the US on the defence deals to be signed with Russia.

In a way, the price and supply of crude are not related to the rupee value. Oil supplies are hit because of Trump’s actions and campaign to squeeze Iran. India has been protesting unilateral sanctions against Iran. But considering that the US is the largest economy and the biggest military power, India cannot ignore what it entails. Nor can India afford to stand on principle — that it will support only UN sanctions — beyond a point.

India can and will find other sources of oil as well as natural gas. (In this matter, Trump has said that he would help India). Refineries dependent on crude from Iran will suffer, but given India’s good relations with oil producers such as Saudi Arabia, UAE and others in the Middle East, supplies should not be a problem in the event of India being compelled to end imports from Iran. Prices will keep rising until such time supplies increase, which will happen when OPEC decides to raise the production. With Trump warning that oil prices should be stable, OPEC would have to give in soon.

Although GoI expects that the US would allow it to fulfil its oil contract obligations with Iran, India is unlikely to wait until the November deadline for finalising other sources of oil supplies. The Ministry of External Affairs (MEA) is confident that there would be no oil crisis.

There is no basis for similar confidence with regard to the rupee value, which is falling because of the weakness of the Indian economy. To address that weakness calls for measures, which the government can ill afford when the country is in election mode, particularly when such measures can alienate powerful financial interests.

India needs to have in place political, economic and diplomatic strategies to deal with a world where the US is moving away from multilateralism. To begin with, it may be worth considering whether India could take a cue from Trump’s North American trade deal with Canada and Mexico.

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-india-is-trump-s-trade-target-2671244">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

For the second time within days, US President Donald Trump has lashed out at India’s high tariffs on various American products and asserted that the Government of India (GoI) is desperately seeking a trade deal with the US to keep him happy.

For the second time within days, US President Donald Trump has lashed out at India’s high tariffs on various American products and asserted that the Government of India (GoI) is desperately seeking a trade deal with the US to keep him happy. Chances are that Trump is speaking the truth, at least about India having approached the US for negotiating a trade agreement. Talk of a trade deal gained credence not only because Trump said so. Only last week, Assistant US Trade Representative Mark Linscott was in New Delhi for detailed talks with officials about a possible agreement on bilateral trade. Earlier in June, Linscott had come at the head of a US delegation for a discussion of issues related to trade and tariffs that have been points of bilateral contention. Yet, in spite of Trump’s taunts of India being a “Tariff King”, if the Government of India has not been forthcoming on a trade deal apparently in the offing, it could be because of concerns over domestic reactions, especially among industry and business. With the threats of a trade war, particularly between the US and China on the rise, the question is, what should India do. Former Foreign Secretary Lalit Mansingh, who was also ambassador to the US, says India should lose no time in signing a trade agreement with the US. Trump is challenging the WTO and he may well render the current international trading regime irrelevant, if not obsolete. In such a scenario, India has no option but to work on regional and bilateral trade pacts to safeguard and advance its interests, says Mansingh. India, which is part of the RCEP — Regional Comprehensive Economic Partnership (RCEP), between the ASEAN and the Indo-Pacific nations of China, Australia, New Zealand, Japan and South Korea — should now similarly protect its economic and commercial interests by signing a bilateral agreement with the US, which is its largest trading partner. In Mansingh’s view, also shared by other observers of India-US relations, India would be justified in going to the US for a special bilateral deal because it has not been able to take advantage of the WTO system in the aggressive way China has been able to do. Besides, the US opposition to China’s trade strategy under the prevalent world trading system is not limited to Trump; there is a political consensus in the US on redefining the terms of trade with China. Mansingh’s prescription is more by way of a safeguard in the event of a trade war breaking out between the US and China. So far, India has not suffered as a result of Trump’s trade offensive and slapping of tariffs across continents. It is true that Trump struck India with tariffs on steel and aluminium after New Delhi failed in its attempts to get an exemption. Even so, India is not affected as it is not a big exporter of either steel or aluminium comparable, for example, to China, Japan and South Korea. However, if a US-China trade war breaks out, the international system could be in serious trouble like in 2008, and India would suffer more than collateral damage. Right now it is a war of words and wits. But a trade war between the world’s two largest trading nations will certainly affect India severely. At this stage, it would be hard to foretell all the grim consequences. For the same reason, it is not possible for India to protect its economic and trade interests against the tide of oncoming events. At the same time, it should not be difficult for India, to secure some of its interests, such as ensuring oil supplies and stabilising the rupee-dollar equation. Petroleum prices are high and going higher because of US sanctions against Russia and its retraction from the nuclear deal with Iran. This is affecting the Indian economy as well as eroding the value of the rupee. In addition, the US sanctions against Russia is also likely to inflict collateral damage on India, which is facing rough weather from the US on the defence deals to be signed with Russia. In a way, the price and supply of crude are not related to the rupee value. Oil supplies are hit because of Trump’s actions and campaign to squeeze Iran. India has been protesting unilateral sanctions against Iran. But considering that the US is the largest economy and the biggest military power, India cannot ignore what it entails. Nor can India afford to stand on principle — that it will support only UN sanctions — beyond a point. India can and will find other sources of oil as well as natural gas. (In this matter, Trump has said that he would help India). Refineries dependent on crude from Iran will suffer, but given India’s good relations with oil producers such as Saudi Arabia, UAE and others in the Middle East, supplies should not be a problem in the event of India being compelled to end imports from Iran. Prices will keep rising until such time supplies increase, which will happen when OPEC decides to raise the production. With Trump warning that oil prices should be stable, OPEC would have to give in soon. Although GoI expects that the US would allow it to fulfil its oil contract obligations with Iran, India is unlikely to wait until the November deadline for finalising other sources of oil supplies. The Ministry of External Affairs (MEA) is confident that there would be no oil crisis. There is no basis for similar confidence with regard to the rupee value, which is falling because of the weakness of the Indian economy. To address that weakness calls for measures, which the government can ill afford when the country is in election mode, particularly when such measures can alienate powerful financial interests. India needs to have in place political, economic and diplomatic strategies to deal with a world where the US is moving away from multilateralism. To begin with, it may be worth considering whether India could take a cue from Trump’s North American trade deal with Canada and Mexico. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

India is Trump’s trade target

The tension between China and the US has intensified, following the Trump administration’s decision to impose sanctions on China for purchasing Russian jets and surface to farce missiles.

Under Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) of 2017, the US Department of State recently announced sanctions on the Chinese Defence Ministry’s Equipment Development Department (EDD) and its director, Li Shangfu, for buying Russian jets and missile equipment.&nbsp;

According to the statement of the US Department of State, the transactions involved the purchase of Russian Su-35 combat aircraft and S-400 surface-to-air missile system-related equipment. Consequently, the EDD will be denied US foreign export licenses, banned from making foreign exchange transactions within US jurisdictions and prohibited from using the US financial system.

Any of the EDD’s property and interests within the US will be blocked. Li will also be subjected to similar restrictions, including the fact that will also not be able to get a US visa.

On the other hand, China and Russia have strongly criticised the US action. Russia’s Deputy Foreign Minister Sergei Ryabkov said that the US was “thoughtlessly undermining” global stability, and warned it against “playing with fire”. Chinese Foreign ministry spokesman Geng Shuang said on Friday, “The US has seriously violated the basic norms of international relations and disturbed the relationship between China and the US. We strongly call on the US to remedy the mistake and cancel the sanctions. Otherwise, the US has to bear the consequences.”

One of the reasons the US imposed sanctions on China under CAATSA was to effectively respond to Russia’s meddling in the US elections, its competition with the US, its allies and its partners. Thus, while the US had already imposed several sanctions on Russia, this time the Trump administration added 33 additional persons to the CAATSA section 231 List of “Specified Persons” for being a part of or operating for or on behalf of, the defence or intelligence sectors of the Government of the Russian Federation.

Certainly, India is also closely watching this development since the sanction against China is also a signal to other countries that are in the process of buying Russian military hardware. This is evident from the fact that the US State Department has made it clear that Turkey would also be subjected to similar sanctions if it purchased S-400 missiles which are due to be delivered next year. Consequently, the CAATSA has also alarmed India because the Trump administration has not yet indicated whether it would exempt India from the US’ punitive action under this Act. 
 
Thus, in this situation, India’s increasing dependence on US arms can be used by Washington to force New Delhi to toe its line on many issues, which in turn, endangers India’s strategic autonomy. At the same time, Russia is already disturbed by expanding ties between India and the US since the two sides signed the civil nuclear agreement in 2008. In fact, the Putin government has expressed guarded disappointment about India’s efforts towards improving deference military ties with the US. This is clearly evident from a marked shift in Russia’s South policy. In 2014 Russia lifted a ban on arms supplies to Pakistan. Moscow also signed a defence agreement and technical cooperation agreement with Pakistan in 2015 for arms supplies and sold it four helicopters in August 2017.

Today, talks for purchasing Russian SU-35 fighter jets are going on along with Pakistan’s reported desire to buy T-90 tanks from Russia. On September 29, Russia has also signed a memorandum of understanding on implementing a project to build an underwater gas pipeline from Iran to Pakistan and India. At the same time, India is also worried about deepening defence ties between Russia and China, given the fact that even today, the Indian military uses Russian arms, and in fact, Russia accounted for 68 per cent of India’s arms import from 2012 to 2016. Rising tension between the US and Russia has placed India in a very volatile security situation. 
 
To effectively defuse this situation, it can be hoped that during the upcoming visit of President Vladimir Putin, the two sides will infuse a momentum into their time-tested friendship. New Delhi must ensure that Russia does not foster defence ties with other South Asian countries at the cost of India’s security.

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-us-sanctions-on-russia-china-add-to-india-s-security-woes-2669987">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

The tension between China and the US has intensified, following the Trump administration’s decision to impose sanctions on China for purchasing Russian jets and surface to farce missiles.

The tension between China and the US has intensified, following the Trump administration’s decision to impose sanctions on China for purchasing Russian jets and surface to farce missiles. Under Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) of 2017, the US Department of State recently announced sanctions on the Chinese Defence Ministry’s Equipment Development Department (EDD) and its director, Li Shangfu, for buying Russian jets and missile equipment. According to the statement of the US Department of State, the transactions involved the purchase of Russian Su-35 combat aircraft and S-400 surface-to-air missile system-related equipment. Consequently, the EDD will be denied US foreign export licenses, banned from making foreign exchange transactions within US jurisdictions and prohibited from using the US financial system. Any of the EDD’s property and interests within the US will be blocked. Li will also be subjected to similar restrictions, including the fact that will also not be able to get a US visa. On the other hand, China and Russia have strongly criticised the US action. Russia’s Deputy Foreign Minister Sergei Ryabkov said that the US was “thoughtlessly undermining” global stability, and warned it against “playing with fire”. Chinese Foreign ministry spokesman Geng Shuang said on Friday, “The US has seriously violated the basic norms of international relations and disturbed the relationship between China and the US. We strongly call on the US to remedy the mistake and cancel the sanctions. Otherwise, the US has to bear the consequences.” One of the reasons the US imposed sanctions on China under CAATSA was to effectively respond to Russia’s meddling in the US elections, its competition with the US, its allies and its partners. Thus, while the US had already imposed several sanctions on Russia, this time the Trump administration added 33 additional persons to the CAATSA section 231 List of “Specified Persons” for being a part of or operating for or on behalf of, the defence or intelligence sectors of the Government of the Russian Federation. Certainly, India is also closely watching this development since the sanction against China is also a signal to other countries that are in the process of buying Russian military hardware. This is evident from the fact that the US State Department has made it clear that Turkey would also be subjected to similar sanctions if it purchased S-400 missiles which are due to be delivered next year. Consequently, the CAATSA has also alarmed India because the Trump administration has not yet indicated whether it would exempt India from the US’ punitive action under this Act. Thus, in this situation, India’s increasing dependence on US arms can be used by Washington to force New Delhi to toe its line on many issues, which in turn, endangers India’s strategic autonomy. At the same time, Russia is already disturbed by expanding ties between India and the US since the two sides signed the civil nuclear agreement in 2008. In fact, the Putin government has expressed guarded disappointment about India’s efforts towards improving deference military ties with the US. This is clearly evident from a marked shift in Russia’s South policy. In 2014 Russia lifted a ban on arms supplies to Pakistan. Moscow also signed a defence agreement and technical cooperation agreement with Pakistan in 2015 for arms supplies and sold it four helicopters in August 2017. Today, talks for purchasing Russian SU-35 fighter jets are going on along with Pakistan’s reported desire to buy T-90 tanks from Russia. On September 29, Russia has also signed a memorandum of understanding on implementing a project to build an underwater gas pipeline from Iran to Pakistan and India. At the same time, India is also worried about deepening defence ties between Russia and China, given the fact that even today, the Indian military uses Russian arms, and in fact, Russia accounted for 68 per cent of India’s arms import from 2012 to 2016. Rising tension between the US and Russia has placed India in a very volatile security situation. To effectively defuse this situation, it can be hoped that during the upcoming visit of President Vladimir Putin, the two sides will infuse a momentum into their time-tested friendship. New Delhi must ensure that Russia does not foster defence ties with other South Asian countries at the cost of India’s security. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

US sanctions on Russia, China add to India’s security woes

By Lorenzo Carrieri 
 
On September 11, Russia launched one of the largest military exercises since 1981. Vostok 2018 (East 2018) took place in the Far East of Russia and on the Pacific Ocean. The drill involved 300,000 Russian servicemen, including 6,000 airborne troops, thousands of planes, drones and helicopters, 36,000 tanks, armoured personnel carriers and other defence vehicles, plus around 80 ships and support vessels.&nbsp;

Beyond the gigantic deployment of manpower and the massive naval build-up by the Russian Federation, China also took part, sending 3,200 troops and 900 armoured vehicles, plus a Mongolian mechanised infantry battalion.

Officially, Vostok 2018 was aimed to achieve several objectives, from checking combat readiness to deploying troops over long distances to testing and ameliorating command-and-control procedures, going through the enhancement of interoperability under a single command. But how should we interpret the impressive size of Russia’s mobilization and China’s participation?

Regarding the size of Russia’s mobilisation, Frants Klintsevich, first deputy chairman of the Defense and Security Committee of the Russian Federation’s Council, publicly stated that Vostok 2018 was meant “to cool down some hotheads.” In other words, the drills would be a response to “the unprecedented pressure that the US is exerting on Russia.” Klintsevich referred to the financial sanctions levied against Russia and the massive expansion that the United States is planning for its Air Force and Navy to keep Russia and China in check. 
 
Notably, during the exercise, the two teams competed against each other to simulate a conventional interstate war, as opposed to fighting an imaginary opponent.

That Vostok 2018 took place far from NATO’s borders is relatively unimportant. What matters is that this demonstration of military might has been noticed by NATO, which now knows that Russia is ready for a full-scale conflict. Russia’s 2014 annexation of Crimea and the war of attrition in eastern Ukraine, led by Russian-backed separatists and non-attributable hybrid forces, have heightened tensions with NATO. Plus, the memory of the 2008 five-day war between Georgia and the Russia-backed separatists in South Ossetia and Abkhazia is still vivid.

Simply put, with Vostok 2018 Russia is flexing its muscles, showcasing to both friends and foes its ability to manage logistics and command-and-control structures while conducting large-scale military operations at a high degree of coordination between land, sea and air forces.

Show of Strength

This show of strength was aimed first at the international public opinion, in a moment where changes in the balance of power on the global stage — namely, the neo-isolationist grand strategy of the Trump administration — would have increased the relative power of Moscow with regard to a perceived decline of the US-led liberal order. Think of the massive Russia military build-up in Syria to shore up Bashar al-Assad and help his regime to reverse the course of the Syrian Civil War.

In the face of a perceived Western reluctance to step in to stop the bloodbath, Putin doubled down and escalated the war. Indeed, Russia’s military role in Syria, still ongoing, consisted in a massive bombing campaign aimed at fighting ISIS. However, as many reports have signalled, Russian airstrikes have reduced many highly-populated urban areas to rubble, with the use of cluster munitions and thermobaric bombs targeting hospitals, mosques and water plants, which resulted in a high death toll among civilians. Putin’s campaign was instead meant to a two-pronged strategy: to wipe out American-backed rebels in order to rescue long-term Kremlin protégé Assad and to reposition Russia as an irreplaceable partner for resolving the conflict in Syria.

This demonstration of strength is embedded within a strategic thinking rooted and socialized in Russia’s strategic culture. Back in 1977, in a report for the US Air Force, Jack L. Snyder contended that, in case of what was then the Soviet Union, the geographical uniqueness (sheer vastness of territory to defend, lengthy borders), political (non-liberal, autocratic system) and economic variables (a rentier-economy linked to the exploitation of natural resources) would reflect the uniqueness of unilateral military and strategic solutions compared to traditional and more cooperative and flexible Westernized doctrines. With regard to this, brinkmanship, escalation dominance and the tactic of outsmarting and deceiving one’s opponents, such as massive information warfare campaigns, still remain in the playbook of Russian foreign policy.

As it often happens with Russia, military operations also speak to domestic public opinion. Indeed, Russia’s economy has been struggling to recover from a decline in investor confidence between 2015 and 2016. Besides low levels of economic diversification and thus low resilience to shocks, hard-hitting sanctions and high volatility of commodity prices took their toll on the Russian economy. In addition, a massive sell-off of the ruble has recently depreciated the currency, with inflation expected to increase.

Thus, in the wake of the recent protests caused by the sluggish economy and the raising of retirement age, Russia’s leadership needs to demonstrate that the extensive — and expensive — military modernization of the last years delivered some tangible results.

Enter China 
 
Regarding China’s participation, simply stating that Vostok 2018 aimed at reducing China’s and Russia’s diplomatic isolation would be a euphemism. Rather, it demonstrates the steady strengthening of the Sino-Russian bilateral relationship. In accordance with the narrative used on previous occasions, Chinese officials even referred to the joint drills as evidence of a “strategic partnership” between the two countries. Although this is more a diplomatic statement than an analytical account of the state of bilateral affairs, the economic and geopolitical trajectories of Russia and China are converging, and Vostok 2018 is both a symptom of this trend and a way of invigorating it.

Put simply, Russia and China chose to temporarily set their conflicting interests apart to handle a greater challenge: the United States. With Vostok 2018 and the decision to jointly develop new military technologies, Russia and China are signalling to each other and their competitors that, at least in the medium term, they will remain politically aligned and keep supporting each other on regional and global issues.

As for the economic momentum, China’s outlook is much better than Russia’s. However, the two countries are still interdependent. On the one hand, China desperately needs Russian oil and gas. On the other, Russia needs the revenues originated by the export of its raw materials. In 2014, the two countries concluded a 30-year gas deal worth roughly $400 billion. In addition, bilateral trade flows across their shared border have increased by seven times since 2002.

While China inches closer to Russia, Beijing is at odds with the US as the two countries are locked in a trade war the consequences of which could spark a ripple effect on the global economy. The Trump White House is accusing China of unfair practices such as industrial espionage, intellectual property theft and unfair competition resulting from adopting a dumping pricing policy and currency manipulation. A trade war could end up making China worse off. Indeed, in its attempt to fix macroeconomic imbalances, such as an unchecked credit-fueled growth and consequent high corporate leverage ratio, the rise of US-China tensions might hold back investors and affect growth. In this sense, both Russia and China see sanctions and tariffs as the demonstration that the US-led free-trade regime operates on a logic of coercion where reluctant states are bullied into line by threat of exclusion from the trade, credit and key political forums.

Nevertheless, as aspiring global powers, both Russia and China are trying to upgrade their roles on the global stage and carve out their respective spheres of influence, in the post-Soviet space and in the South China Sea. Although their aspirations clash with America’s model of a liberal international order, Russia and China propose the paradigm that is better suited to their national interests. As long as their territorial ambitions do not overlap, the two countries will support each other’s foreign policies and visions of the international order.

It must be noted that the participation of China in the Vostok 2018 drills does not necessarily mean that Russia and China will form a military alliance or develop a proper strategic partnership as a series of unsolved frictions still undermine mutual trust. First, Russia is exporting weapons to Vietnam, which is at odds with China over its South China Sea policy, and to India, one of China’s greatest regional competitors. Second, both Russia and China recently implemented massive programs of military modernization and are willing to expand their clout. Third, Russia’s economy is dwarfed by China’s, and far from gaining steam. From this perspective, Russia might have invited China to Vostok 2018 in order to mitigate the concerns caused by troop build-up along the Chinese border and to promote mutual trust amongst allies.

Vostok 2018 testifies that we are going to witness an increasing economic, diplomatic, geopolitical and military alignment between Russia and China, at least as long as the two are united by a shared rivalry with the United States. 
 
(Lorenzo Carrieri is a postgraduate student&nbsp;at the School of Advanced International Studies, Johns Hopkins) 
 
(This article was originally published on The Conversation. Read the <a href="https://www.fairobserver.com/region/europe/russia-china-vostok-2018-us-trade-war-sanctions-international-security-global-economy-news-91821/">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

By Lorenzo Carrieri On September 11, Russia launched one of the largest military exercises since 1981. Vostok 2018 (East 2018) took place in the Far East of Russia and on the Pacific Ocean.

By Lorenzo Carrieri On September 11, Russia launched one of the largest military exercises since 1981. Vostok 2018 (East 2018) took place in the Far East of Russia and on the Pacific Ocean. The drill involved 300,000 Russian servicemen, including 6,000 airborne troops, thousands of planes, drones and helicopters, 36,000 tanks, armoured personnel carriers and other defence vehicles, plus around 80 ships and support vessels. Beyond the gigantic deployment of manpower and the massive naval build-up by the Russian Federation, China also took part, sending 3,200 troops and 900 armoured vehicles, plus a Mongolian mechanised infantry battalion. Officially, Vostok 2018 was aimed to achieve several objectives, from checking combat readiness to deploying troops over long distances to testing and ameliorating command-and-control procedures, going through the enhancement of interoperability under a single command. But how should we interpret the impressive size of Russia’s mobilization and China’s participation? Regarding the size of Russia’s mobilisation, Frants Klintsevich, first deputy chairman of the Defense and Security Committee of the Russian Federation’s Council, publicly stated that Vostok 2018 was meant “to cool down some hotheads.” In other words, the drills would be a response to “the unprecedented pressure that the US is exerting on Russia.” Klintsevich referred to the financial sanctions levied against Russia and the massive expansion that the United States is planning for its Air Force and Navy to keep Russia and China in check. Notably, during the exercise, the two teams competed against each other to simulate a conventional interstate war, as opposed to fighting an imaginary opponent. That Vostok 2018 took place far from NATO’s borders is relatively unimportant. What matters is that this demonstration of military might has been noticed by NATO, which now knows that Russia is ready for a full-scale conflict. Russia’s 2014 annexation of Crimea and the war of attrition in eastern Ukraine, led by Russian-backed separatists and non-attributable hybrid forces, have heightened tensions with NATO. Plus, the memory of the 2008 five-day war between Georgia and the Russia-backed separatists in South Ossetia and Abkhazia is still vivid. Simply put, with Vostok 2018 Russia is flexing its muscles, showcasing to both friends and foes its ability to manage logistics and command-and-control structures while conducting large-scale military operations at a high degree of coordination between land, sea and air forces. Show of Strength This show of strength was aimed first at the international public opinion, in a moment where changes in the balance of power on the global stage — namely, the neo-isolationist grand strategy of the Trump administration — would have increased the relative power of Moscow with regard to a perceived decline of the US-led liberal order. Think of the massive Russia military build-up in Syria to shore up Bashar al-Assad and help his regime to reverse the course of the Syrian Civil War. In the face of a perceived Western reluctance to step in to stop the bloodbath, Putin doubled down and escalated the war. Indeed, Russia’s military role in Syria, still ongoing, consisted in a massive bombing campaign aimed at fighting ISIS. However, as many reports have signalled, Russian airstrikes have reduced many highly-populated urban areas to rubble, with the use of cluster munitions and thermobaric bombs targeting hospitals, mosques and water plants, which resulted in a high death toll among civilians. Putin’s campaign was instead meant to a two-pronged strategy: to wipe out American-backed rebels in order to rescue long-term Kremlin protégé Assad and to reposition Russia as an irreplaceable partner for resolving the conflict in Syria. This demonstration of strength is embedded within a strategic thinking rooted and socialized in Russia’s strategic culture. Back in 1977, in a report for the US Air Force, Jack L. Snyder contended that, in case of what was then the Soviet Union, the geographical uniqueness (sheer vastness of territory to defend, lengthy borders), political (non-liberal, autocratic system) and economic variables (a rentier-economy linked to the exploitation of natural resources) would reflect the uniqueness of unilateral military and strategic solutions compared to traditional and more cooperative and flexible Westernized doctrines. With regard to this, brinkmanship, escalation dominance and the tactic of outsmarting and deceiving one’s opponents, such as massive information warfare campaigns, still remain in the playbook of Russian foreign policy. As it often happens with Russia, military operations also speak to domestic public opinion. Indeed, Russia’s economy has been struggling to recover from a decline in investor confidence between 2015 and 2016. Besides low levels of economic diversification and thus low resilience to shocks, hard-hitting sanctions and high volatility of commodity prices took their toll on the Russian economy. In addition, a massive sell-off of the ruble has recently depreciated the currency, with inflation expected to increase. Thus, in the wake of the recent protests caused by the sluggish economy and the raising of retirement age, Russia’s leadership needs to demonstrate that the extensive — and expensive — military modernization of the last years delivered some tangible results. Enter China Regarding China’s participation, simply stating that Vostok 2018 aimed at reducing China’s and Russia’s diplomatic isolation would be a euphemism. Rather, it demonstrates the steady strengthening of the Sino-Russian bilateral relationship. In accordance with the narrative used on previous occasions, Chinese officials even referred to the joint drills as evidence of a “strategic partnership” between the two countries. Although this is more a diplomatic statement than an analytical account of the state of bilateral affairs, the economic and geopolitical trajectories of Russia and China are converging, and Vostok 2018 is both a symptom of this trend and a way of invigorating it. Put simply, Russia and China chose to temporarily set their conflicting interests apart to handle a greater challenge: the United States. With Vostok 2018 and the decision to jointly develop new military technologies, Russia and China are signalling to each other and their competitors that, at least in the medium term, they will remain politically aligned and keep supporting each other on regional and global issues. As for the economic momentum, China’s outlook is much better than Russia’s. However, the two countries are still interdependent. On the one hand, China desperately needs Russian oil and gas. On the other, Russia needs the revenues originated by the export of its raw materials. In 2014, the two countries concluded a 30-year gas deal worth roughly $400 billion. In addition, bilateral trade flows across their shared border have increased by seven times since 2002. While China inches closer to Russia, Beijing is at odds with the US as the two countries are locked in a trade war the consequences of which could spark a ripple effect on the global economy. The Trump White House is accusing China of unfair practices such as industrial espionage, intellectual property theft and unfair competition resulting from adopting a dumping pricing policy and currency manipulation. A trade war could end up making China worse off. Indeed, in its attempt to fix macroeconomic imbalances, such as an unchecked credit-fueled growth and consequent high corporate leverage ratio, the rise of US-China tensions might hold back investors and affect growth. In this sense, both Russia and China see sanctions and tariffs as the demonstration that the US-led free-trade regime operates on a logic of coercion where reluctant states are bullied into line by threat of exclusion from the trade, credit and key political forums. Nevertheless, as aspiring global powers, both Russia and China are trying to upgrade their roles on the global stage and carve out their respective spheres of influence, in the post-Soviet space and in the South China Sea. Although their aspirations clash with America’s model of a liberal international order, Russia and China propose the paradigm that is better suited to their national interests. As long as their territorial ambitions do not overlap, the two countries will support each other’s foreign policies and visions of the international order. It must be noted that the participation of China in the Vostok 2018 drills does not necessarily mean that Russia and China will form a military alliance or develop a proper strategic partnership as a series of unsolved frictions still undermine mutual trust. First, Russia is exporting weapons to Vietnam, which is at odds with China over its South China Sea policy, and to India, one of China’s greatest regional competitors. Second, both Russia and China recently implemented massive programs of military modernization and are willing to expand their clout. Third, Russia’s economy is dwarfed by China’s, and far from gaining steam. From this perspective, Russia might have invited China to Vostok 2018 in order to mitigate the concerns caused by troop build-up along the Chinese border and to promote mutual trust amongst allies. Vostok 2018 testifies that we are going to witness an increasing economic, diplomatic, geopolitical and military alignment between Russia and China, at least as long as the two are united by a shared rivalry with the United States. (Lorenzo Carrieri is a postgraduate student at the School of Advanced International Studies, Johns Hopkins) (This article was originally published on The Conversation. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Russia and China draw closer over rivalry with the US

Oil prices are likely to climb continuously into next year, as concerns over drops in supply from the likes of Iran and Venezuela outweigh any worry that global trade disputes could undermine demand, a Reuters poll showed on Friday.

A survey of 50 economists and analysts forecast Brent crude to average $73.48 a barrel in 2018, up from the $72.71 forecast in August and the $72.68 average so far this year. Brent was forecast to average $73.75 in 2019.

This is the highest projection for the benchmark for both 2018 and 2019 in the polls this year.

"Concerns over global trade disputes have not yet really affected economic growth, but the sanctions on Iran already have had an impact on Iranian exports and output," said Frank Schallenberger, head of commodity research at LBBW.

"If an export destination like South Korea is not willing to buy Iranian oil anymore, there is a high probability that output from Iran could drop some 500,000-1 million bpd. This is really bad news for the supply side - and especially also for the consumers - as prices could go up even further."

Iranian exports of crude and condensates have declined by 0.8 million barrels a day (mbd) from April to September, according to the Institute of International Finance, ahead of the November 4 US&nbsp;sanctions on the third largest producer in the Organization of the Petroleum Exporting Countries.

Brent prices have risen more than 20 per cent since the beginning of April.

Analysts expect a reduction of anywhere between 500,000 and 1.5 million bpd in Iranian supply due to the sanctions, with most expecting Saudi Arabia to take the lead in filling any supply gaps.

"The best is yet to come with a fourth-quarter of $80+/bbl driven by still strong oil demand growth, expectation of a significant drop in Iranian exports to 1 mbd by year-end and an only limited willingness by OPEC to ramp-up output to exhaust spare capacity," said Jan Edelmann, commodities analyst at HSH Nordbank AG.

However, an escalating trade dispute between the United States and China, the world's largest consumer of commodities, could affect demand growth, especially next year, analysts said.

"Uncertainty about possible effects of a trade war between the U.S. and China could dampen some of the upside risks triggered by the supply issues," said Hans van Cleef, senior energy economist at ABN Amro.

Meanwhile, US&nbsp;crude futures were forecast to average $67.29 a barrel in 2018, compared with the $67.13 consensus last month and an average of $66.76 until now.

A majority of participants saw growth in US&nbsp;shale oil output slowing over the remainder of 2018 and into next year due to infrastructure problems.

Oil prices are likely to climb continuously into next year, as concerns over drops in supply from the likes of Iran and Venezuela outweigh any worry that global trade disputes could undermine demand, a Reuters poll showed on Friday.

Oil prices are likely to climb continuously into next year, as concerns over drops in supply from the likes of Iran and Venezuela outweigh any worry that global trade disputes could undermine demand, a Reuters poll showed on Friday. A survey of 50 economists and analysts forecast Brent crude to average $73.48 a barrel in 2018, up from the $72.71 forecast in August and the $72.68 average so far this year. Brent was forecast to average $73.75 in 2019. This is the highest projection for the benchmark for both 2018 and 2019 in the polls this year. "Concerns over global trade disputes have not yet really affected economic growth, but the sanctions on Iran already have had an impact on Iranian exports and output," said Frank Schallenberger, head of commodity research at LBBW. "If an export destination like South Korea is not willing to buy Iranian oil anymore, there is a high probability that output from Iran could drop some 500,000-1 million bpd. This is really bad news for the supply side - and especially also for the consumers - as prices could go up even further." Iranian exports of crude and condensates have declined by 0.8 million barrels a day (mbd) from April to September, according to the Institute of International Finance, ahead of the November 4 US sanctions on the third largest producer in the Organization of the Petroleum Exporting Countries. Brent prices have risen more than 20 per cent since the beginning of April. Analysts expect a reduction of anywhere between 500,000 and 1.5 million bpd in Iranian supply due to the sanctions, with most expecting Saudi Arabia to take the lead in filling any supply gaps. "The best is yet to come with a fourth-quarter of $80+/bbl driven by still strong oil demand growth, expectation of a significant drop in Iranian exports to 1 mbd by year-end and an only limited willingness by OPEC to ramp-up output to exhaust spare capacity," said Jan Edelmann, commodities analyst at HSH Nordbank AG. However, an escalating trade dispute between the United States and China, the world's largest consumer of commodities, could affect demand growth, especially next year, analysts said. "Uncertainty about possible effects of a trade war between the U.S. and China could dampen some of the upside risks triggered by the supply issues," said Hans van Cleef, senior energy economist at ABN Amro. Meanwhile, US crude futures were forecast to average $67.29 a barrel in 2018, compared with the $67.13 consensus last month and an average of $66.76 until now. A majority of participants saw growth in US shale oil output slowing over the remainder of 2018 and into next year due to infrastructure problems.

Oil to rise as Iran sanctions outweigh demand risks from trade wars: Report

The United States is optimistic about finding a way forward in its trade dispute with China, but it does not have a date scheduled for further talks as it assesses Beijing's response to the latest round of tariffs, a senior White House official said on Friday.

The official said despite its protestations, China was well aware of US&nbsp;demands it halt what Washington considers unfair trade practices. US&nbsp;President Donald Trump has made clear his resolve on the issue, the official said, and the two sides remain in touch.

"We have been very clear in all of these meetings about what is ... required," the official said. "I am still optimistic that there is a positive way forward, and the president wants us to continue to engage to try to achieve a positive way forward."

The official's comments came ahead of a report by the Wall Street Journal that China had cancelled mid-level trade talks with the United States, as well as a proposed visit to Washington by vice premier Liu He originally scheduled for next week.

Earlier this week, China added $60 billion of US&nbsp;products to its import tariff list as it hit back at US&nbsp;duties on $200 billion of Chinese goods that go into effect from Sept. 24. The escalating trade dispute has spooked financial markets.

Speaking to reporters at the White House on condition of anonymity, the official made clear the administration's ultimate goal was not to separate the interlinked US&nbsp;and Chinese economies, but he said companies could choose to alter their supply chains if Beijing did not change course.

"Our goal here is not to cleave off the Chinese market from the US&nbsp;market, I don't think that's good for long-term growth," he said. "In the short term there is of course a risk that if China continues on the path it is, that some companies as a result of this may start ... to move supply chains."

The official also said he hoped Canada would agree to join a US-Mexico trade deal by the end of the month while saying he thought US&nbsp;lawmakers would support a bilateral deal with Mexico if that did not happen.

US&nbsp;and Canadian officials have been engaged in talks to modernize the North American Free Trade Agreement, a 1994 deal that underpins $1.2 trillion in trade between the United States, Canada and Mexico.

The official dismissed concerns separate deals with Canada and Mexico would have a negative impact on supply chains.

"I think it's overblown to say that if we have separate deals with these two, that there still can't be a really high degree of integration," he said.

The United States is optimistic about finding a way forward in its trade dispute with China, but it does not have a date scheduled for further talks as it assesses Beijing's response to the latest round of tariffs, a senior White House official said on Friday.

The United States is optimistic about finding a way forward in its trade dispute with China, but it does not have a date scheduled for further talks as it assesses Beijing's response to the latest round of tariffs, a senior White House official said on Friday. The official said despite its protestations, China was well aware of US demands it halt what Washington considers unfair trade practices. US President Donald Trump has made clear his resolve on the issue, the official said, and the two sides remain in touch. "We have been very clear in all of these meetings about what is ... required," the official said. "I am still optimistic that there is a positive way forward, and the president wants us to continue to engage to try to achieve a positive way forward." The official's comments came ahead of a report by the Wall Street Journal that China had cancelled mid-level trade talks with the United States, as well as a proposed visit to Washington by vice premier Liu He originally scheduled for next week. Earlier this week, China added $60 billion of US products to its import tariff list as it hit back at US duties on $200 billion of Chinese goods that go into effect from Sept. 24. The escalating trade dispute has spooked financial markets. Speaking to reporters at the White House on condition of anonymity, the official made clear the administration's ultimate goal was not to separate the interlinked US and Chinese economies, but he said companies could choose to alter their supply chains if Beijing did not change course. "Our goal here is not to cleave off the Chinese market from the US market, I don't think that's good for long-term growth," he said. "In the short term there is of course a risk that if China continues on the path it is, that some companies as a result of this may start ... to move supply chains." The official also said he hoped Canada would agree to join a US-Mexico trade deal by the end of the month while saying he thought US lawmakers would support a bilateral deal with Mexico if that did not happen. US and Canadian officials have been engaged in talks to modernize the North American Free Trade Agreement, a 1994 deal that underpins $1.2 trillion in trade between the United States, Canada and Mexico. The official dismissed concerns separate deals with Canada and Mexico would have a negative impact on supply chains. "I think it's overblown to say that if we have separate deals with these two, that there still can't be a really high degree of integration," he said.

White House optimistic on China trade; no date for more talks

World stocks slipped on Friday as expectations of trade tensions dominating this weekend's summit of G7 countries, along with renewed talk of monetary tightening by major central banks, weighed on risk sentiment.

The MSCI All-Country World index, which tracks shares in 47 countries, was down nearly half a per cent in morning trade in Europe - though it was still set to break a three-week streak of losses.

Fears of a trade war, expectations of more rate hikes in the United States, and a wind-down of a massive monetary stimulus in Europe fuelled a risk-off tone in markets, investors said.

The US&nbsp;Federal Reserve is widely expected to raise interest rates for a second time this year next week. The focus is on whether it will hint at raising rates four times in 2018.

European Central Bank policymakers meeting on June 14 will debate whether to end bond purchases later this year, the bank's chief economist said this week, in a hawkish message that sent the euro to a three-week top, hit emerging markets, and spurred demand for safe-haven bonds.

Before those meetings, however, markets will have to digest fallout from the G7 summit in Quebec, where the mounting risk of a tariff war between the United States and its major trade partners will be in the spotlight.

An unprecedented US-North Korea summit scheduled for June 12 in Singapore, with Washington seeking to pressure Pyongyang into abandoning its nuclear weapons programme, is giving investors another reason for caution.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 per cent after six straight sessions of gains took it to its highest since mid-March. It was on track for a weekly gain of more than 1 per cent.

Chinese shares slipped, with the blue-chip Shangai-Shenzhen index down 1.7 per cent and Hong Kong's Hang Seng.HSI declining 1.5 per cent.

Japan's Nikkei average and South Korea's KOSPI were off 0.6 per cent and 0.8 per cent, respectively, while Australian shares ended 0.1 per cent lower.

The pan-European STOXX 600 index was on track for its third weekly loss in a row, with renewed strength in the euro also weighing. It was down 0.7 per cent.

Italy's government bonds faced renewed selling pressure, as the risk aversion in world markets and unease about Rome's spending plans set yields on short-dated debt up for their biggest weekly rise since 2012.

"A few things are contributing to nervousness today -- the trade issues are back on, then there is the Italy situation and we are not sure how the ECB will respond to that," said Salman Ahmed, chief investment strategist at Lombard Odier Investment Management.

"And in emerging markets, there are some idiosyncratic risks (Turkey, Argentina and Brazil) which are becoming worrying." He remained "cautious" on adding risk, as "none of these issues seems to have a clear short-term resolution."

The dollar rebounded 0.3 per cent from near three-week lows against a basket of currencies, helped by the strong jobless claims numbers in the US&nbsp;on Thursday.

The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebbing of political concerns over Italy as well as the possible ECB moves over its bond purchases.

The dollar fell against the safe-haven Japanese yen to 109.35 but remained well below a four-month top of 111.39 touched in May.

The euro inched down to $1.1763 after four straight session of gains took it to its highest level since mid-May.

In commodities, copper came off from a 4-1/2-year high touched on Wednesday.

Oil prices fell as surging US&nbsp;output and signs of weakening demand in China output outweighed support from supply woes in Venezuela and OPEC's production cuts.

U.S. crude fell 0.5 per cent to $65.64 a barrel, while Brent dropped 0.5 per cent to $76.95.

Spot gold slipped 0.1 per cent at $1,298.47 an ounce.

Fears of a trade war, expectations of more rate hikes in the United States, and a wind-down of a massive monetary stimulus in Europe fuelled a risk-off tone in markets, investors said

World stocks slipped on Friday as expectations of trade tensions dominating this weekend's summit of G7 countries, along with renewed talk of monetary tightening by major central banks, weighed on risk sentiment. The MSCI All-Country World index, which tracks shares in 47 countries, was down nearly half a per cent in morning trade in Europe - though it was still set to break a three-week streak of losses. Fears of a trade war, expectations of more rate hikes in the United States, and a wind-down of a massive monetary stimulus in Europe fuelled a risk-off tone in markets, investors said. The US Federal Reserve is widely expected to raise interest rates for a second time this year next week. The focus is on whether it will hint at raising rates four times in 2018. European Central Bank policymakers meeting on June 14 will debate whether to end bond purchases later this year, the bank's chief economist said this week, in a hawkish message that sent the euro to a three-week top, hit emerging markets, and spurred demand for safe-haven bonds. Before those meetings, however, markets will have to digest fallout from the G7 summit in Quebec, where the mounting risk of a tariff war between the United States and its major trade partners will be in the spotlight. An unprecedented US-North Korea summit scheduled for June 12 in Singapore, with Washington seeking to pressure Pyongyang into abandoning its nuclear weapons programme, is giving investors another reason for caution. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 per cent after six straight sessions of gains took it to its highest since mid-March. It was on track for a weekly gain of more than 1 per cent. Chinese shares slipped, with the blue-chip Shangai-Shenzhen index down 1.7 per cent and Hong Kong's Hang Seng.HSI declining 1.5 per cent. Japan's Nikkei average and South Korea's KOSPI were off 0.6 per cent and 0.8 per cent, respectively, while Australian shares ended 0.1 per cent lower. The pan-European STOXX 600 index was on track for its third weekly loss in a row, with renewed strength in the euro also weighing. It was down 0.7 per cent. Italy's government bonds faced renewed selling pressure, as the risk aversion in world markets and unease about Rome's spending plans set yields on short-dated debt up for their biggest weekly rise since 2012. "A few things are contributing to nervousness today -- the trade issues are back on, then there is the Italy situation and we are not sure how the ECB will respond to that," said Salman Ahmed, chief investment strategist at Lombard Odier Investment Management. "And in emerging markets, there are some idiosyncratic risks (Turkey, Argentina and Brazil) which are becoming worrying." He remained "cautious" on adding risk, as "none of these issues seems to have a clear short-term resolution." The dollar rebounded 0.3 per cent from near three-week lows against a basket of currencies, helped by the strong jobless claims numbers in the US on Thursday. The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebbing of political concerns over Italy as well as the possible ECB moves over its bond purchases. The dollar fell against the safe-haven Japanese yen to 109.35 but remained well below a four-month top of 111.39 touched in May. The euro inched down to $1.1763 after four straight session of gains took it to its highest level since mid-May. In commodities, copper came off from a 4-1/2-year high touched on Wednesday. Oil prices fell as surging US output and signs of weakening demand in China output outweighed support from supply woes in Venezuela and OPEC's production cuts. U.S. crude fell 0.5 per cent to $65.64 a barrel, while Brent dropped 0.5 per cent to $76.95. Spot gold slipped 0.1 per cent at $1,298.47 an ounce.

Global Stocks: Stocks slip as central bank talk, trade, weigh on risk sentiment

Washington's main allies delivered a unified message of shock and dismay at a Group of Seven ministerial meeting on Saturday, urging US President Donald Trump to rescind punishing metal tariffs.

The lack of common ground meant the dispute would continue into next week's G7 summit in Quebec, Canada, where Trump is expected to face other heads of state as the global economy verges on outright trade conflict.

At this snow-capped mountain resort north of Vancouver, British Columbia, US Treasury Secretary Steven Mnuchin was the odd man out.

Major trading partners rebuked Trump's multi-front trade offensive while their governments announced countermeasures and legal challenges.

One after another, finance ministers and central bankers spoke of exasperation and an abiding sense of betrayal by a longtime ally.

Mnuchin, however, downplayed the disagreements and said the United States was committed to the G7 process.

Announcing the meeting's close, Canadian Finance Minister Bill Morneau said the host government and five others had urged Mnuchin to relay their "unanimous concern and disappointment."

"We said that we were collectively hoping that he would bring the message back of regret and disappointment at the American actions and concern that they are not constructive," said Morneau.

French Finance Minister Bruno Le Maire also expressed France's outrage as the meetings ended.

"I want to make it clear," Le Maire said, "that it is up to the US administration to make the right decisions to alleviate the situation and ease the difficulties."

Avoiding trade war "will depend on the decision the (US) administration is ready to take in the next few days and in the next few hours -- I'm not talking about weeks ahead," he added.

German Finance Minister Olaf Scholz told reporters the US tariffs were "a very severe problem" for transatlantic relations.

"No one understands that due to security reasons there should be extra tariffs on steel and aluminum," he said.

Trump's tariffs on America's largest foreign providers of the crucial metals that went into effect Friday upended the agenda for this normally convivial event for consensus-building among countries that account for about half of global GDP.

No joint final statement emerged from the G7 ministerial meeting, a sign of the strong discord now at the heart of the global economy.

How the White House would deal with this remained unclear.&nbsp

As the ministers' meet ended, Trump was as bellicose as ever, taking to Twitter to denounce "stupid trade" in which he said the US saw foreign tariffs on its exports without responding in kind.

"When you're almost 800 Billion Dollars a year down on Trade, you can't lose a Trade War! The US has been ripped off by other countries for years on Trade, time to get smart!" he wrote.

Counting trade in both goods and services, the US trade deficit was $566 billion in 2017, a 12 percent increase marking its highest level since the 2008 Great Recession.

Getting an earful from allies

Chairing a meeting on Friday, Morneau allowed participants to register grievances with Mnuchin one at a time, according to a Canadian source.

Behind closed doors, sources briefed on the talks said Mnuchin listened but spoke little, saying instead the discussion could continue at next week's G7 summit in the French-speaking province of Quebec at which Trump is expected to participate.

Mnuchin said he had informed Trump of his discussions but that trade was only one of many issues on a full agenda.

"These are our most important allies or some of our most important allies. We've had long-standing relationships with all these countries that are very important across all different aspects," Mnuchin told reporters.

"I believe there was a comment out there that this was the G6 plus one. It was not. This was the G7. We believe in the G7."

The week's whirlwind global developments in trade suggested a quick de-escalation was unlikely.&nbsp

Trump has suggested the 24-year-old North American Free Trade Agreement might be scrapped in favor of seeking bilateral agreements with Canada and Mexico.

G7 governments were also digesting Trump's threats to impose tariffs on hundreds of billions of dollars in US auto imports on purported national security grounds.

In China, US Commerce Secretary Wilbur Ross was due to conduct trade talks with Chinese officials even as Washington finalizes planned sanctions on Beijing.

Potential measures include restrictions on Chinese investment in the United States, new export controls and 25 percent tariffs on about $50 billion in tech-sector goods.

The talks come despite the Trump administration's apparent announcement last month of a truce with Beijing following talks in Washington last month.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods -- as have Canadian, EU and Mexican authorities.

Washington's main allies delivered a unified message of shock and dismay at a Group of Seven ministerial meeting on Saturday, urging US President Donald Trump to rescind punishing metal tariffs

Washington's main allies delivered a unified message of shock and dismay at a Group of Seven ministerial meeting on Saturday, urging US President Donald Trump to rescind punishing metal tariffs. The lack of common ground meant the dispute would continue into next week's G7 summit in Quebec, Canada, where Trump is expected to face other heads of state as the global economy verges on outright trade conflict. At this snow-capped mountain resort north of Vancouver, British Columbia, US Treasury Secretary Steven Mnuchin was the odd man out. Major trading partners rebuked Trump's multi-front trade offensive while their governments announced countermeasures and legal challenges. One after another, finance ministers and central bankers spoke of exasperation and an abiding sense of betrayal by a longtime ally. Mnuchin, however, downplayed the disagreements and said the United States was committed to the G7 process. Announcing the meeting's close, Canadian Finance Minister Bill Morneau said the host government and five others had urged Mnuchin to relay their "unanimous concern and disappointment." "We said that we were collectively hoping that he would bring the message back of regret and disappointment at the American actions and concern that they are not constructive," said Morneau. French Finance Minister Bruno Le Maire also expressed France's outrage as the meetings ended. "I want to make it clear," Le Maire said, "that it is up to the US administration to make the right decisions to alleviate the situation and ease the difficulties." Avoiding trade war "will depend on the decision the (US) administration is ready to take in the next few days and in the next few hours -- I'm not talking about weeks ahead," he added. German Finance Minister Olaf Scholz told reporters the US tariffs were "a very severe problem" for transatlantic relations. "No one understands that due to security reasons there should be extra tariffs on steel and aluminum," he said. Trump's tariffs on America's largest foreign providers of the crucial metals that went into effect Friday upended the agenda for this normally convivial event for consensus-building among countries that account for about half of global GDP. No joint final statement emerged from the G7 ministerial meeting, a sign of the strong discord now at the heart of the global economy. How the White House would deal with this remained unclear. As the ministers' meet ended, Trump was as bellicose as ever, taking to Twitter to denounce "stupid trade" in which he said the US saw foreign tariffs on its exports without responding in kind. "When you're almost 800 Billion Dollars a year down on Trade, you can't lose a Trade War! The US has been ripped off by other countries for years on Trade, time to get smart!" he wrote. Counting trade in both goods and services, the US trade deficit was $566 billion in 2017, a 12 percent increase marking its highest level since the 2008 Great Recession. Getting an earful from allies Chairing a meeting on Friday, Morneau allowed participants to register grievances with Mnuchin one at a time, according to a Canadian source. Behind closed doors, sources briefed on the talks said Mnuchin listened but spoke little, saying instead the discussion could continue at next week's G7 summit in the French-speaking province of Quebec at which Trump is expected to participate. Mnuchin said he had informed Trump of his discussions but that trade was only one of many issues on a full agenda. "These are our most important allies or some of our most important allies. We've had long-standing relationships with all these countries that are very important across all different aspects," Mnuchin told reporters. "I believe there was a comment out there that this was the G6 plus one. It was not. This was the G7. We believe in the G7." The week's whirlwind global developments in trade suggested a quick de-escalation was unlikely. Trump has suggested the 24-year-old North American Free Trade Agreement might be scrapped in favor of seeking bilateral agreements with Canada and Mexico. G7 governments were also digesting Trump's threats to impose tariffs on hundreds of billions of dollars in US auto imports on purported national security grounds. In China, US Commerce Secretary Wilbur Ross was due to conduct trade talks with Chinese officials even as Washington finalizes planned sanctions on Beijing. Potential measures include restrictions on Chinese investment in the United States, new export controls and 25 percent tariffs on about $50 billion in tech-sector goods. The talks come despite the Trump administration's apparent announcement last month of a truce with Beijing following talks in Washington last month. China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods -- as have Canadian, EU and Mexican authorities.

US isolated as trade outrage roils G7 ministerial meet

US Commerce Secretary Wilbur Ross arrived in Beijing&nbsp;Saturday&nbsp;for talks aiming to ease tensions over tariffs that have heightened fears of a trade war between the world's two biggest economies, Chinese state media said.

Despite announcing a truce earlier this month, the United States is working to finalise planned sanctions on Beijing -- including restrictions on Chinese investment, export controls and 25 per cent tariffs on $50 billion in Chinese tech goods.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods.

Ross will stay in the Chinese capital until&nbsp;Sunday, a US government official said.

His visit comes as fears of an all-out global trade war intensified after the European Union, Canada and Mexico drew up retaliatory measures to Washington's stinging steel and aluminium tariffs that came into effect&nbsp;on Friday.

US President Donald Trump first announced trade sanctions on China, largely focused on the Asian giant's theft of US intellectual property, in March.

Beijing&nbsp;on Wednesday&nbsp;lambasted "sudden flip-flops" in US policy after the Trump administration said it would still move to impose the sanctions against it -- just over a week after announcing a truce.

But as Ross arrived, China appeared to soften its position.

"China's door for negotiation remains open," said foreign ministry spokeswoman Hua Chunying&nbsp;on Friday.

The US and China "should adopt a sincere attitude and follow the spirit of equality and mutual respect to seek a win-win solution through dialogue and consultation", she added.

The final list of Chinese imports covered by the US tariffs list will be announced&nbsp;June 15&nbsp;and imposed shortly thereafter, while the proposed investment restrictions and enhanced export controls will be announced by&nbsp;June 30, according to the White House.

Trump has accused China of forcing American firms to hand over their industrial secrets to Chinese companies in order to do business in the country, a charge that Beijing has rejected.

The US leader has also threatened to impose tariffs on an additional $100 billion in Chinese goods if Beijing retaliates.

Zhu Feng, a professor of international relations at Nanjing University, told AFP he was "not very optimistic" about the outcome of the latest trade negotiations.

"The chance that there will be no trade war at all is low. I'm afraid that the most practical option for the two sides is now to limit the extent of the conflict," he said.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods

US Commerce Secretary Wilbur Ross arrived in Beijing Saturday for talks aiming to ease tensions over tariffs that have heightened fears of a trade war between the world's two biggest economies, Chinese state media said. Despite announcing a truce earlier this month, the United States is working to finalise planned sanctions on Beijing -- including restrictions on Chinese investment, export controls and 25 per cent tariffs on $50 billion in Chinese tech goods. China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods. Ross will stay in the Chinese capital until Sunday, a US government official said. His visit comes as fears of an all-out global trade war intensified after the European Union, Canada and Mexico drew up retaliatory measures to Washington's stinging steel and aluminium tariffs that came into effect on Friday. US President Donald Trump first announced trade sanctions on China, largely focused on the Asian giant's theft of US intellectual property, in March. Beijing on Wednesday lambasted "sudden flip-flops" in US policy after the Trump administration said it would still move to impose the sanctions against it -- just over a week after announcing a truce. But as Ross arrived, China appeared to soften its position. "China's door for negotiation remains open," said foreign ministry spokeswoman Hua Chunying on Friday. The US and China "should adopt a sincere attitude and follow the spirit of equality and mutual respect to seek a win-win solution through dialogue and consultation", she added. The final list of Chinese imports covered by the US tariffs list will be announced June 15 and imposed shortly thereafter, while the proposed investment restrictions and enhanced export controls will be announced by June 30, according to the White House. Trump has accused China of forcing American firms to hand over their industrial secrets to Chinese companies in order to do business in the country, a charge that Beijing has rejected. The US leader has also threatened to impose tariffs on an additional $100 billion in Chinese goods if Beijing retaliates. Zhu Feng, a professor of international relations at Nanjing University, told AFP he was "not very optimistic" about the outcome of the latest trade negotiations. "The chance that there will be no trade war at all is low. I'm afraid that the most practical option for the two sides is now to limit the extent of the conflict," he said.

US Commerce Secretary in China for talks to avoid trade war

A populist government in Rome, political instability in Madrid, democratic crises in the east and a transatlantic trade war to the west: the European Union faces threats and challenges on multiple fronts.

On Friday, Italy's President Sergio Mattarella swore in an anti-establishment and eurosceptic government comprising the Five Star Movement and the far-right League.

Their agenda -- increased public spending in the EU's most indebted nation, coupled with anti-German rhetoric -- has led to concerns for the bloc's future and its single currency, the euro.

Also&nbsp;Friday, Spain's parliament ousted Prime Minister Mariano Rajoy in a no-confidence vote sparked by fury over his party's corruption woes, with his Socialist arch-rival Pedro Sanchez automatically taking over.

"In Spain, it's a localised issue about corruption, but Italy is obviously very serious," John Springford of the London-based Centre for European Reform (CER) think-tank said.

"It is too big to fail in terms of the eurozone and too big to save."

While Italy is clearly the most pressing danger facing the 28-member bloc, it is not the only one.

Asked this week if Rome had become Europe's Achilles Heel, Gianni Riotta from the Council on Foreign Relations joked: "How many heels can Europe sport? Greece, the United Kingdom, Poland, Hungary -— too many, I'd say."

In eastern Europe, European Union officials fret that nationalist governments in Poland and Hungary are undermining democratic standards such as the independence of the judiciary and media freedom.

Brussels launched unprecedented legal action against Warsaw in December over "systemic threats" to the independence of the Polish judiciary.

Britain, meanwhile, is engaged in the painful and at times bitter negotiations to leave the European Union, having decided to leave the bloc in a 2016 referendum.

And Greece is still recovering from its economic depression caused by a sovereign debt crisis which led to multiple bailouts by its EU partners since 2010 that exposed deep tensions in the bloc.

"Europe makes me think of someone that is on the edge of a precipice, even a little bit further along. Its nails are already in the air," former German foreign minister Joschka Fischer said this week.

Veteran financier George Soros, an outspoken proponent of greater EU integration, also warned in recent days that the project was facing "an existential crisis -- everything that could go wrong has gone wrong".

Along with its internal issues, the EU faces some of the most serious problems in transatlantic relations since World War II sparked by a series of combative decisions by US President Donald Trump

From scrapping the 2015 Iran deal against the wishes of his EU partners to imposing trade tariffs on steel and aluminium imports, Trump has pursued his "American First" agenda with little regard for America's traditional allies.&nbsp;

Some analysts say they believe Trump could be the catalyst Europe needs to finally become a more cohesive bloc that comes together to act more forcefully in the face of external threats.

"Trump will perhaps succeed where no one has succeeded before him: by uniting the Europeans," said Pascale Joannin, director of the Robert Schuman think-tank.

This was French President Emmanuel Macron's hope after his election last May when he came to power promising to reform the EU and arguing that its members needed to club together in an increasingly dangerous world.

He has pitched a vision for the future in which the bloc goes further in linking its economies, political systems and armies to face a range of contemporary threats, from trade and migration to international terrorism and climate change.

A key part of his vision is wealthy northern EU members, particularly Germany, showing more solidarity towards weaker and indebted southern nations such as Italy where economies and wages have stagnated.

"I personally think that President Macron plays a vital role in brokering a new north-south settlement in the eurozone," former British deputy prime minister Nick Clegg told AFP this week.

But German Chancellor Angela Merkel has so far failed to respond to Macron's ideas, and the new populist government in Rome makes a positive reaction even less likely, said Springford of the CER.

"My sense is that Italy is probably the nail in the coffin for Macron's reforms," he said.

Timothy Garton Ash, a British historian and author, depicted Macron as the only hope for Europe in a column published by the Guardian newspaper&nbsp;on Thursday&nbsp;-- but he was pessimistic about his chances.

"Italy is having a nervous breakdown, Spain weighed down by trouble at home, Poland throwing a massive wobbly, Britain hovering near the exit, and Germany slumped on the sofa. Talk about a dysfunctional family," he wrote.

A populist government in Rome, political instability in Madrid, democratic crises in the east and a transatlantic trade war to the west: the European Union faces threats and challenges on multiple fronts

A populist government in Rome, political instability in Madrid, democratic crises in the east and a transatlantic trade war to the west: the European Union faces threats and challenges on multiple fronts. On Friday, Italy's President Sergio Mattarella swore in an anti-establishment and eurosceptic government comprising the Five Star Movement and the far-right League. Their agenda -- increased public spending in the EU's most indebted nation, coupled with anti-German rhetoric -- has led to concerns for the bloc's future and its single currency, the euro. Also Friday, Spain's parliament ousted Prime Minister Mariano Rajoy in a no-confidence vote sparked by fury over his party's corruption woes, with his Socialist arch-rival Pedro Sanchez automatically taking over. "In Spain, it's a localised issue about corruption, but Italy is obviously very serious," John Springford of the London-based Centre for European Reform (CER) think-tank said. "It is too big to fail in terms of the eurozone and too big to save." While Italy is clearly the most pressing danger facing the 28-member bloc, it is not the only one. Asked this week if Rome had become Europe's Achilles Heel, Gianni Riotta from the Council on Foreign Relations joked: "How many heels can Europe sport? Greece, the United Kingdom, Poland, Hungary -— too many, I'd say." In eastern Europe, European Union officials fret that nationalist governments in Poland and Hungary are undermining democratic standards such as the independence of the judiciary and media freedom. Brussels launched unprecedented legal action against Warsaw in December over "systemic threats" to the independence of the Polish judiciary. Britain, meanwhile, is engaged in the painful and at times bitter negotiations to leave the European Union, having decided to leave the bloc in a 2016 referendum. And Greece is still recovering from its economic depression caused by a sovereign debt crisis which led to multiple bailouts by its EU partners since 2010 that exposed deep tensions in the bloc. "Europe makes me think of someone that is on the edge of a precipice, even a little bit further along. Its nails are already in the air," former German foreign minister Joschka Fischer said this week. Veteran financier George Soros, an outspoken proponent of greater EU integration, also warned in recent days that the project was facing "an existential crisis -- everything that could go wrong has gone wrong". Along with its internal issues, the EU faces some of the most serious problems in transatlantic relations since World War II sparked by a series of combative decisions by US President Donald Trump From scrapping the 2015 Iran deal against the wishes of his EU partners to imposing trade tariffs on steel and aluminium imports, Trump has pursued his "American First" agenda with little regard for America's traditional allies. Some analysts say they believe Trump could be the catalyst Europe needs to finally become a more cohesive bloc that comes together to act more forcefully in the face of external threats. "Trump will perhaps succeed where no one has succeeded before him: by uniting the Europeans," said Pascale Joannin, director of the Robert Schuman think-tank. This was French President Emmanuel Macron's hope after his election last May when he came to power promising to reform the EU and arguing that its members needed to club together in an increasingly dangerous world. He has pitched a vision for the future in which the bloc goes further in linking its economies, political systems and armies to face a range of contemporary threats, from trade and migration to international terrorism and climate change. A key part of his vision is wealthy northern EU members, particularly Germany, showing more solidarity towards weaker and indebted southern nations such as Italy where economies and wages have stagnated. "I personally think that President Macron plays a vital role in brokering a new north-south settlement in the eurozone," former British deputy prime minister Nick Clegg told AFP this week. But German Chancellor Angela Merkel has so far failed to respond to Macron's ideas, and the new populist government in Rome makes a positive reaction even less likely, said Springford of the CER. "My sense is that Italy is probably the nail in the coffin for Macron's reforms," he said. Timothy Garton Ash, a British historian and author, depicted Macron as the only hope for Europe in a column published by the Guardian newspaper on Thursday -- but he was pessimistic about his chances. "Italy is having a nervous breakdown, Spain weighed down by trouble at home, Poland throwing a massive wobbly, Britain hovering near the exit, and Germany slumped on the sofa. Talk about a dysfunctional family," he wrote.

The European Union counts its crises as problems mount

In a bid to soften his stand, US president Donald Trump said today that different &nbspstructure was needed for trade deals with China as the present one was "too hard to get done."

Chinese and US officials had met last week to discuss import of agricultural goods in Beijing after the US president had turned the heat on President Xi's regime over Chinese goods entering the US.

Deputy Commissioner of Customs Zhang Jiwen and US Under Secretary of Agriculture Ted McKinney discussed access to &nbspChinese cooked poultry products, citrus fruits and date exports and US exports to China of poultry, rice, feed additives and other products.

"Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion," Trump said in his Twitter post.

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Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion.
— Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/999257533327073281?ref_src=twsrc%5Etfw">May 23, 2018</a></blockquote>
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The US president's move comes amid softening of stand between China and the US over trade issues which has riled US officials including Trump. Chinese state media recently said the two countries had huge potential for "win-win business cooperation".

The US has been putting pressure on China to narrow its trade deficit with China which currently stands at &nbsp$335 billion annually. In the early rounds the US had insisted that China reduce its trade surplus by $200 billion, but toned down later.

The US has been putting pressure on China to narrow its trade deficit with China which currently stands at $335 billion annually.

In a bid to soften his stand, US president Donald Trump said today that different &nbspstructure was needed for trade deals with China as the present one was "too hard to get done." Chinese and US officials had met last week to discuss import of agricultural goods in Beijing after the US president had turned the heat on President Xi's regime over Chinese goods entering the US. Deputy Commissioner of Customs Zhang Jiwen and US Under Secretary of Agriculture Ted McKinney discussed access to &nbspChinese cooked poultry products, citrus fruits and date exports and US exports to China of poultry, rice, feed additives and other products. "Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion," Trump said in his Twitter post. Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion. — Donald J. Trump (@realDonaldTrump) May 23, 2018 × The US president's move comes amid softening of stand between China and the US over trade issues which has riled US officials including Trump. Chinese state media recently said the two countries had huge potential for "win-win business cooperation". The US has been putting pressure on China to narrow its trade deficit with China which currently stands at $335 billion annually. In the early rounds the US had insisted that China reduce its trade surplus by $200 billion, but toned down later.

Different structure needed for trade deal with China, declares Trump

Gold slid to a near five-month low&nbsp;on Monday, as the dollar rose and demand for safe-haven assets eased after US&nbsp;Treasury Secretary Steven Mnuchin said a trade war between China and the United States was "on hold".

Spot gold was down 0.6 percent at $1,283.30 per ounce at 0658 GMT, after earlier hitting $1,281.76, its lowest since&nbsp;December 27.

US&nbsp;gold futures for June delivery were 0.7 percent lower at $1,282.50.

"Gold price is under pressure as the dollar maintains its strength," said Naeem Aslam, chief markets analyst at Think Markets.

"'On Hold' is a risk-on term...The absence of trade tariffs and hostile tone between the two countries has also impacted the gold price more adversely," Aslam said.

The dollar rose versus the yen and hit five months high against a basket of currencies, after Mnuchin's comments downplaying a trade dispute with China, boosting risk sentiment amid hopes for an easing of trade tensions between the world's two biggest economies.

Chinese state media&nbsp;on Monday&nbsp;praised a significant dialing back of trade tension with the US, saying China had stood its ground and the two countries had huge potential for win-win business cooperation.

"You have this combination of technical factors which is at the moment un-supportive (for gold). As long as the dollar is on the firm side, gold is under pressure," said Dominic Schnider at UBS Wealth Management in Hong Kong.

The price of gold fell below the psychologically important $1,300 per ounce level last week for the first time since late December and has since continued to trade below its 200-day moving average.

A stronger dollar makes dollar-denominated gold more expensive for holders using other currencies. Furthermore, rising US&nbsp;interest rates, and the expectation that US&nbsp;Federal Reserve will raise rates again next month, limits investor demand for non-yielding bullion.

"Investors are looking towards the biggest event of this week- the FOMC minutes and if the Fed doesn't tame its hawkish stance, we would expect more weakness in the gold price," Aslam said.

Hedge funds and money managers cut their net long position in COMEX gold contracts by 21,294 contracts to 31,327 in the week to May 15, data showed&nbsp;on Friday.

In other precious metals, silver fell 0.8 percent to $16.30 an ounce.

Platinum was 0.4 percent lower at $879 an ounce, after marking an over five-month low at $874 earlier.

Palladium rose 0.5 percent at $968.30 per ounce, after hitting a two-week low at $960.22&nbsp;on Friday.

The dollar rose versus the yen and hit a five-month-high against a basket of currencies

Gold slid to a near five-month low on Monday, as the dollar rose and demand for safe-haven assets eased after US Treasury Secretary Steven Mnuchin said a trade war between China and the United States was "on hold". Spot gold was down 0.6 percent at $1,283.30 per ounce at 0658 GMT, after earlier hitting $1,281.76, its lowest since December 27. US gold futures for June delivery were 0.7 percent lower at $1,282.50. "Gold price is under pressure as the dollar maintains its strength," said Naeem Aslam, chief markets analyst at Think Markets. "'On Hold' is a risk-on term...The absence of trade tariffs and hostile tone between the two countries has also impacted the gold price more adversely," Aslam said. The dollar rose versus the yen and hit five months high against a basket of currencies, after Mnuchin's comments downplaying a trade dispute with China, boosting risk sentiment amid hopes for an easing of trade tensions between the world's two biggest economies. Chinese state media on Monday praised a significant dialing back of trade tension with the US, saying China had stood its ground and the two countries had huge potential for win-win business cooperation. "You have this combination of technical factors which is at the moment un-supportive (for gold). As long as the dollar is on the firm side, gold is under pressure," said Dominic Schnider at UBS Wealth Management in Hong Kong. The price of gold fell below the psychologically important $1,300 per ounce level last week for the first time since late December and has since continued to trade below its 200-day moving average. A stronger dollar makes dollar-denominated gold more expensive for holders using other currencies. Furthermore, rising US interest rates, and the expectation that US Federal Reserve will raise rates again next month, limits investor demand for non-yielding bullion. "Investors are looking towards the biggest event of this week- the FOMC minutes and if the Fed doesn't tame its hawkish stance, we would expect more weakness in the gold price," Aslam said. Hedge funds and money managers cut their net long position in COMEX gold contracts by 21,294 contracts to 31,327 in the week to May 15, data showed on Friday. In other precious metals, silver fell 0.8 percent to $16.30 an ounce. Platinum was 0.4 percent lower at $879 an ounce, after marking an over five-month low at $874 earlier. Palladium rose 0.5 percent at $968.30 per ounce, after hitting a two-week low at $960.22 on Friday.

Gold hits five-month low as US trade war with China 'on hold'

China and the US have agreed to abandon a threatened trade war, the news agency Xinhua reported Saturday.&nbsp;

The two countries have also agreed not to raise tariffs on each other.&nbsp;

The report came after Chinese Vice-Premier Liu He led a high-level delegation to the US.&nbsp;

"The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other," Xinhua reported He as saying.&nbsp;

Also read:&nbsp;<a href="http://www.wionews.com/world/china-agrees-to-import-more-from-us-no-sign-of-us-200-billion-figure-138324">China agrees to import more from </a><a href="http://www.wionews.com/world/china-agrees-to-import-more-from-us-no-sign-of-us-200-billion-figure-138324">US</a>

The state-owned news agency added that the two sides agreed to take effective measures to substantially decrease the US trade deficit in goods with China.

And that China will significantly increase its purchase of US goods and services to meet the consumption needs of the Chinese people.

Xinhua added that the two countries also agreed to meaningfully increase the export of US agriculture and energy products.&nbsp;

'The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other," Xinhua reported Chinese Vice-Premier Liu He as saying

China and the US have agreed to abandon a threatened trade war, the news agency Xinhua reported Saturday. The two countries have also agreed not to raise tariffs on each other. The report came after Chinese Vice-Premier Liu He led a high-level delegation to the US. "The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other," Xinhua reported He as saying. Also read: China agrees to import more from US The state-owned news agency added that the two sides agreed to take effective measures to substantially decrease the US trade deficit in goods with China. And that China will significantly increase its purchase of US goods and services to meet the consumption needs of the Chinese people. Xinhua added that the two countries also agreed to meaningfully increase the export of US agriculture and energy products.

China-US agree to abandon trade war, not raise tariffs: Xinhua

&nbspChina denied on Friday that it had offered a package to slash the US trade deficit by up to $200 billion, hours after it dropped an anti-dumping probe into US sorghum imports in a conciliatory gesture as top negotiators meet in Washington.

US officials had said on Thursday that China was proposing trade concessions and increased purchases of American goods aimed at cutting the US trade deficit with China by up to $200 billion a year.

"This rumour is not true. This I can confirm to you," Chinese foreign ministry spokesman Lu Kang told a regular news briefing.

"As I understand, the relevant consultations are ongoing and they are constructive," he said, adding that he could not elaborate on the specifics of the negotiations.

Earlier on Friday, China announced that it was ending its sorghum investigation, which had effectively halted a trade worth roughly $1.1 billion last year and roiled global grain markets and spurred worries about rising costs domestically.

The United States is China's dominant source of imported sorghum, a product grown in states such as Texas and Kansas that lean towards Trump's Republican party, whose Congressional majorities are under threat in mid-term elections in November.

Explaining the dropping of the sorghum investigation, China's commerce ministry said it "would have a widespread impact on consumer living costs, and does not accord with the public interest".

Getting to a $200 billion reduction of the US-China trade deficit on a sustainable basis would require a massive change in the composition of commerce between the two, and the news from the unidentified U.S. officials in Washington had been met with scepticism from economists.

"That's an enormous number and it suggests that there could be some impressively ambitious accounting," said Scott Mulhauser, a former chief of staff at the US Embassy in Beijing and US Export-Import Bank official who now advises companies on trade.

The US goods deficit was $375 billion last year.

One US source said earlier that US aircraft maker Boeing Co would be a major beneficiary of the Chinese offer to narrow the trade gap if Trump were to accept it. Boeing is the largest US exporter and already sells about a quarter of its commercial aircraft to Chinese customers.

Another person familiar with the talks had said the package may include some elimination of Chinese tariffs already in place on about $4 billion worth of US farm products including fruit, nuts, pork, wine - and sorghum.

A White House statement described the meetings as part of "ongoing trade discussions" and said Trump met the Chinese delegation led by Liu and the US team led by Mnuchin.

"The United States officials conveyed the president's clear goal for a fair trading relationship with China," the White House said.

That top-line number in the reported Chinese offer would largely match a request presented to Chinese officials by Trump administration officials in Beijing two weeks ago.

The two biggest US exports to China were aircraft at $16 billion last year, and soybeans, at $12 billion.

The United States shipped 4.76 million tonnes of sorghum to China in 2017, worth about $1.1 billion, accounting for the bulk of Chinese imports of the grain used in animal feed and Chinese liquor.

In April, China forced US sorghum exporters to put up a 178.6 per cent deposit on the value of sorghum shipments to the country after launching an investigation in February following Trump's imposition of steep tariffs on imports of solar panels and washing machines.

"China has taught a lesson to the United States and showed how it can hurt US exports," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

"Now they are showing goodwill by halting its anti-dumping investigation into sorghum imports, but it is a cheap way of showing goodwill as the US doesn't have much sorghum left to export. The next US&nbspsorghum crop will be harvested in August,” Houe said.

Trump has threatened to impose tariffs on up to $150 billion of Chinese goods to combat what he says is Beijing's appropriation of US technology through joint venture requirements and other policies. Beijing has threatened equal retaliation, including tariffs on some of its largest US imports, including aircraft, soybeans and autos.

In April, China forced US sorghum exporters to put up a 178.6 per cent deposit on the value of sorghum shipments to the country after launching an investigation in February.

&nbspChina denied on Friday that it had offered a package to slash the US trade deficit by up to $200 billion, hours after it dropped an anti-dumping probe into US sorghum imports in a conciliatory gesture as top negotiators meet in Washington. US officials had said on Thursday that China was proposing trade concessions and increased purchases of American goods aimed at cutting the US trade deficit with China by up to $200 billion a year. "This rumour is not true. This I can confirm to you," Chinese foreign ministry spokesman Lu Kang told a regular news briefing. "As I understand, the relevant consultations are ongoing and they are constructive," he said, adding that he could not elaborate on the specifics of the negotiations. Earlier on Friday, China announced that it was ending its sorghum investigation, which had effectively halted a trade worth roughly $1.1 billion last year and roiled global grain markets and spurred worries about rising costs domestically. The United States is China's dominant source of imported sorghum, a product grown in states such as Texas and Kansas that lean towards Trump's Republican party, whose Congressional majorities are under threat in mid-term elections in November. Explaining the dropping of the sorghum investigation, China's commerce ministry said it "would have a widespread impact on consumer living costs, and does not accord with the public interest". Getting to a $200 billion reduction of the US-China trade deficit on a sustainable basis would require a massive change in the composition of commerce between the two, and the news from the unidentified U.S. officials in Washington had been met with scepticism from economists. "That's an enormous number and it suggests that there could be some impressively ambitious accounting," said Scott Mulhauser, a former chief of staff at the US Embassy in Beijing and US Export-Import Bank official who now advises companies on trade. The US goods deficit was $375 billion last year. One US source said earlier that US aircraft maker Boeing Co would be a major beneficiary of the Chinese offer to narrow the trade gap if Trump were to accept it. Boeing is the largest US exporter and already sells about a quarter of its commercial aircraft to Chinese customers. Another person familiar with the talks had said the package may include some elimination of Chinese tariffs already in place on about $4 billion worth of US farm products including fruit, nuts, pork, wine - and sorghum. A White House statement described the meetings as part of "ongoing trade discussions" and said Trump met the Chinese delegation led by Liu and the US team led by Mnuchin. "The United States officials conveyed the president's clear goal for a fair trading relationship with China," the White House said. That top-line number in the reported Chinese offer would largely match a request presented to Chinese officials by Trump administration officials in Beijing two weeks ago. The two biggest US exports to China were aircraft at $16 billion last year, and soybeans, at $12 billion. The United States shipped 4.76 million tonnes of sorghum to China in 2017, worth about $1.1 billion, accounting for the bulk of Chinese imports of the grain used in animal feed and Chinese liquor. In April, China forced US sorghum exporters to put up a 178.6 per cent deposit on the value of sorghum shipments to the country after launching an investigation in February following Trump's imposition of steep tariffs on imports of solar panels and washing machines. "China has taught a lesson to the United States and showed how it can hurt US exports," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney. "Now they are showing goodwill by halting its anti-dumping investigation into sorghum imports, but it is a cheap way of showing goodwill as the US doesn't have much sorghum left to export. The next US&nbspsorghum crop will be harvested in August,” Houe said. Trump has threatened to impose tariffs on up to $150 billion of Chinese goods to combat what he says is Beijing's appropriation of US technology through joint venture requirements and other policies. Beijing has threatened equal retaliation, including tariffs on some of its largest US imports, including aircraft, soybeans and autos.

China denies offering $200 billion package to slash US trade gap

The Trump administration will have a "frank discussion" with the Chinese leadership on a series of trade issues, according to US Treasury Secretary Steven Mnuchin who is leading a high-powered trade delegation to Beijing later this week.

"We're looking to have a very frank discussion on trade, on the issues of the trade imbalance. President (Donald) Trump has been very clear for the last year that he's very focused on the trade deficit and we're looking to correct that," Mnuchin told Fox News in an interview today.

Mnuchin would be accompanied by Commerce Secretary Wilbur Ross and US Trade Representative Robert Lighthizer. Trump's top advisers on trade and economic policies Larry Kudlow and Peter Navarro would also be part of the US delegation, the White House said.

In the last one month, Trump has taken a series of measures to address the challenge of massive $500 billion trade deficit with China. Prominent among them being increasing import duties on steel and aluminium and proposing to do the same with several hundred other Chinese items.

China too has responded by retaliatory actions. Trump has said that such a huge trade deficit with China is not acceptable to his administration.

"We are definitely going to be talking to them about intellectual property rights, about forged technology, forged joined ventures, those are all important issues that are on our list," Mnuchin said, adding that he is cautiously optimistic about the meetings.

Ahead of the US trade delegation visit to China, the Alliance for American Manufacturing said that bilateral meetings with Chinese government officials present an opportunity to affect meaningful change in the United States' lopsided trade relationship with that country, but "results-oriented," enforceable commitments must be their goal.

"Withdrawing the threat of tariffs without achieving meaningful results would be tantamount to waving the white flag of trade surrender signalling to China and other trade cheats that there will be no consequences for predatory trade behaviours," its president Scott N Paul, wrote in a letter addressed to Mnuchin, Navarro, Lighthizer, and Kudlow.

"If a negotiated solution with specific disciplines and automatic enforcement provisions can be agreed to, then, and only then, should we look at lifting tariffs. Otherwise, as I believe you know, we would be abandoning the best leverage we've had in years," he said.

Paul alleged that China is not holding up its end of the bargain, at the World Trade Organization or via its bilateral relationships and kicking the can further down the road is simply not a smart trade policy strategy.

"The past 20 years of seemingly endless dialogue with China show that polite requests to curtail state-driven industrial overcapacity or to refrain from forced technology transfers and joint ownership partnerships in exchange for market access do not yield meaningful results," he said.

In the letter, the alliance strongly urged against any rush to make trade concessions to China in exchange for promises of reforms.

"Any deal with China must be comprehensive, binding, enforceable, and backed by strong penalties if Beijing fails to live up to its words as has repeatedly been the case under previous administrations of both political parties," Paul said.

Trump has said that huge trade deficit with China is not acceptable to his administration.

The Trump administration will have a "frank discussion" with the Chinese leadership on a series of trade issues, according to US Treasury Secretary Steven Mnuchin who is leading a high-powered trade delegation to Beijing later this week. "We're looking to have a very frank discussion on trade, on the issues of the trade imbalance. President (Donald) Trump has been very clear for the last year that he's very focused on the trade deficit and we're looking to correct that," Mnuchin told Fox News in an interview today. Mnuchin would be accompanied by Commerce Secretary Wilbur Ross and US Trade Representative Robert Lighthizer. Trump's top advisers on trade and economic policies Larry Kudlow and Peter Navarro would also be part of the US delegation, the White House said. In the last one month, Trump has taken a series of measures to address the challenge of massive $500 billion trade deficit with China. Prominent among them being increasing import duties on steel and aluminium and proposing to do the same with several hundred other Chinese items. China too has responded by retaliatory actions. Trump has said that such a huge trade deficit with China is not acceptable to his administration. "We are definitely going to be talking to them about intellectual property rights, about forged technology, forged joined ventures, those are all important issues that are on our list," Mnuchin said, adding that he is cautiously optimistic about the meetings. Ahead of the US trade delegation visit to China, the Alliance for American Manufacturing said that bilateral meetings with Chinese government officials present an opportunity to affect meaningful change in the United States' lopsided trade relationship with that country, but "results-oriented," enforceable commitments must be their goal. "Withdrawing the threat of tariffs without achieving meaningful results would be tantamount to waving the white flag of trade surrender signalling to China and other trade cheats that there will be no consequences for predatory trade behaviours," its president Scott N Paul, wrote in a letter addressed to Mnuchin, Navarro, Lighthizer, and Kudlow. "If a negotiated solution with specific disciplines and automatic enforcement provisions can be agreed to, then, and only then, should we look at lifting tariffs. Otherwise, as I believe you know, we would be abandoning the best leverage we've had in years," he said. Paul alleged that China is not holding up its end of the bargain, at the World Trade Organization or via its bilateral relationships and kicking the can further down the road is simply not a smart trade policy strategy. "The past 20 years of seemingly endless dialogue with China show that polite requests to curtail state-driven industrial overcapacity or to refrain from forced technology transfers and joint ownership partnerships in exchange for market access do not yield meaningful results," he said. In the letter, the alliance strongly urged against any rush to make trade concessions to China in exchange for promises of reforms. "Any deal with China must be comprehensive, binding, enforceable, and backed by strong penalties if Beijing fails to live up to its words as has repeatedly been the case under previous administrations of both political parties," Paul said.

Looking to have frank discussion on trade with China: US

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