US President Donald Trump said on Wednesday that <a href="https://www.wionews.com/world/us-china-reneged-on-trade-commitments-sparking-trump-tariff-hike-216534">China "broke the deal"</a> it had reached in trade talks with the United States and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing "stops cheating our workers."

The US Trade Representative's office announced that tariffs on $200 billion worth of Chinese goods would increase to 25 per cent from 10 per cent at 12:01 a.m. (0401) GMT on Friday, right in the middle of two days of meetings between Chinese Vice Premier Liu He and Trump's top trade officials in Washington.

Also read:&nbsp;<a href="https://www.wionews.com/world/trump-targets-irans-iron-steel-aluminium-copper-sectors-in-new-sanctions-217134">Trump targets Iran's iron, steel, aluminium &amp; copper sectors in new sanctions</a>

Speaking to supporters at a rally in Florida on Wednesday, Trump accused China of breaking the deal and said that Beijing would pay if no agreement is reached.

"I just announced that we’ll increase tariffs on China and we won’t back down until China stops cheating our workers and stealing our jobs, and that’s what’s going to happen, otherwise we don’t have to do business with them,” Trump told a cheering crowd.

"They broke the deal," he added. "They can't do that. So they'll be paying. If we don't make the deal, nothing wrong with taking in more than $100 billion a year."

Trump's comments fueled a round of selling in Asian markets

Beijing has announced it would retaliate if tariffs rise.

Also read:&nbsp;<a href="https://www.wionews.com/world/explaining-the-us-china-trade-war-which-grabbed-spotlight-in-2018-185043">Explaining the US-China trade war which grabbed spotlight in 2018</a>

"The Chinese side deeply regrets that if the US&nbsp;tariff measures are implemented, China will have to take necessary countermeasures," China's Commerce Ministry said on its website, without elaborating.

The world's two largest economies have been embroiled in a tit-for-tat tariff war since July 2018 over US&nbsp;demands that the Asian powerhouse adopt policy changes that would, among other things, better protect American intellectual property and make China's market more accessible to US companies.

Expectations were recently riding high that a deal could be reached, but a deep rift over the language of the proposed agreement opened up last weekend.

Reuters, citing US government and private-sector sources, reported on Wednesday that China had backtracked on almost all aspects of a draft trade agreement, threatening to blow up the negotiations and prompting Trump to order the tariff increase.

Trump, who has embraced largely protectionist policies as part of his "America First" agenda, warned China on Wednesday that it was mistaken if it hoped to delay a trade deal until a Democrat controlled the White House.

"The reason for the China pullback &amp; attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to 'negotiate' with Joe Biden or one of the very weak Democrats," Trump, a Republican, tweeted on Wednesday.

"Guess what, that's not going to happen! China has just informed us that they (Vice-Premier) are now coming to the US&nbsp;to make a deal. We'll see, but I am very happy with over $100 Billion a year in Tariffs filling US coffers," he added.

In response, Biden's deputy campaign manager, Kate Bedingfield, criticized Trump, saying on Twitter that US farmers, small-business owners and consumers were the ones hit by the tariff battle.

Speaking to reporters, White House Press Secretary Sarah Sanders said the Trump administration had received an "indication" that China wants an agreement.

US stock indexes rebounded slightly from this week's earlier losses after her comments, but the S&amp;P 500 and the Nasdaq closed in negative territory amid caution over trade and some disappointing earnings.

SWEEPING CHANGES

Washington is demanding Beijing make sweeping changes to its trade and regulatory practices, including protecting US intellectual property from theft and forced transfers to Chinese firms, curbs on Chinese government subsidies and increased American access to China's markets.

Trump also has sought massive hikes in Chinese purchases of US farm, energy and manufactured products to shrink a gaping US&nbsp;trade deficit with China.

Sources familiar with the talks said China's latest demands for changes to a 150-page document that had been drafted over several months would make it hard to avoid the US tariff hike on Friday. That increase would affect Chinese imports from computer modems and routers to vacuum cleaners, furniture, lighting and building materials.

Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington, said the talks were at a delicate stage and much depended on what sort of proposal Liu is bringing to Washington.

"I think the Trump administration is quite serious about imposing tariffs," Kennedy said. "I don't think Liu He would have agreed to come if he was just going to give the US&nbsp;a lecture."

US President Donald Trump said on Wednesday that China "broke the deal" it had reached in trade talks with the United States and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing "stops cheating our workers.

US President Donald Trump said on Wednesday that China "broke the deal" it had reached in trade talks with the United States and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing "stops cheating our workers." The US Trade Representative's office announced that tariffs on $200 billion worth of Chinese goods would increase to 25 per cent from 10 per cent at 12:01 a.m. (0401) GMT on Friday, right in the middle of two days of meetings between Chinese Vice Premier Liu He and Trump's top trade officials in Washington. Also read: Trump targets Iran's iron, steel, aluminium & copper sectors in new sanctions Speaking to supporters at a rally in Florida on Wednesday, Trump accused China of breaking the deal and said that Beijing would pay if no agreement is reached. "I just announced that we’ll increase tariffs on China and we won’t back down until China stops cheating our workers and stealing our jobs, and that’s what’s going to happen, otherwise we don’t have to do business with them,” Trump told a cheering crowd. "They broke the deal," he added. "They can't do that. So they'll be paying. If we don't make the deal, nothing wrong with taking in more than $100 billion a year." Trump's comments fueled a round of selling in Asian markets Beijing has announced it would retaliate if tariffs rise. Also read: Explaining the US-China trade war which grabbed spotlight in 2018 "The Chinese side deeply regrets that if the US tariff measures are implemented, China will have to take necessary countermeasures," China's Commerce Ministry said on its website, without elaborating. The world's two largest economies have been embroiled in a tit-for-tat tariff war since July 2018 over US demands that the Asian powerhouse adopt policy changes that would, among other things, better protect American intellectual property and make China's market more accessible to US companies. Expectations were recently riding high that a deal could be reached, but a deep rift over the language of the proposed agreement opened up last weekend. Reuters, citing US government and private-sector sources, reported on Wednesday that China had backtracked on almost all aspects of a draft trade agreement, threatening to blow up the negotiations and prompting Trump to order the tariff increase. Trump, who has embraced largely protectionist policies as part of his "America First" agenda, warned China on Wednesday that it was mistaken if it hoped to delay a trade deal until a Democrat controlled the White House. "The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to 'negotiate' with Joe Biden or one of the very weak Democrats," Trump, a Republican, tweeted on Wednesday. "Guess what, that's not going to happen! China has just informed us that they (Vice-Premier) are now coming to the US to make a deal. We'll see, but I am very happy with over $100 Billion a year in Tariffs filling US coffers," he added. In response, Biden's deputy campaign manager, Kate Bedingfield, criticized Trump, saying on Twitter that US farmers, small-business owners and consumers were the ones hit by the tariff battle. Speaking to reporters, White House Press Secretary Sarah Sanders said the Trump administration had received an "indication" that China wants an agreement. US stock indexes rebounded slightly from this week's earlier losses after her comments, but the S&P 500 and the Nasdaq closed in negative territory amid caution over trade and some disappointing earnings. SWEEPING CHANGES Washington is demanding Beijing make sweeping changes to its trade and regulatory practices, including protecting US intellectual property from theft and forced transfers to Chinese firms, curbs on Chinese government subsidies and increased American access to China's markets. Trump also has sought massive hikes in Chinese purchases of US farm, energy and manufactured products to shrink a gaping US trade deficit with China. Sources familiar with the talks said China's latest demands for changes to a 150-page document that had been drafted over several months would make it hard to avoid the US tariff hike on Friday. That increase would affect Chinese imports from computer modems and routers to vacuum cleaners, furniture, lighting and building materials. Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington, said the talks were at a delicate stage and much depended on what sort of proposal Liu is bringing to Washington. "I think the Trump administration is quite serious about imposing tariffs," Kennedy said. "I don't think Liu He would have agreed to come if he was just going to give the US a lecture."

Won’t back down until China stops cheating our workers and stealing our jobs: Trump at Florida rally

US President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports in place, adding that China is mistaken if it hopes to negotiate trade later with a Democratic presidential administration.

"The reason for the China pullback &amp; attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to 'negotiate' with Joe Biden or one of the very weak Democrats," Trump tweeted.

"Guess what, that's not going to happen! China has just informed us that they (Vice-Premier) are now coming to the US to make a deal. We'll see, but I am very happy with over $100 Billion a year in Tariffs filling US coffers," he added.

The United States announced on Wednesday it would hike tariffs on $200 billion worth of Chinese imports from 10 to 25 per cent effective Friday, according to a notice posted on the Federal Register.

Sources with knowledge of the talks told that China has sought to alter previously agreed provisions specifying changes to Chinese laws affecting nearly every chapter of a nearly 150-page proposed trade deal between Washington and Beijing.

The changes sought by China would create major hurdles in reaching a deal in two days of talks with Chinese Vice Premier Liu He this week before the tariff increase goes into effect.

US President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports in place, adding that China is mistaken if it hopes to negotiate trade later with a Democratic presidential administration.

US President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports in place, adding that China is mistaken if it hopes to negotiate trade later with a Democratic presidential administration. "The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to 'negotiate' with Joe Biden or one of the very weak Democrats," Trump tweeted. "Guess what, that's not going to happen! China has just informed us that they (Vice-Premier) are now coming to the US to make a deal. We'll see, but I am very happy with over $100 Billion a year in Tariffs filling US coffers," he added. The United States announced on Wednesday it would hike tariffs on $200 billion worth of Chinese imports from 10 to 25 per cent effective Friday, according to a notice posted on the Federal Register. Sources with knowledge of the talks told that China has sought to alter previously agreed provisions specifying changes to Chinese laws affecting nearly every chapter of a nearly 150-page proposed trade deal between Washington and Beijing. The changes sought by China would create major hurdles in reaching a deal in two days of talks with Chinese Vice Premier Liu He this week before the tariff increase goes into effect.

Trump says he would be happy to keep tariffs on Chinese imports in place

<a href="https://www.wionews.com/world/china-considers-cancelling-trade-talks-with-us-after-trump-vows-new-tariff-hike-report-216292">China</a> backtracked on substantial commitments it made during <a href="https://www.wionews.com/world/us-china-trade-dilemma-how-to-hold-beijings-feet-to-the-fire-216010">trade talks with the United States</a>, prompting President Donald Trump to impose additional tariffs on Chinese goods slated to go into effect on Friday, top US&nbsp;trade officials said on Monday.

Also read:&nbsp;<a href="https://www.wionews.com/world/explaining-the-us-china-trade-war-which-grabbed-spotlight-in-2018-185043">Explaining the US-China trade war which grabbed spotlight in 2018</a>

The swift deterioration in negotiations between the world`s two largest economies hit global financial markets as investors faced the prospect of an escalation rather than an end to a 10-month-old trade war.

Trump tweeted on Sunday that he would <a href="https://www.wionews.com/world/trump-announces-higher-us-tariffs-on-china-goods-216186">raise tariffs on $200 billion worth of Chinese goods </a>to 25 per cent from 10 per cent by the end of the week, and would "soon" target the remaining Chinese imports with tariffs, sending stocks and oil prices lower on Monday.

US Trade Representative Robert Lighthizer, who has been an advocate for tough structural changes in China, said Beijing had reneged on commitments it had made previously that would have changed the agreement substantially.

"Over the course of the last week or so we have seen ... an erosion in commitments by China," Lighthizer told reporters. "That in our view is unacceptable."

Chinese Vice Premier Liu He is expected to be in Washington on Thursday and Friday of this week for further talks.

"We`re not breaking off talks at this point. But for now ... come Friday there will be tariffs in place," Lighthizer said.

Treasury Secretary Steven Mnuchin, considered to be less hawkish toward China, said China`s backtracking became clear with "new information" over the weekend. He declined to give specifics and said the US&nbsp;side had originally hoped to conclude a deal one way or the other this week.

"They were trying to go back on language that had been previously negotiated, very clear language, that had the potential of changing the deal dramatically," Mnuchin said. "The entire economic team ... are completely unified and recommended to the president to move forward with tariffs if we are not able to conclude a deal by the end of the week."

A spokesman at the Chinese Embassy in Washington did not immediately respond to queries about the US assertions.

"We are also in the process of understanding the relevant situation. What I can tell you is that China`s team is preparing to go to the United States for the discussions," Chinese Foreign Ministry spokesman Gene Shuang said earlier in Beijing. "We still hope the United States can work hard with China to meet each other halfway, and strive to reach a mutually beneficial, win-win agreement on the basis of mutual respect."

TRUCE ENDS

Trump`s Sunday announcement abruptly ended a five-month truce in a trade war that has cost the two countries billions of dollars, slowed global growth and disrupted manufacturing supply chains and US farm exports.

Businesses, while largely supportive of Trump`s tough stance on China, want the tariffs to be lifted. Mnuchin said on Monday that the stock market reaction was not affecting US decisions on the trade talks.&nbsp;

A person familiar with the negotiations said the latest dispute came after the Chinese side sought to deal with policy changes through administrative and regulatory actions, not through changes to Chinese law as previously agreed.

"It undermines the core architecture of the deal," the person said, adding that not codifying the concessions would make it difficult to verify and enforce China`s compliance.

Speaking on condition of anonymity due to the sensitive nature of the talks, the person said that under China's system in which the Communist Party has ultimate control, changes in law are the only way to get even a small measure of certainty.

The United States is demanding sweeping changes to China`s economic policies, including better protection of US intellectual property, and ending forced technology transfers from US companies and cyber theft of American trade secrets.

Washington also wants more access to China`s vast markets for US businesses, curbs on industrial subsidies and increased purchases of American products.

Another source familiar with the situation said Trump had reiterated to advisers in recent days that he would walk away from a trade deal with China if it was not strong enough.

The United States imported about $539.5 billion in goods from China in 2018 and exported $120.3 billion, for a record trade deficit of $419.2 billion, according to US Census Bureau data.

Trump lashed out over the US trade deficit with China on Monday. "With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!" he tweeted. Trump has said that China was paying existing US tariffs on Chinese imports into the United States, but in reality, mostly US companies importing the goods pay the tariffs.

The United States currently has 25 per cent tariffs on $50 billion worth of Chinese machinery and technology goods, and 10 per cent tariffs on $200 billion worth of products ranging from computer modems and routers to furniture, lighting and building materials.

Negotiations on removing punitive US tariffs has been one of the remaining sticking points. China wants the tariffs to be removed, while US&nbsp;officials want to keep some, if not all, as part of any final deal to ensure China lives up to its commitments.

Mnuchin, who originally had called the talks in Beijing "productive," said Washington had been in the process of planning a summit between Trump and Chinese President Xi Jinping for a successful deal.

China backtracked on substantial commitments it made during trade talks with the United States, prompting President Donald Trump to impose additional tariffs on Chinese goods slated to go into effect on Friday, top US trade officials said on Monday.

China backtracked on substantial commitments it made during trade talks with the United States, prompting President Donald Trump to impose additional tariffs on Chinese goods slated to go into effect on Friday, top US trade officials said on Monday. Also read: Explaining the US-China trade war which grabbed spotlight in 2018 The swift deterioration in negotiations between the world`s two largest economies hit global financial markets as investors faced the prospect of an escalation rather than an end to a 10-month-old trade war. Trump tweeted on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent by the end of the week, and would "soon" target the remaining Chinese imports with tariffs, sending stocks and oil prices lower on Monday. US Trade Representative Robert Lighthizer, who has been an advocate for tough structural changes in China, said Beijing had reneged on commitments it had made previously that would have changed the agreement substantially. "Over the course of the last week or so we have seen ... an erosion in commitments by China," Lighthizer told reporters. "That in our view is unacceptable." Chinese Vice Premier Liu He is expected to be in Washington on Thursday and Friday of this week for further talks. "We`re not breaking off talks at this point. But for now ... come Friday there will be tariffs in place," Lighthizer said. Treasury Secretary Steven Mnuchin, considered to be less hawkish toward China, said China`s backtracking became clear with "new information" over the weekend. He declined to give specifics and said the US side had originally hoped to conclude a deal one way or the other this week. "They were trying to go back on language that had been previously negotiated, very clear language, that had the potential of changing the deal dramatically," Mnuchin said. "The entire economic team ... are completely unified and recommended to the president to move forward with tariffs if we are not able to conclude a deal by the end of the week." A spokesman at the Chinese Embassy in Washington did not immediately respond to queries about the US assertions. "We are also in the process of understanding the relevant situation. What I can tell you is that China`s team is preparing to go to the United States for the discussions," Chinese Foreign Ministry spokesman Gene Shuang said earlier in Beijing. "We still hope the United States can work hard with China to meet each other halfway, and strive to reach a mutually beneficial, win-win agreement on the basis of mutual respect." TRUCE ENDS Trump`s Sunday announcement abruptly ended a five-month truce in a trade war that has cost the two countries billions of dollars, slowed global growth and disrupted manufacturing supply chains and US farm exports. Businesses, while largely supportive of Trump`s tough stance on China, want the tariffs to be lifted. Mnuchin said on Monday that the stock market reaction was not affecting US decisions on the trade talks. A person familiar with the negotiations said the latest dispute came after the Chinese side sought to deal with policy changes through administrative and regulatory actions, not through changes to Chinese law as previously agreed. "It undermines the core architecture of the deal," the person said, adding that not codifying the concessions would make it difficult to verify and enforce China`s compliance. Speaking on condition of anonymity due to the sensitive nature of the talks, the person said that under China's system in which the Communist Party has ultimate control, changes in law are the only way to get even a small measure of certainty. The United States is demanding sweeping changes to China`s economic policies, including better protection of US intellectual property, and ending forced technology transfers from US companies and cyber theft of American trade secrets. Washington also wants more access to China`s vast markets for US businesses, curbs on industrial subsidies and increased purchases of American products. Another source familiar with the situation said Trump had reiterated to advisers in recent days that he would walk away from a trade deal with China if it was not strong enough. The United States imported about $539.5 billion in goods from China in 2018 and exported $120.3 billion, for a record trade deficit of $419.2 billion, according to US Census Bureau data. Trump lashed out over the US trade deficit with China on Monday. "With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!" he tweeted. Trump has said that China was paying existing US tariffs on Chinese imports into the United States, but in reality, mostly US companies importing the goods pay the tariffs. The United States currently has 25 per cent tariffs on $50 billion worth of Chinese machinery and technology goods, and 10 per cent tariffs on $200 billion worth of products ranging from computer modems and routers to furniture, lighting and building materials. Negotiations on removing punitive US tariffs has been one of the remaining sticking points. China wants the tariffs to be removed, while US officials want to keep some, if not all, as part of any final deal to ensure China lives up to its commitments. Mnuchin, who originally had called the talks in Beijing "productive," said Washington had been in the process of planning a summit between Trump and Chinese President Xi Jinping for a successful deal.

China reneged on trade commitments, sparking Trump tariff hike: US officials

US&nbsp;stocks fell on Monday after President Donald Trump pledged to <a href="https://www.wionews.com/world/us-china-reneged-on-trade-commitments-sparking-trump-tariff-hike-216534">raise tariffs on Chinese goods</a>, though Wall Street finished well off its session lows as some investors saw Trump`s comments as a bargaining tactic and expressed confidence in an eventual trade agreement.

But stock futures dropped sharply following the market close after US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said China had moved away from commitments made over the course of trade negotiations. S&amp;P e-minis were last down 1.3%.

Also read:&nbsp;<a href="https://www.wionews.com/world/explaining-the-us-china-trade-war-which-grabbed-spotlight-in-2018-185043">Explaining the US-China trade war which grabbed spotlight in 2018</a>

US negotiators are now recommending an increase in tariffs on Chinese goods if a trade agreement is not reached by Friday. Lighthizer said his office would likely post a notice on Tuesday about the planned increase in tariffs on $200 billion worth of Chinese goods to 25% from 10%.

On Sunday, Trump had said an increase in the tariffs would go into effect, reversing a decision he made in February to retain the tariffs at 10% as the United States and China made progress on trade talks.&nbsp;

China said on Monday that a delegation was still preparing to go to the United States, but did not mention if Vice Premier Liu He, its lead official in the negotiations, would be part of the team as originally planned.

Trump`s comments inflamed fears of a slowdown in global growth, which have periodically roiled markets over the past year. The benchmark S&amp;P 500 fell as much as 1.6% during the session while US&nbsp;Treasury yields dropped as investors turned to low-risk government bonds.

Yet the major indexes recovered much of their losses in afternoon trading as some investors remained hopeful that a trade agreement would soon be reached.

"It seems like a negotiating stance," said David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management`s chief investment office in New York. "Our base case still is that China and the United States do find common ground.

"The probability that there is a negative outcome has probably gone up a little bit, but quantifying that, it`s hard to say," he added.

A rise in healthcare shares helped offset the trade-driven losses. At the Sohn Investment Conference on Monday, Glenview Capital Management Chief Executive Larry Robbins said he favored the sector.

The sector got a further lift as Centene Corp shares rose 6.6% after Reuters reported that two hedge funds have built stakes in the health insurer and are exploring a challenge to its planned acquisition of WellCare Health Plans Inc.

But materials, industrials and technology shares dropped as investors moved away from cyclical and trade-sensitive sectors.

Boeing Co, the single largest US exporter to China, fell 1.3%. Chipmakers, which get a sizable portion of their revenue from China, also tumbled. The Philadelphia chip index slid 1.7%. Apple Inc shares, which have also been sensitive to signs of weakness in China, declined 1.5%.

The Dow Jones Industrial Average fell 66.47 points, or 0.25%, to 26,438.48, the S&amp;P 500 lost 13.17 points, or 0.45%, to 2,932.47 and the Nasdaq Composite dropped 40.71 points, or 0.5%, to 8,123.29.

In a bright spot, Anadarko Petroleum Corp shares rose 3.8% after Occidental Petroleum Corp increased the cash component of its $38 billion bid, removing a need for any deal to receive the approval of Occidental`s shareholders.

Occidental is trying to convince Anadarko to accept its offer and abandon the agreed-upon $33 billion sale to Chevron Corp. Shares of Chevron rose 1.0%.&nbsp;

Declining issues outnumbered advancing ones on the NYSE by a 1.45-to-1 ratio; on Nasdaq, a 1.28-to-1 ratio favored decliners.

The S&amp;P 500 posted 19 new 52-week highs and four new lows; the Nasdaq Composite recorded 69 new highs and 33 new lows.&nbsp;

Volume on US exchanges was 6.45 billion shares, compared to the 6.62 billion average for the full session over the last 20 trading days.

US stocks fell on Monday after President Donald Trump pledged to raise tariffs on Chinese goods, though Wall Street finished well off its session lows as some investors saw Trump`s comments as a bargaining tactic and expressed confidence in an eventual trade agreement.

US stocks fell on Monday after President Donald Trump pledged to raise tariffs on Chinese goods, though Wall Street finished well off its session lows as some investors saw Trump`s comments as a bargaining tactic and expressed confidence in an eventual trade agreement. But stock futures dropped sharply following the market close after US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said China had moved away from commitments made over the course of trade negotiations. S&P e-minis were last down 1.3%. Also read: Explaining the US-China trade war which grabbed spotlight in 2018 US negotiators are now recommending an increase in tariffs on Chinese goods if a trade agreement is not reached by Friday. Lighthizer said his office would likely post a notice on Tuesday about the planned increase in tariffs on $200 billion worth of Chinese goods to 25% from 10%. On Sunday, Trump had said an increase in the tariffs would go into effect, reversing a decision he made in February to retain the tariffs at 10% as the United States and China made progress on trade talks. China said on Monday that a delegation was still preparing to go to the United States, but did not mention if Vice Premier Liu He, its lead official in the negotiations, would be part of the team as originally planned. Trump`s comments inflamed fears of a slowdown in global growth, which have periodically roiled markets over the past year. The benchmark S&P 500 fell as much as 1.6% during the session while US Treasury yields dropped as investors turned to low-risk government bonds. Yet the major indexes recovered much of their losses in afternoon trading as some investors remained hopeful that a trade agreement would soon be reached. "It seems like a negotiating stance," said David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management`s chief investment office in New York. "Our base case still is that China and the United States do find common ground. "The probability that there is a negative outcome has probably gone up a little bit, but quantifying that, it`s hard to say," he added. A rise in healthcare shares helped offset the trade-driven losses. At the Sohn Investment Conference on Monday, Glenview Capital Management Chief Executive Larry Robbins said he favored the sector. The sector got a further lift as Centene Corp shares rose 6.6% after Reuters reported that two hedge funds have built stakes in the health insurer and are exploring a challenge to its planned acquisition of WellCare Health Plans Inc. But materials, industrials and technology shares dropped as investors moved away from cyclical and trade-sensitive sectors. Boeing Co, the single largest US exporter to China, fell 1.3%. Chipmakers, which get a sizable portion of their revenue from China, also tumbled. The Philadelphia chip index slid 1.7%. Apple Inc shares, which have also been sensitive to signs of weakness in China, declined 1.5%. The Dow Jones Industrial Average fell 66.47 points, or 0.25%, to 26,438.48, the S&P 500 lost 13.17 points, or 0.45%, to 2,932.47 and the Nasdaq Composite dropped 40.71 points, or 0.5%, to 8,123.29. In a bright spot, Anadarko Petroleum Corp shares rose 3.8% after Occidental Petroleum Corp increased the cash component of its $38 billion bid, removing a need for any deal to receive the approval of Occidental`s shareholders. Occidental is trying to convince Anadarko to accept its offer and abandon the agreed-upon $33 billion sale to Chevron Corp. Shares of Chevron rose 1.0%. Declining issues outnumbered advancing ones on the NYSE by a 1.45-to-1 ratio; on Nasdaq, a 1.28-to-1 ratio favored decliners. The S&P 500 posted 19 new 52-week highs and four new lows; the Nasdaq Composite recorded 69 new highs and 33 new lows. Volume on US exchanges was 6.45 billion shares, compared to the 6.62 billion average for the full session over the last 20 trading days.

Wall Street falls as White House plans to raise China tariffs

US President Donald Trump says the United States will raise tariffs on $200 billion of Chinese goods from 10 to 25 percent, complaining of a lack of progress in trade talks. "The Trade Deal with China continues, but too slowly, as they attempt to renegotiate.

US President Trump to hike tariffs on $200 bn of China goods

Top US and Chinese<a href="https://www.wionews.com/world/mike-pompeo-confident-china-trade-talks-will-not-be-hurt-over-iran-oil-sanctions-214566"> trade negotiators resumed</a> talks on Wednesday as they an eye an endgame to a months-long dispute that has hit businesses with bruising tariffs.

Vice Premier Liu He, a close aide to President Xi Jinping on economic matters, greeted US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to begin what the US side has described as a decisive phase in the talks.

The world's two leading economies have exchanged tariffs on $360 billion worth of goods since President Donald Trump launched a trade war last year.

Mnuchin and Lighthizer exchanged pleasantries with Liu when they arrived at the Diaoyutai state guest house on Wednesday, with the US treasury chief pointing to his red tie and smiling at the vice premier, who wore the same colour.

"Morning. Good to see you," Liu told the Americans, to which Mnuchin replied: "Nice to see you. It's good to be back here." Mnuchin told reporters earlier that he had a "nice" working dinner with Liu on Tuesday night.

Liu is expected to head to Washington on May 8th for further talks.

The US side is pressing China to overhaul its industrial policy by further opening its market to foreign firms, stopping massive subsidies to domestic companies and curbing the alleged theft of American technology.

Beijing has made public displays of concessions, with Xi last week saying China would abolish "unjustified regulations, subsidies and practices that impede fair competition and distort the market".

China has also passed a foreign investment law that promises to protect the intellectual property of overseas companies.

The Financial Times reported on Wednesday that Trump was dropping a key demand in the negotiations, with the US likely to accept a watered-down commitment from China on commercial cyber theft.

Such a concession could remove a major obstacle for a final deal in the fraught talks.

Mnuchin said earlier this week that the sides were close to agreement on tough enforcement provisions in any trade pact.

He also said the talks were in a decisive phase, telling the Fox Business channel "there's a strong desire from both sides to see if we can wrap this up or move on".

"We hope within the next two rounds -- in China and in DC -- to be at the point where we can either recommend to the president we have a deal or make a recommendation that we don't," he said. 
&nbsp;

Top US and Chinese trade negotiators resumed talks on Wednesday as they an eye an endgame to a months-long dispute that has hit businesses with bruising tariffs.

Top US and Chinese trade negotiators resumed talks on Wednesday as they an eye an endgame to a months-long dispute that has hit businesses with bruising tariffs. Vice Premier Liu He, a close aide to President Xi Jinping on economic matters, greeted US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to begin what the US side has described as a decisive phase in the talks. The world's two leading economies have exchanged tariffs on $360 billion worth of goods since President Donald Trump launched a trade war last year. Mnuchin and Lighthizer exchanged pleasantries with Liu when they arrived at the Diaoyutai state guest house on Wednesday, with the US treasury chief pointing to his red tie and smiling at the vice premier, who wore the same colour. "Morning. Good to see you," Liu told the Americans, to which Mnuchin replied: "Nice to see you. It's good to be back here." Mnuchin told reporters earlier that he had a "nice" working dinner with Liu on Tuesday night. Liu is expected to head to Washington on May 8th for further talks. The US side is pressing China to overhaul its industrial policy by further opening its market to foreign firms, stopping massive subsidies to domestic companies and curbing the alleged theft of American technology. Beijing has made public displays of concessions, with Xi last week saying China would abolish "unjustified regulations, subsidies and practices that impede fair competition and distort the market". China has also passed a foreign investment law that promises to protect the intellectual property of overseas companies. The Financial Times reported on Wednesday that Trump was dropping a key demand in the negotiations, with the US likely to accept a watered-down commitment from China on commercial cyber theft. Such a concession could remove a major obstacle for a final deal in the fraught talks. Mnuchin said earlier this week that the sides were close to agreement on tough enforcement provisions in any trade pact. He also said the talks were in a decisive phase, telling the Fox Business channel "there's a strong desire from both sides to see if we can wrap this up or move on". "We hope within the next two rounds -- in China and in DC -- to be at the point where we can either recommend to the president we have a deal or make a recommendation that we don't," he said.

Good to see you, says Chinese negotiator to Mnuchin as US-China trade talks enter final lap

In early March 2019, President Donald Trump, announced that he would withdraw duty benefits on all imports from India. These benefits had been offered under the Generalised System of Preferences (GSP), a programme that allows duty-free imports of specified goods from beneficiary countries. &nbsp;

The scheme, introduced in 1974, was intended as a way of helping developing nations as well as giving the US manufacturers access to cheap raw material. &nbsp;

The March announcement should not have come as a surprise to India. In November, the US withdrew GSP benefits to some 50 products from India. &nbsp;

Earlier in 2018, the Office of the US Trade Representative (USTR) had begun an eligibility review of India, based on complaints received from US dairy associations and the medical technology association. &nbsp;

The trigger for these trade bodies to focus on India was because India had made it difficult for them to enter the market. &nbsp;

In the case of dairy, India had asked dairy importers to certify their products as being from livestock that had not been fed animal parts. &nbsp;

The reason for this is that dairy products in India are often used in religious rites, and need to be ritually “pure”. &nbsp;

Medical technology companies, meanwhile, have been hit hard by the Indian government providing heavy subsidies on medical equipment in order to make such equipment easily accessible. This “populist” move has meant that American companies cannot charge a premium on their products.

According to the USTR, beneficiary countries under GSP are expected to provide “equitable and reasonable access to its markets” to US companies. &nbsp;

India, however, has imposed several measures that the US considers protectionist, including the two steps mentioned above. &nbsp;

What does this mean for Indian exports? According to the government, very little. &nbsp;

Official sources have downplayed the impact of GSP removal. The numbers they quote seem convincing -- Indian exports to the US are valued at $5.6 billion; Indian trade authorities say that GSP covers some $190 million worth of exports and so the impact of removing India from GSP will be minimal. But any negative impact could hit the country’s balance of trade, and a big trade deficit will hit the GDP. 
 
Exporters will also take a hit. Small and medium enterprises (SMEs) form the bulk of exporters who benefit under GSP, and having to pay duty on their goods could prove too expensive for them. &nbsp;

Many of these exporters are in labour-intensive industries, so if they go out of business, it could hit the labour market as well. Leather and footwear, chemicals, and bulk drugs will be the sectors most affected.

On the whole, other exports will not feel the pinch. However, the fear is that once the US has used GSP as a stick, it will make other exports from India unviable. &nbsp;

In the case of seafood, the US has already imposed stringent import regulations; given that the bulk of Indian seafood exports is to the US, these norms will hit India hard. &nbsp;

There’s also the possibility of the US imposing or increasing anti-dumping duties on a range of other goods.

The impact on exporters will likely be softened over the medium term as these players look at markets outside the US. While China and the US may both be closed to these exporters, there’s still a large market in the rest of the world. &nbsp;

Judging by the state of internal politics, and with elections coming up soon, the GSP issue may soon be buried or resolved to India’s benefit. &nbsp;

That’s because removing India from the GSP will mean that Indian goods will cost more in the US, which means that the cost of raw material for American industry could go up too.

Meanwhile, there are steps India can take to protect its exporters. For one, it can approach the World Trade Organisation. Under the Enabling Clause of the WTO’s General Agreement on Trade and Tariffs (to which both India and the US are signatories), developed countries can offer preferential treatment on a non-reciprocal basis. By removing India from the GSP on the grounds that the country isn’t providing access to its market, the US is violating this GATT clause. &nbsp;

India can take this matter to the WTO and, judging by a past victory against the European Union, win. 
 
(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-india-s-removal-from-gsp-new-delhi-can-move-wto-2740316">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.) 
&nbsp;

&nbsp;

In early March 2019, President Donald Trump, announced that he would withdraw duty benefits on all imports from India. These benefits had been offered under the Generalised System of Preferences (GSP), a programme that allows duty-free imports of specified goods from beneficiary countries.

In early March 2019, President Donald Trump, announced that he would withdraw duty benefits on all imports from India. These benefits had been offered under the Generalised System of Preferences (GSP), a programme that allows duty-free imports of specified goods from beneficiary countries. The scheme, introduced in 1974, was intended as a way of helping developing nations as well as giving the US manufacturers access to cheap raw material. The March announcement should not have come as a surprise to India. In November, the US withdrew GSP benefits to some 50 products from India. Earlier in 2018, the Office of the US Trade Representative (USTR) had begun an eligibility review of India, based on complaints received from US dairy associations and the medical technology association. The trigger for these trade bodies to focus on India was because India had made it difficult for them to enter the market. In the case of dairy, India had asked dairy importers to certify their products as being from livestock that had not been fed animal parts. The reason for this is that dairy products in India are often used in religious rites, and need to be ritually “pure”. Medical technology companies, meanwhile, have been hit hard by the Indian government providing heavy subsidies on medical equipment in order to make such equipment easily accessible. This “populist” move has meant that American companies cannot charge a premium on their products. According to the USTR, beneficiary countries under GSP are expected to provide “equitable and reasonable access to its markets” to US companies. India, however, has imposed several measures that the US considers protectionist, including the two steps mentioned above. What does this mean for Indian exports? According to the government, very little. Official sources have downplayed the impact of GSP removal. The numbers they quote seem convincing -- Indian exports to the US are valued at $5.6 billion; Indian trade authorities say that GSP covers some $190 million worth of exports and so the impact of removing India from GSP will be minimal. But any negative impact could hit the country’s balance of trade, and a big trade deficit will hit the GDP. Exporters will also take a hit. Small and medium enterprises (SMEs) form the bulk of exporters who benefit under GSP, and having to pay duty on their goods could prove too expensive for them. Many of these exporters are in labour-intensive industries, so if they go out of business, it could hit the labour market as well. Leather and footwear, chemicals, and bulk drugs will be the sectors most affected. On the whole, other exports will not feel the pinch. However, the fear is that once the US has used GSP as a stick, it will make other exports from India unviable. In the case of seafood, the US has already imposed stringent import regulations; given that the bulk of Indian seafood exports is to the US, these norms will hit India hard. There’s also the possibility of the US imposing or increasing anti-dumping duties on a range of other goods. The impact on exporters will likely be softened over the medium term as these players look at markets outside the US. While China and the US may both be closed to these exporters, there’s still a large market in the rest of the world. Judging by the state of internal politics, and with elections coming up soon, the GSP issue may soon be buried or resolved to India’s benefit. That’s because removing India from the GSP will mean that Indian goods will cost more in the US, which means that the cost of raw material for American industry could go up too. Meanwhile, there are steps India can take to protect its exporters. For one, it can approach the World Trade Organisation. Under the Enabling Clause of the WTO’s General Agreement on Trade and Tariffs (to which both India and the US are signatories), developed countries can offer preferential treatment on a non-reciprocal basis. By removing India from the GSP on the grounds that the country isn’t providing access to its market, the US is violating this GATT clause. India can take this matter to the WTO and, judging by a past victory against the European Union, win. (This article was originally published on The 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-US trade bumps: New Delhi can move WTO on its removal from GSP

Global growth in 2019 should be even slower than previously expected but a "precarious" rebound later this year is likely, the head of the International Monetary Fund said Tuesday.

In a speech ahead of next week's spring meetings in Washington with the World Bank, IMF chief Christine Lagarde said the world economy was vulnerable to shocks from Brexit, high debt levels and trade tensions, as well as unease on financial markets.

"The expected rebound in global growth this year is precarious," she said in an address at the US Chamber of Commerce. "This is a delicate moment that requires us to handle with care."

Lagarde said the IMF next week was due to cut its global growth forecasts even further than it had in January, with more than two-thirds of the world economy likely to see slowing growth.

Next week's meetings -- a twice-yearly conclave of central bankers and finance ministers -- come with the backdrop of fraught negotiations between Beijing and Washington to resolve their eight-month trade war.

Gloom about slowing growth in Asia, Europe and the United States, as well as the protected US-China trade war, have sparked periodic jitters on markets since last year.

At the start of the year, the fund had already lowered its expectations several notches from a prior outlook, calling for global GDP to expand by 3.5 per cent this year and next.

Elsewhere on Tuesday, the World Trade Organization announced in Geneva it was slashing its 2019 forecast for growth in global trade to 2.6 per cent, down from the 3.7 per cent predicted earlier.

"We had this synchronized acceleration of growth a couple of years ago. Now it's synchronized deceleration," Lagarde said following her speech. "I don't want to be overly dramatic, because we don't see a recession."

A 'monopoly problem'?&nbsp;

But Lagarde pointed to some grounds for optimism, saying major central banks, including the US Federal Reserve, were showing patience about the speed of interest rate increases, while China had moved to stimulate its economy.

She called on member governments to help avert mounting dangers by modernizing tax systems, cutting public debts and reducing wealth inequalities through spending on education, health and infrastructure, recommendations the IMF has made before.

Lagarde repeated warnings about imposing tariffs, saying such barriers to trade were "potentially self-inflicted wounds" that threatened to dent economic growth and leave no winners.

But Lagarde also said governments should address the dangers posed by the concentration of market power in the hands of corporate giants, especially in the tech sector, with major players often able to block out competition and garner the lion's share of profits for themselves.

While IMF research showed this concentration had so far had little effect on business investment, production and worker pay, according to Lagarde, there was still a danger that it could weigh on all of them.

"I am not saying that we currently have a monopoly problem," she said. "But I am saying that we should take appropriate measures so that it does not become a problem."

Speaking to CNBC later, Lagarde also said new IMF research showed that an all-out trade war between the United States and China -- with 25 per cent duties on all traded merchandise -- could shave up to 1.6 per cent off of annual growth in China and 0.6 per cent off US GDP growth.

While there were signs of progress in talks between the United States and China, a deal should be "signed, sealed and delivered" before it can restore certainty to global trade, she added.

Global growth in 2019 should be even slower than previously expected but a "precarious" rebound later this year is likely, the head of the International Monetary Fund said Tuesday.

Global growth in 2019 should be even slower than previously expected but a "precarious" rebound later this year is likely, the head of the International Monetary Fund said Tuesday. In a speech ahead of next week's spring meetings in Washington with the World Bank, IMF chief Christine Lagarde said the world economy was vulnerable to shocks from Brexit, high debt levels and trade tensions, as well as unease on financial markets. "The expected rebound in global growth this year is precarious," she said in an address at the US Chamber of Commerce. "This is a delicate moment that requires us to handle with care." Lagarde said the IMF next week was due to cut its global growth forecasts even further than it had in January, with more than two-thirds of the world economy likely to see slowing growth. Next week's meetings -- a twice-yearly conclave of central bankers and finance ministers -- come with the backdrop of fraught negotiations between Beijing and Washington to resolve their eight-month trade war. Gloom about slowing growth in Asia, Europe and the United States, as well as the protected US-China trade war, have sparked periodic jitters on markets since last year. At the start of the year, the fund had already lowered its expectations several notches from a prior outlook, calling for global GDP to expand by 3.5 per cent this year and next. Elsewhere on Tuesday, the World Trade Organization announced in Geneva it was slashing its 2019 forecast for growth in global trade to 2.6 per cent, down from the 3.7 per cent predicted earlier. "We had this synchronized acceleration of growth a couple of years ago. Now it's synchronized deceleration," Lagarde said following her speech. "I don't want to be overly dramatic, because we don't see a recession." A 'monopoly problem'? But Lagarde pointed to some grounds for optimism, saying major central banks, including the US Federal Reserve, were showing patience about the speed of interest rate increases, while China had moved to stimulate its economy. She called on member governments to help avert mounting dangers by modernizing tax systems, cutting public debts and reducing wealth inequalities through spending on education, health and infrastructure, recommendations the IMF has made before. Lagarde repeated warnings about imposing tariffs, saying such barriers to trade were "potentially self-inflicted wounds" that threatened to dent economic growth and leave no winners. But Lagarde also said governments should address the dangers posed by the concentration of market power in the hands of corporate giants, especially in the tech sector, with major players often able to block out competition and garner the lion's share of profits for themselves. While IMF research showed this concentration had so far had little effect on business investment, production and worker pay, according to Lagarde, there was still a danger that it could weigh on all of them. "I am not saying that we currently have a monopoly problem," she said. "But I am saying that we should take appropriate measures so that it does not become a problem." Speaking to CNBC later, Lagarde also said new IMF research showed that an all-out trade war between the United States and China -- with 25 per cent duties on all traded merchandise -- could shave up to 1.6 per cent off of annual growth in China and 0.6 per cent off US GDP growth. While there were signs of progress in talks between the United States and China, a deal should be "signed, sealed and delivered" before it can restore certainty to global trade, she added.

'Precarious' global rebound expected in late 2019: IMF chief

The US trade deficit dropped nearly 15 per cent in January compared to December, largely due to declining imports from China, the Commerce Department reported Wednesday.

Economists say the decline could help support growth in the first three months of the year, which would be a welcome development amid signs the world's largest economy has peaked.

The drop reversed most of the expansion in the trade gap posted in the final month of 2018, a year that saw the deficit surge to a 10-year record, despite President Donald Trump's aggressive tariff policies.

The trade gap in December surged nearly 19 per cent to $59.9 billion but fell back to $51.1 billion in January, the report said.

Analysts had been expecting a much more modest narrowing of the January deficit, which also was 3.7 per cent smaller than it was a year earlier.

US imports fell 2.6 per cent to $258.5 billion while exports rose just under 1 per cent to $207.3 billion, according to the data.

And the deficit in goods alone with China -- the primary foe in Trump's trade wars -- fell by $5.5 billion in the month to $33.2 billion, according to the report, almost entirely due to declining American purchases of Chinese goods.

The falling average price for oil, which hit the lowest point in three years, also helped narrow the trade gap by $1.4 billion.

In addition to the impact of tariffs on trade with China, the stronger-than-expected decline in the trade deficit could reflect the slowing in the US and global economies.

However, some economists say the smaller trade gap should add to first quarter growth.

Subdued exports

"The data look consistent with net exports adding at least a few tenths to the growth rate in Q1," said Jim O'Sullivan of High Frequency Economics.

Ian Shepherdson of Pantheon Macroeconomics said it is too early to tell the exact impact, but "we’re penciling-in a 0.3 percentage point contribution to GDP growth."

"The record December deficit always looked like an outlier, and data on container movements at major ports pointed clearly to a reversal in January," said Shepherdson, who unlike his counterparts correctly forecast the trade gap.

However, others caution that a cooling global economy means export momentum likely will be subdued, which could lead to a continued rise in the deficit, especially as a strong US dollar makes imports cheaper, despite the impact of tariffs.

US goods exports to China fell to just $7.1 billion, not adjusted for seasonal factors, the lowest since September 2010.

The goods balance with Canada shifted to a surplus of $1.4 billion, while the deficit with Mexico narrowed more than $1.5 billion to $7.2 billion, and with the European Union fell more than $2.5 billion to $13.1 billion.

But in services, where the US is a dominant force, exports were the highest on record at $70 billion, according to the report.

The US trade deficit dropped nearly 15 per cent in January compared to December, largely due to declining imports from China, the Commerce Department reported Wednesday.

The US trade deficit dropped nearly 15 per cent in January compared to December, largely due to declining imports from China, the Commerce Department reported Wednesday. Economists say the decline could help support growth in the first three months of the year, which would be a welcome development amid signs the world's largest economy has peaked. The drop reversed most of the expansion in the trade gap posted in the final month of 2018, a year that saw the deficit surge to a 10-year record, despite President Donald Trump's aggressive tariff policies. The trade gap in December surged nearly 19 per cent to $59.9 billion but fell back to $51.1 billion in January, the report said. Analysts had been expecting a much more modest narrowing of the January deficit, which also was 3.7 per cent smaller than it was a year earlier. US imports fell 2.6 per cent to $258.5 billion while exports rose just under 1 per cent to $207.3 billion, according to the data. And the deficit in goods alone with China -- the primary foe in Trump's trade wars -- fell by $5.5 billion in the month to $33.2 billion, according to the report, almost entirely due to declining American purchases of Chinese goods. The falling average price for oil, which hit the lowest point in three years, also helped narrow the trade gap by $1.4 billion. In addition to the impact of tariffs on trade with China, the stronger-than-expected decline in the trade deficit could reflect the slowing in the US and global economies. However, some economists say the smaller trade gap should add to first quarter growth. Subdued exports "The data look consistent with net exports adding at least a few tenths to the growth rate in Q1," said Jim O'Sullivan of High Frequency Economics. Ian Shepherdson of Pantheon Macroeconomics said it is too early to tell the exact impact, but "we’re penciling-in a 0.3 percentage point contribution to GDP growth." "The record December deficit always looked like an outlier, and data on container movements at major ports pointed clearly to a reversal in January," said Shepherdson, who unlike his counterparts correctly forecast the trade gap. However, others caution that a cooling global economy means export momentum likely will be subdued, which could lead to a continued rise in the deficit, especially as a strong US dollar makes imports cheaper, despite the impact of tariffs. US goods exports to China fell to just $7.1 billion, not adjusted for seasonal factors, the lowest since September 2010. The goods balance with Canada shifted to a surplus of $1.4 billion, while the deficit with Mexico narrowed more than $1.5 billion to $7.2 billion, and with the European Union fell more than $2.5 billion to $13.1 billion. But in services, where the US is a dominant force, exports were the highest on record at $70 billion, according to the report.

US trade deficit drops in January as imports from China fall

The United States is not in a rush to enter into a <a href="https://www.wionews.com/world/explaining-the-us-china-trade-war-which-grabbed-spotlight-in-2018-185043">trade deal </a>with China, the negotiations for which has been undergoing since December last year, US President Donald Trump said.

At the same time, talks with the Chinese on a bilateral trade deal has been going on quite well, Trump said, amid reports that Chinese President Xi Jinping has postponed his trip to the US president's Mar-a-Lago resort in Florida later this month.

"I think things are going along very well. We'll just see what the date is. I'm in no rush. I want the deal to be right, much more importantly. Somebody said I'm in a rush. I'm not in a rush at all," Trump told reporters at the White House.

"Right now, we're getting billions and billions of dollars of tariffs paid into our coffers. I am not in a rush whatsoever. It's got to be the right deal, and it's got to be a good deal for us. And if it's not, we're not going to make that deal. But I will say that deal is going along very nicely," Trump said.

Responding to a question, Trump said his Chinese counterpart does not end up in what he did in Hanoi last month when he walked out of his summit meeting with North Korean leader Kim Jong-un because the deal on the table was not in the best interest of the US.

"I think President Xi saw that I'm somebody that believes in walking when a deal is not done. And, you know, there's always a chance it could happen, and he probably wouldn't want that. That could be a reason," Trump said when asked about the cancellation of his proposed summit with Xi in Mar-a-Lago.

"But we can do it either way. We can have the deal completed and come and sign, or we can get the deal almost completed and negotiate some of the final points. I would prefer that, but it doesn't matter that much,"&nbsp;he said.

Trump said the US economy is doing very good, but that is not the case with China.

"Our country is doing great. China would like to make a deal and we'd like to make a deal. We'll see. We have a very good relationship. I have a very good relationship with President Xi. We're going to see what happens,"&nbsp;he said.

"But it's an exciting time in terms of trade. We just made a deal with Mexico, Canada. We just made a deal with South Korea. We have other deals that we have cooking,"he said.

Trump reiterated the US was being taken advantage of by everybody.

"What was happening to our country on trade was a horrible thing; that this wasn't done years ago. And I'm not talking about the Obama administration. I'm talking about that and plenty of other administrations before it. That they could have allowed this to happen -- we lost, over the last number of years, almost USD 800 billion a year on trade. Who's making these deals"&nbsp;he said.

"So we're making great deals or we're not going to make them at all. We're going to go tariffs,"said the US President.&nbsp;

The United States is not in a rush to enter into a trade deal with China, the negotiations for which has been undergoing since December last year, US President Donald Trump said.

The United States is not in a rush to enter into a trade deal with China, the negotiations for which has been undergoing since December last year, US President Donald Trump said. At the same time, talks with the Chinese on a bilateral trade deal has been going on quite well, Trump said, amid reports that Chinese President Xi Jinping has postponed his trip to the US president's Mar-a-Lago resort in Florida later this month. "I think things are going along very well. We'll just see what the date is. I'm in no rush. I want the deal to be right, much more importantly. Somebody said I'm in a rush. I'm not in a rush at all," Trump told reporters at the White House. "Right now, we're getting billions and billions of dollars of tariffs paid into our coffers. I am not in a rush whatsoever. It's got to be the right deal, and it's got to be a good deal for us. And if it's not, we're not going to make that deal. But I will say that deal is going along very nicely," Trump said. Responding to a question, Trump said his Chinese counterpart does not end up in what he did in Hanoi last month when he walked out of his summit meeting with North Korean leader Kim Jong-un because the deal on the table was not in the best interest of the US. "I think President Xi saw that I'm somebody that believes in walking when a deal is not done. And, you know, there's always a chance it could happen, and he probably wouldn't want that. That could be a reason," Trump said when asked about the cancellation of his proposed summit with Xi in Mar-a-Lago. "But we can do it either way. We can have the deal completed and come and sign, or we can get the deal almost completed and negotiate some of the final points. I would prefer that, but it doesn't matter that much," he said. Trump said the US economy is doing very good, but that is not the case with China. "Our country is doing great. China would like to make a deal and we'd like to make a deal. We'll see. We have a very good relationship. I have a very good relationship with President Xi. We're going to see what happens," he said. "But it's an exciting time in terms of trade. We just made a deal with Mexico, Canada. We just made a deal with South Korea. We have other deals that we have cooking,"he said. Trump reiterated the US was being taken advantage of by everybody. "What was happening to our country on trade was a horrible thing; that this wasn't done years ago. And I'm not talking about the Obama administration. I'm talking about that and plenty of other administrations before it. That they could have allowed this to happen -- we lost, over the last number of years, almost USD 800 billion a year on trade. Who's making these deals" he said. "So we're making great deals or we're not going to make them at all. We're going to go tariffs,"said the US President.

Not rushing to have trade deal with China: Trump

China's exports tumbled the most in<a href="http://www.wionews.com/business-economy/china-economy-grew-at-slowest-pace-in-28-years-in-2018-191687"> three years in February while imports</a> fell for a third straight month, pointing to a further slowdown in the economy despite a spate of support measures.

Global investors and <a href="http://www.wionews.com/business-economy/weakness-in-china-economy-gives-beijing-incentive-for-trade-deal-trump-188582">China's major trading partners </a>are closely watching to see how quickly its economy is cooling after growth slowed to a near 30-year-low in 2018.

February exports fell 20.7 per cent from a year earlier, the largest decline since February 2016, customs data showed on Friday.

Imports fell 5.2 per cent from a year earlier, worse than analysts' forecasts for a 1.4 per cent fall and widening from January's 1.5 per cent drop.

That left the country with a trade surplus of $4.12 billion for the month, much smaller than forecasts of $26.38 billion.

Analysts warn that data from China in the first two months of the year should be read with caution due to business disruptions caused by the long Lunar New Year holidays, which came in mid-February in 2018 but started on February&nbsp;4th this year.

But many China watchers had expected a weak start to the year for the world's largest trading nations as factory surveys showed dwindling domestic and export orders and the Sino-US&nbsp;trade war dragged on.

US&nbsp;President Donald Trump said on Wednesday that trade talks with China were moving along well and predicted either a "good deal" or no deal between the world's two largest economies.

Trump postponed a sharp US&nbsp;tariff hike slated for early March as the talks progressed, but both Washington and Beijing have kept previous tariffs in place. At the same time, global demand has been weakening, particularly in Europe.

Before trade tensions sharply escalated last year, China's economy was already slowing, in part due to a clampdown on riskier lending that starved smaller, private companies of financing and stifled investment.

The government is targeting economic growth of 6.0 to 6.5 per cent in 2019, Premier Li Keqiang said at Tuesday's opening of the annual meeting of China's parliament, a lower target than set for 2018.

China's exports tumbled the most in three years in February while imports fell for a third straight month, pointing to a further slowdown in the economy despite a spate of support measures.

China's exports tumbled the most in three years in February while imports fell for a third straight month, pointing to a further slowdown in the economy despite a spate of support measures. Global investors and China's major trading partners are closely watching to see how quickly its economy is cooling after growth slowed to a near 30-year-low in 2018. February exports fell 20.7 per cent from a year earlier, the largest decline since February 2016, customs data showed on Friday. Imports fell 5.2 per cent from a year earlier, worse than analysts' forecasts for a 1.4 per cent fall and widening from January's 1.5 per cent drop. That left the country with a trade surplus of $4.12 billion for the month, much smaller than forecasts of $26.38 billion. Analysts warn that data from China in the first two months of the year should be read with caution due to business disruptions caused by the long Lunar New Year holidays, which came in mid-February in 2018 but started on February 4th this year. But many China watchers had expected a weak start to the year for the world's largest trading nations as factory surveys showed dwindling domestic and export orders and the Sino-US trade war dragged on. US President Donald Trump said on Wednesday that trade talks with China were moving along well and predicted either a "good deal" or no deal between the world's two largest economies. Trump postponed a sharp US tariff hike slated for early March as the talks progressed, but both Washington and Beijing have kept previous tariffs in place. At the same time, global demand has been weakening, particularly in Europe. Before trade tensions sharply escalated last year, China's economy was already slowing, in part due to a clampdown on riskier lending that starved smaller, private companies of financing and stifled investment. The government is targeting economic growth of 6.0 to 6.5 per cent in 2019, Premier Li Keqiang said at Tuesday's opening of the annual meeting of China's parliament, a lower target than set for 2018.

Amid trade war, China's exports fall to three-year low; imports slip for third straight month

OECD lowers global growth forecast over trade, Brexit uncertainty

By James L Anderson

The original March 1 deadline has passed as the United States and China hash out a trade deal amid deadlocked negotiations.

Any US-China trade deal likely falls short compared to what the Trans-Pacific Partnership (TPP) could have been.

Within current talks, Donald Trump’s administration is focused on greater access to subsidised Chinese industries and addressing intellectual property theft linked to alleged forced technology transfers to China. All of this has an impact on America’s economic competitiveness in the short term.

But is the US adequately managing long-term Chinese efforts to don the mantle of global leader?

On the third day of his administration in 2017, Trump honoured a campaign promise by withdrawing from the contentious TPP. The historic 12-nation agreement was on track to cover roughly 40 per cent of the global economy.

Democrats and some Republicans in Congress, advocacy groups and some members of the American public flatly opposed the agreement. Concerns about the oversized influence of multinational corporations and the controversial investor-state dispute process was a feature of the public discourse.

Lost opportunity to rein in China?

But America may have missed a window of opportunity to curb China’s rise when it pulled out of the TPP.

Scholars Graham Allison and Kori Schake have grappled over if and how China can replace America as the world’s ranking power. Allison’s recent work, Destined for War, discusses the “windows of opportunity” the US can exploit to slow the pace of the rising power.

If history is any credible guide, the transition from Pax Britannica to Pax Americana may help US policy-makers and the public alike to understand the imperatives that surround China’s rise.

At the turn of the 20th century, America had unprecedented growth, thanks to Alfred Thayer Mahan’s vision of American sea power. And in the early years between the two World Wars, the United States, Great Britain and Japan headlined a global naval arms race.

In 1921, President Warren Harding held the Washington Naval Conference to disarm tensions among the competing navies in the Pacific. The naval powers agreed to discontinue their shipbuilding programmes and capped their naval fleets in the region. America also protected holdings in East Asia from the threat of a rising Japan.

The agreement was a triumph for America. But for Britain, their naval power was now at “eye level” with the United States.

The UK could not challenge the US

An overstretched Britain had neither the political will nor the financial ability to oppose America’s demands, aware that an arms race with the U.S. would likely bankrupt the British economy.

Pax Britannica, a symbol of Britain’s naval dominance, was forced to deliberately accommodate America’s rise. Britain’s reduced Pacific fleet and degraded Anglo-Japanese relations marked a turning point in America’s ascendancy.

It was not the first time Britain missed an opportunity to slow America’s rise. The American Civil War offered the chance, but Britain decided against joining on behalf of the Confederacy due to the issue of slavery. Schake also notes the Venezuela crisis of 1895 marked an early turning point in the leadership transition. This could have also been a window of opportunity.

How does this apply to current US-China relations? The “battleground” remains the same as in 1921; instead, China plans to supplant America to become the global leader.

Barack Obama’s administration crafted the TPP as a geopolitical instrument to halt China’s plans. It presented east and southeast Asian nations with an alternative to China’s coercive diplomacy in the region, such as in the case of Sri Lanka.

Reducing trade barriers had the potential to provide America with greater investment opportunities in the Asia-Pacific region. It could have weakened China’s diplomatic clout while also creating economic incentives for American investment in the area. It exploited a window of opportunity that targeted the source of China’s rise — its economy.

Pulling out of the TPP was not solely a product of the current administration —a Hillary Clinton administration may have withdrawn too. America’s anti-free trade mood reflects the priority of the public and lawmakers, which is to preserve US jobs and sovereignty.

Shifts in global power are afoot

But shifts in global power may be underway with implications beyond what happens on the home front. A tech Cold War is brewing, China’s plans for expansion under the Belt and Road initiative continue and South China Sea claims are an extension of China’s sovereignty.

The rebooted TPP, the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership, is likely to reduce barriers to trade and increase investment opportunities across Asia and Latin America for its member countries, including Canada.

But the agreement, without US representation, hardly lives up to America’s once-desired aim to create a trade zone in a large swath of East Asia that would isolate China while addressing the global power shifts underway. A renegotiated CPTPP, with American backing, may have even strengthened the Trump administration’s position in its current trade negotiations with the Chinese.

The UK was unable to prevent the last global leadership transition due to missed windows of opportunity and deliberate accommodation. An America that views China’s rise through a short-term bilateral lens runs the risk of accidentally accommodating Chinese efforts to replace America.

Taking advantage of a window of opportunity may be key to curbing the next global leadership transition —and the CPTPP may be the window that America needs before we are forced to accommodate to China’s interests. The US should reconsider joining the pact if it wants any shot at slowing China’s rise.

(James L Anderson is Visiting Fulbright Fellow at Centre for International and Defence Policy, Queen's University, Ontario)

(This article was originally published on the Conversation. Read the <a href="https://theconversation.com/a-u-s-china-trade-deal-does-not-slow-chinas-rise-111971">original article)</a>

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

By James L Anderson The original March 1 deadline has passed as the United States and China hash out a trade deal amid deadlocked negotiations. Any US-China trade deal likely falls short compared to what the Trans-Pacific Partnership (TPP) could have been.

By James L Anderson The original March 1 deadline has passed as the United States and China hash out a trade deal amid deadlocked negotiations. Any US-China trade deal likely falls short compared to what the Trans-Pacific Partnership (TPP) could have been. Within current talks, Donald Trump’s administration is focused on greater access to subsidised Chinese industries and addressing intellectual property theft linked to alleged forced technology transfers to China. All of this has an impact on America’s economic competitiveness in the short term. But is the US adequately managing long-term Chinese efforts to don the mantle of global leader? On the third day of his administration in 2017, Trump honoured a campaign promise by withdrawing from the contentious TPP. The historic 12-nation agreement was on track to cover roughly 40 per cent of the global economy. Democrats and some Republicans in Congress, advocacy groups and some members of the American public flatly opposed the agreement. Concerns about the oversized influence of multinational corporations and the controversial investor-state dispute process was a feature of the public discourse. Lost opportunity to rein in China? But America may have missed a window of opportunity to curb China’s rise when it pulled out of the TPP. Scholars Graham Allison and Kori Schake have grappled over if and how China can replace America as the world’s ranking power. Allison’s recent work, Destined for War, discusses the “windows of opportunity” the US can exploit to slow the pace of the rising power. If history is any credible guide, the transition from Pax Britannica to Pax Americana may help US policy-makers and the public alike to understand the imperatives that surround China’s rise. At the turn of the 20th century, America had unprecedented growth, thanks to Alfred Thayer Mahan’s vision of American sea power. And in the early years between the two World Wars, the United States, Great Britain and Japan headlined a global naval arms race. In 1921, President Warren Harding held the Washington Naval Conference to disarm tensions among the competing navies in the Pacific. The naval powers agreed to discontinue their shipbuilding programmes and capped their naval fleets in the region. America also protected holdings in East Asia from the threat of a rising Japan. The agreement was a triumph for America. But for Britain, their naval power was now at “eye level” with the United States. The UK could not challenge the US An overstretched Britain had neither the political will nor the financial ability to oppose America’s demands, aware that an arms race with the U.S. would likely bankrupt the British economy. Pax Britannica, a symbol of Britain’s naval dominance, was forced to deliberately accommodate America’s rise. Britain’s reduced Pacific fleet and degraded Anglo-Japanese relations marked a turning point in America’s ascendancy. It was not the first time Britain missed an opportunity to slow America’s rise. The American Civil War offered the chance, but Britain decided against joining on behalf of the Confederacy due to the issue of slavery. Schake also notes the Venezuela crisis of 1895 marked an early turning point in the leadership transition. This could have also been a window of opportunity. How does this apply to current US-China relations? The “battleground” remains the same as in 1921; instead, China plans to supplant America to become the global leader. Barack Obama’s administration crafted the TPP as a geopolitical instrument to halt China’s plans. It presented east and southeast Asian nations with an alternative to China’s coercive diplomacy in the region, such as in the case of Sri Lanka. Reducing trade barriers had the potential to provide America with greater investment opportunities in the Asia-Pacific region. It could have weakened China’s diplomatic clout while also creating economic incentives for American investment in the area. It exploited a window of opportunity that targeted the source of China’s rise — its economy. Pulling out of the TPP was not solely a product of the current administration —a Hillary Clinton administration may have withdrawn too. America’s anti-free trade mood reflects the priority of the public and lawmakers, which is to preserve US jobs and sovereignty. Shifts in global power are afoot But shifts in global power may be underway with implications beyond what happens on the home front. A tech Cold War is brewing, China’s plans for expansion under the Belt and Road initiative continue and South China Sea claims are an extension of China’s sovereignty. The rebooted TPP, the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership, is likely to reduce barriers to trade and increase investment opportunities across Asia and Latin America for its member countries, including Canada. But the agreement, without US representation, hardly lives up to America’s once-desired aim to create a trade zone in a large swath of East Asia that would isolate China while addressing the global power shifts underway. A renegotiated CPTPP, with American backing, may have even strengthened the Trump administration’s position in its current trade negotiations with the Chinese. The UK was unable to prevent the last global leadership transition due to missed windows of opportunity and deliberate accommodation. An America that views China’s rise through a short-term bilateral lens runs the risk of accidentally accommodating Chinese efforts to replace America. Taking advantage of a window of opportunity may be key to curbing the next global leadership transition —and the CPTPP may be the window that America needs before we are forced to accommodate to China’s interests. The US should reconsider joining the pact if it wants any shot at slowing China’s rise. (James L Anderson is Visiting Fulbright Fellow at Centre for International and Defence Policy, Queen's University, Ontario) (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)

A US-China trade deal does not slow China’s rise

The United States and China appear close to a deal that would roll back US tariffs on at least $200 billion worth of Chinese goods, as Beijing makes pledges on structural economic changes and eliminates retaliatory tariffs on US&nbsp;goods, a source briefed on negotiations said on Sunday.

US President Donald Trump and Chinese President Xi Jinping could seal a formal trade deal at a summit around March 27 given progress in talks between the two countries, the Wall Street Journal reported on Sunday.

In an eight-month trade war, the United States has imposed punitive tariffs on $250 billion worth of imports from China, while Beijing has hit back with tariffs on $110 billion worth of U.S. goods, including soybeans and other commodities. The actions have roiled financial markets, disrupted manufacturing supply chains and reduced U.S. farm exports.

Trump administration officials have said they expect the two presidents to "close" a deal at a summit in coming weeks at Trump's Mar-a-Lago estate in Florida.

The source briefed on the talks said that no dates for a summit had been determined, but that Beijing had reserved a 10-day window from around March 20 for a possible summit.

Many details still needed to be worked out, including the terms of an enforcement mechanism to ensure that Beijing follows through on pledges to make changes to policies to better protect US intellectual property, end forced technology transfers and curb industrial subsidies.

Another source familiar with the talks said that Washington and Beijing were close to agreement on non-enforcement issues, including China's pledges to increase purchases of farm, energy and manufactured products, as well as six agreements on structural policy changes.

The Wall Street Journal said that in the pending agreement, China would lower tariffs on US-made goods including agricultural products, chemicals and cars in exchange for sanctions relief from Washington, citing people briefed on the matter on both sides.

The newspaper's sources cautioned that hurdles remain, and each side faces possible resistance at home that the terms are too favourable to the other side.

As a part of the deal there would be an $18 billion purchase of natural-gas from Houston-based Cheniere Energy Inc, the report said.

Cheniere declined to comment on the potential for a new LNG supply deal with China, a spokesman said. It last year signed a 20-year deal to supply state-run Chinese National Petroleum Corp (CNPC) with natural gas from its Louisiana export terminal through 2043.

The United States is working to hammer out a detailed trade agreement with China that will include specific structural commitments, U.S. Treasury Secretary Steven Mnuchin told CNBC on Thursday.

Last week, Trump said the U.S. could walk away from a trade deal with China if it were not good enough, even as his economic advisers touted "fantastic" progress towards an agreement to end the dispute with Beijing.

Trump a week ago delayed a tariff increase on $200 billion in Chinese goods that was previously scheduled to take place on Saturday, citing progress in the talks.

The United States and China appear close to a deal that would roll back US tariffs on at least $200 billion worth of Chinese goods, as Beijing makes pledges on structural economic changes and eliminates retaliatory tariffs on US goods, a source briefed on negotiations said on Sunday.

The United States and China appear close to a deal that would roll back US tariffs on at least $200 billion worth of Chinese goods, as Beijing makes pledges on structural economic changes and eliminates retaliatory tariffs on US goods, a source briefed on negotiations said on Sunday. US President Donald Trump and Chinese President Xi Jinping could seal a formal trade deal at a summit around March 27 given progress in talks between the two countries, the Wall Street Journal reported on Sunday. In an eight-month trade war, the United States has imposed punitive tariffs on $250 billion worth of imports from China, while Beijing has hit back with tariffs on $110 billion worth of U.S. goods, including soybeans and other commodities. The actions have roiled financial markets, disrupted manufacturing supply chains and reduced U.S. farm exports. Trump administration officials have said they expect the two presidents to "close" a deal at a summit in coming weeks at Trump's Mar-a-Lago estate in Florida. The source briefed on the talks said that no dates for a summit had been determined, but that Beijing had reserved a 10-day window from around March 20 for a possible summit. Many details still needed to be worked out, including the terms of an enforcement mechanism to ensure that Beijing follows through on pledges to make changes to policies to better protect US intellectual property, end forced technology transfers and curb industrial subsidies. Another source familiar with the talks said that Washington and Beijing were close to agreement on non-enforcement issues, including China's pledges to increase purchases of farm, energy and manufactured products, as well as six agreements on structural policy changes. The Wall Street Journal said that in the pending agreement, China would lower tariffs on US-made goods including agricultural products, chemicals and cars in exchange for sanctions relief from Washington, citing people briefed on the matter on both sides. The newspaper's sources cautioned that hurdles remain, and each side faces possible resistance at home that the terms are too favourable to the other side. As a part of the deal there would be an $18 billion purchase of natural-gas from Houston-based Cheniere Energy Inc, the report said. Cheniere declined to comment on the potential for a new LNG supply deal with China, a spokesman said. It last year signed a 20-year deal to supply state-run Chinese National Petroleum Corp (CNPC) with natural gas from its Louisiana export terminal through 2043. The United States is working to hammer out a detailed trade agreement with China that will include specific structural commitments, U.S. Treasury Secretary Steven Mnuchin told CNBC on Thursday. Last week, Trump said the U.S. could walk away from a trade deal with China if it were not good enough, even as his economic advisers touted "fantastic" progress towards an agreement to end the dispute with Beijing. Trump a week ago delayed a tariff increase on $200 billion in Chinese goods that was previously scheduled to take place on Saturday, citing progress in the talks.

US and China said to appear close to deal to roll back tariffs

President Donald Trump said on Friday there was "a very good chance" the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese President Xi Jinping.

US&nbsp;and Chinese negotiators had made progress and will extend this week's round of negotiations by two days through Sunday, Trump told reporters at the White House as he met with his top negotiators and their counterpart, Chinese Vice Premier Liu He.

"I think that we both feel there's a very good chance a deal will happen," Trump said.

Liu agreed there had been "great progress".

"From China, we believe that (it) is very likely that it will happen and we hope that ultimately we'll have a deal. And the Chinese side is ready to make our utmost effort," he said at the White House.

The Republican president said he probably would meet with Xi in March in Florida to decide on the most important terms of a trade deal.

Extending the deadline would put on hold Trump's threatened tariff increase to 25 percent from 10 percent on $200 billion of Chinese imports into the United States.

That would prevent a further escalation in a trade war that already has disrupted commerce in goods worth hundreds of billions of dollars, slowed global economic growth and roiled markets.

Optimism that the two sides will find a way to end the trade war lifted stocks, especially technology shares. The S&amp;P 500 stock index reached its highest closing level since Nov. 8. Oil prices rose to their highest since mid-November, with Brent crude reaching a high of $67.73 a barrel.

Currency agreement&nbsp;

Trump and Treasury Secretary Steven Mnuchin said the two sides had reached an agreement on currency. Trump declined to provide details, but US&nbsp;officials long have expressed concerns that China's yuan is undervalued, giving China a trade advantage and partly offsetting US&nbsp;tariffs.

Announcement of a pact aimed at limiting yuan depreciation was putting "the currency cart before the trade horse," but would likely be positive for Asian emerging market currencies, said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.

"How can you agree to avoid excessive Chinese yuan depreciation or volatility if you have not made an agreement on trade that could have huge FX implications?" Ruskin asked in a note to clients.

In a letter to Trump read aloud by an aide to Liu at the White House, Xi called on negotiators to work hard to strike a deal that benefits both country.

Trump said a deal with China may extend beyond trade to encompass Chinese telecommunications companies Huawei Technologies and ZTE Corp.

The Justice Department has accused Huawei of conspiring to violate US&nbsp;sanctions on Iran and of stealing robotic technology from T-Mobile US Inc.

Chinese peer ZTE was last year prevented from buying essential components from US&nbsp;firms after pleading guilty to similar charges, crippling its operations.

MEMORANDUMS NO MORE

Trump appeared at odds with his top negotiator, US&nbsp;Trade Representative Robert Lighthizer, on the preliminary terms that his team is outlining in memorandums of understanding for a deal with China. Trump said he did not like MOUs because they are short term, and he wanted a long-term deal.

"I don't like MOUs because they don't mean anything," Trump said. "Either you are going to make a deal or you're not."

Lighthizer responded testily that MOUs were binding, but that he would never use the term again.

Reuters reported exclusively on Wednesday that the two sides were drafting the language for six MOUs covering the most difficult issues in the trade talks that would require structural economic change in China.

Negotiators have struggled this week to agree on specific language within those memorandums to address tough US&nbsp;demands, according to sources familiar with the talks. The six memorandums include cyber theft, intellectual property rights, services, agriculture and non-tariff barriers to trade, including subsidies.

An industry source briefed on the talks said both sides have narrowed differences on intellectual property rights, market access and narrowing a nearly $400 billion US&nbsp;trade deficit with China. But bigger differences remain on changes to China's treatment of state-owned enterprises, subsidies, forced technology transfers and cyber theft of US&nbsp;trade secrets.

Lighthizer pushed back when questioned on forced technology transfers, saying the two sides made "a lot of progress" on the issue, but did not elaborate.

The United States has said foreign firms in China are often coerced to transfer their technology to Chinese firms if they want to operate there. China denies this.

The US&nbsp;Chamber of Commerce on Friday urged the US&nbsp;government to ensure the deal was comprehensive and addressed core issues, rather than one based on more Chinese short-term purchases of goods.

China has pledged to increase purchases of agricultural produce, energy, semiconductors and industrial goods to reduce its trade surplus with the United States.

China committed to buying an additional 10 million tonnes of US&nbsp;soybeans on Friday, US&nbsp;Agriculture Secretary Sonny Perdue said on Twitter. China bought about 32 million tonnes of US&nbsp;soybeans in 2017. The commitments are a "show of good faith by the Chinese" and "indications of more good news to come," Perdue wrote.

China was the top buyer of US&nbsp;soybeans before the trade war, but Beijing's retaliatory tariffs on US&nbsp;soybeans slashed business that had been worth $12 billion annually.

President Donald Trump said on Friday there was "a very good chance" the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese President Xi Jinping.

President Donald Trump said on Friday there was "a very good chance" the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese President Xi Jinping. US and Chinese negotiators had made progress and will extend this week's round of negotiations by two days through Sunday, Trump told reporters at the White House as he met with his top negotiators and their counterpart, Chinese Vice Premier Liu He. "I think that we both feel there's a very good chance a deal will happen," Trump said. Liu agreed there had been "great progress". "From China, we believe that (it) is very likely that it will happen and we hope that ultimately we'll have a deal. And the Chinese side is ready to make our utmost effort," he said at the White House. The Republican president said he probably would meet with Xi in March in Florida to decide on the most important terms of a trade deal. Extending the deadline would put on hold Trump's threatened tariff increase to 25 percent from 10 percent on $200 billion of Chinese imports into the United States. That would prevent a further escalation in a trade war that already has disrupted commerce in goods worth hundreds of billions of dollars, slowed global economic growth and roiled markets. Optimism that the two sides will find a way to end the trade war lifted stocks, especially technology shares. The S&P 500 stock index reached its highest closing level since Nov. 8. Oil prices rose to their highest since mid-November, with Brent crude reaching a high of $67.73 a barrel. Currency agreement Trump and Treasury Secretary Steven Mnuchin said the two sides had reached an agreement on currency. Trump declined to provide details, but US officials long have expressed concerns that China's yuan is undervalued, giving China a trade advantage and partly offsetting US tariffs. Announcement of a pact aimed at limiting yuan depreciation was putting "the currency cart before the trade horse," but would likely be positive for Asian emerging market currencies, said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York. "How can you agree to avoid excessive Chinese yuan depreciation or volatility if you have not made an agreement on trade that could have huge FX implications?" Ruskin asked in a note to clients. In a letter to Trump read aloud by an aide to Liu at the White House, Xi called on negotiators to work hard to strike a deal that benefits both country. Trump said a deal with China may extend beyond trade to encompass Chinese telecommunications companies Huawei Technologies and ZTE Corp. The Justice Department has accused Huawei of conspiring to violate US sanctions on Iran and of stealing robotic technology from T-Mobile US Inc. Chinese peer ZTE was last year prevented from buying essential components from US firms after pleading guilty to similar charges, crippling its operations. MEMORANDUMS NO MORE Trump appeared at odds with his top negotiator, US Trade Representative Robert Lighthizer, on the preliminary terms that his team is outlining in memorandums of understanding for a deal with China. Trump said he did not like MOUs because they are short term, and he wanted a long-term deal. "I don't like MOUs because they don't mean anything," Trump said. "Either you are going to make a deal or you're not." Lighthizer responded testily that MOUs were binding, but that he would never use the term again. Reuters reported exclusively on Wednesday that the two sides were drafting the language for six MOUs covering the most difficult issues in the trade talks that would require structural economic change in China. Negotiators have struggled this week to agree on specific language within those memorandums to address tough US demands, according to sources familiar with the talks. The six memorandums include cyber theft, intellectual property rights, services, agriculture and non-tariff barriers to trade, including subsidies. An industry source briefed on the talks said both sides have narrowed differences on intellectual property rights, market access and narrowing a nearly $400 billion US trade deficit with China. But bigger differences remain on changes to China's treatment of state-owned enterprises, subsidies, forced technology transfers and cyber theft of US trade secrets. Lighthizer pushed back when questioned on forced technology transfers, saying the two sides made "a lot of progress" on the issue, but did not elaborate. The United States has said foreign firms in China are often coerced to transfer their technology to Chinese firms if they want to operate there. China denies this. The US Chamber of Commerce on Friday urged the US government to ensure the deal was comprehensive and addressed core issues, rather than one based on more Chinese short-term purchases of goods. China has pledged to increase purchases of agricultural produce, energy, semiconductors and industrial goods to reduce its trade surplus with the United States. China committed to buying an additional 10 million tonnes of US soybeans on Friday, US Agriculture Secretary Sonny Perdue said on Twitter. China bought about 32 million tonnes of US soybeans in 2017. The commitments are a "show of good faith by the Chinese" and "indications of more good news to come," Perdue wrote. China was the top buyer of US soybeans before the trade war, but Beijing's retaliatory tariffs on US soybeans slashed business that had been worth $12 billion annually.

There's very good chance a deal will happen: Trump on ending trade war with China

While there is no such thing as “free trade”, but freer trade, which gained impetus after the second world war has not only raised world output, among other things but raised, also lifted millions out of poverty. Underpinned and promoted by an institutional firmament, especially the World Trade Organisation (WTO), whose precursor was the General Agreement on Trade and Tariffs (GATT),&nbsp;and what has been termed as the “liberal world order”, the freer trade paradigm is under serious threat. This holds despite US president Donald Trump’s assurances that trade talks between the United States and China were going on well and the March 1 deadline for tariffs might be extended.

The backdrop to the threat to freer trade is a mélange of the 2008 financial crisis, the assumption of Donald Trump to the highest office in the United States, with the concomitant rise of protectionism and mercantilism, or in other words, the primacy of the nation-state over a more open trading and even world order. The paradox here is that the United States, which led and pioneered the liberal economic and political world order and whose support for it was essential, benefited from an open economic order but is now retreating from it. The reasons pertain not to economics but to political economy.

While broad benefits accrue from freer trade, but it has both distributional and other economic consequences in terms of both “winners” and “losers”. This has been poignant in the United States where the distributional consequences of freer trade were acutely and intensely felt by those left behind by the gale of trade. The base brought Trump to power who, in his campaign pledges, promised to unwind the trade bargains and pacts and “make America great again(MAGA). In lieu of his pledges, Trump picked a trade fight with China and also attempted to rejigg trade between the United States, Canada and Mexico. The result has been a disruption that might feel good to some, but throws a spanner into the works of freer trade.

This insalubrious development is not only ominous but potentially threatens to roll back the stupendous gains made so far throwing into jeopardy human welfare. The question is: can freer trade be salvaged?&nbsp;

Yes. It can and it will perhaps gyrate to a dynamic of its own.&nbsp;

The reasons accrue from the nature of the 21st-century economy which is both a knowledge and a “gig” economy and the widgets, nuts and bolts one too. Trump’s focus till now has been the relocation of manufacturing to the United States. But, the country’s economy and even the global economy in which it is enmeshed has moved on. Profound and staggering developments in the Information, Communications and Technologies (ICTs), automation, robotics and Artificial Intelligence(AI) mean that the name of the game is different, especially in the developed world. This is not to demean the nuts and bolts economy which is and will remain relevant but it will be a complement to changes elsewhere. It is here that the United States, the world’s largest economy, must focus on instead of adopting a protectionist mercantilist paradigm.&nbsp;

The nature of this approach should be to reorient the country’s educational institutions and skill development in tune with the demands and the needs of the 21st century. A political price might have to made here but from a long duree perspective, it is the adoption of this particular approach that would be more sustainable and yield rewards both to the United States and the world, at large.

But, importantly, an important structural complement to the suggested paradigm, should be the creation of safety nets for those who are likely to be left behind by what is a veritable gale of “creative destruction” in the offing. 
 
Cumulatively, a novel approach toward education, skill development and a safety net could lead to a condition that would be win-win and offset the losses from freer trade. There would also ensue global prosperity which could undercut migratory pressures to both the developed world and the United States, in particular.

In the final analysis, freer trade is a blessing that has proved to be a boon for mankind. It would be a sheer travesty if its momentum is derailed, even if temporarily. What is required,&nbsp;at this delicate point in world history, is far-sighted and deft leadership that is both particular and general.&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

While there is no such thing as “free trade”, but freer trade, which gained impetus after the second world war has not only raised world output, among other things but raised, also lifted millions out of poverty.

While there is no such thing as “free trade”, but freer trade, which gained impetus after the second world war has not only raised world output, among other things but raised, also lifted millions out of poverty. Underpinned and promoted by an institutional firmament, especially the World Trade Organisation (WTO), whose precursor was the General Agreement on Trade and Tariffs (GATT), and what has been termed as the “liberal world order”, the freer trade paradigm is under serious threat. This holds despite US president Donald Trump’s assurances that trade talks between the United States and China were going on well and the March 1 deadline for tariffs might be extended. The backdrop to the threat to freer trade is a mélange of the 2008 financial crisis, the assumption of Donald Trump to the highest office in the United States, with the concomitant rise of protectionism and mercantilism, or in other words, the primacy of the nation-state over a more open trading and even world order. The paradox here is that the United States, which led and pioneered the liberal economic and political world order and whose support for it was essential, benefited from an open economic order but is now retreating from it. The reasons pertain not to economics but to political economy. While broad benefits accrue from freer trade, but it has both distributional and other economic consequences in terms of both “winners” and “losers”. This has been poignant in the United States where the distributional consequences of freer trade were acutely and intensely felt by those left behind by the gale of trade. The base brought Trump to power who, in his campaign pledges, promised to unwind the trade bargains and pacts and “make America great again(MAGA). In lieu of his pledges, Trump picked a trade fight with China and also attempted to rejigg trade between the United States, Canada and Mexico. The result has been a disruption that might feel good to some, but throws a spanner into the works of freer trade. This insalubrious development is not only ominous but potentially threatens to roll back the stupendous gains made so far throwing into jeopardy human welfare. The question is: can freer trade be salvaged? Yes. It can and it will perhaps gyrate to a dynamic of its own. The reasons accrue from the nature of the 21st-century economy which is both a knowledge and a “gig” economy and the widgets, nuts and bolts one too. Trump’s focus till now has been the relocation of manufacturing to the United States. But, the country’s economy and even the global economy in which it is enmeshed has moved on. Profound and staggering developments in the Information, Communications and Technologies (ICTs), automation, robotics and Artificial Intelligence(AI) mean that the name of the game is different, especially in the developed world. This is not to demean the nuts and bolts economy which is and will remain relevant but it will be a complement to changes elsewhere. It is here that the United States, the world’s largest economy, must focus on instead of adopting a protectionist mercantilist paradigm. The nature of this approach should be to reorient the country’s educational institutions and skill development in tune with the demands and the needs of the 21st century. A political price might have to made here but from a long duree perspective, it is the adoption of this particular approach that would be more sustainable and yield rewards both to the United States and the world, at large. But, importantly, an important structural complement to the suggested paradigm, should be the creation of safety nets for those who are likely to be left behind by what is a veritable gale of “creative destruction” in the offing. Cumulatively, a novel approach toward education, skill development and a safety net could lead to a condition that would be win-win and offset the losses from freer trade. There would also ensue global prosperity which could undercut migratory pressures to both the developed world and the United States, in particular. In the final analysis, freer trade is a blessing that has proved to be a boon for mankind. It would be a sheer travesty if its momentum is derailed, even if temporarily. What is required, at this delicate point in world history, is far-sighted and deft leadership that is both particular and general. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

US-China trade talks: Free trade must not be derailed

By Amitrajeet A Batabyal

Talks between the US and China to end the trade war appear to be in trouble with the March 2 deadline for a deal fast approaching.

In the ongoing trade talks between the US and China, a lack of trust – key to any successful negotiation – appears to be hobbling the ability to reach a deal. Hence it is not clear negotiators will be able to achieve anything substantive before they hit President Donald Trump’s deadline, triggering automatic tariff hikes if there’s no agreement.

As a trade economist, I believe the answer to the trust conundrum lies in learning from an international body the president disdains: the World Trade Organisation.

Empty words? 
 
From the American perspective, a key issue is that in the past the Chinese have made all sorts of promises to address US&nbsp;concerns that they later reneged on. Or, China has taken so long to act that when it finally did it made little difference.

Several examples of Chinese promises going unkept readily come to mind.

When China joined the World Trade Organization in 2001, it was given “developing country” status. This allowed China to levy high tariffs on imports from the US&nbsp;and Europe even as it benefited from low duties on its exports.

The understanding at that time was that as its economy grew, China would gradually adopt market-based economic principles and commit itself to the basic tenets of liberalised trade and globalisation. But this has not happened.

Sometime after China joined the WTO, the country imposed a 21 per cent to 30 per cent tariff on cars. It was only this past December, and under pressure because of the current trade talks, that the Chinese finally agreed to temporarily reduce the tariff to 15 per cent. In contrast, the corresponding US tariff on Chinese auto imports has long been 2.5 per cent.

More generally, also after becoming a WTO member, China promised to open up its banking, telecommunications and electronic payment processing sectors. But action in these areas has either been non-existent or half-hearted.

Even now, the Chinese telecommunications industry remains very much under government control, and the government has effectively precluded Facebook and Google from offering their services in China.

Concerns about the reliability of the Chinese are not limited to economic and technological matters. To see this, note that on a state visit to the US in 2015, President Xi Jinping promised not to militarize the artificial islands on disputed reefs that the Chinese were building in the South China Sea.

However, we now have clear evidence that he has done exactly what he promised he would not do.

Holding China’s feet to the fire

Given all this, I believe it would be rather naïve on the part of the US to agree to any Chinese promises in the current trade talks without also building a robust enforcement mechanism into any deal.

Indeed, the negotiators themselves seem to understand this, but difficulty finding a way to enforce any agreements – both past and present – is making it harder to come to a deal. And that’s where the WTO and its enforcement mechanisms come in.

For example, China agreed to just such a mechanism with its WTO ascension. This enforcement rule permitted a nation to automatically levy tariffs on certain Chinese goods and services if that country’s domestic market was hurt by those same exports. Unfortunately, like most WTO rules, this rule had a finite life and was allowed to lapse at the end in 2013. Even though this mechanism has been infrequently used, President Barack Obama took advantage of it with some success in 2009 to impose tariffs on Chinese-made tires that were harming US manufacturers.

If such an enforcement mechanism can be built into a trade deal, then the US would not have to plead its case before some international body before it retaliated against the Chinese. Instead, when confronted with one or more broken promises, it would have the legal right to act unilaterally to hold China accountable.

That said, since the current negotiations are between two sovereign nations, the key is to devise an enforcement mechanism that is agreeable to both the US and China. Only then will a resulting trade deal be self-enforcing.

Since the US and China are both members of the WTO, another but less potent enforcement mechanism would lie in utilising its dispute settlement mechanism to address any disagreements that may arise after a deal is reached. The US has had success in the past in using this WTO mechanism as well to hold China accountable.

A deal worth the paper it’s printed on

The venerable Chinese sage Sun Tzu once said that “in the midst of chaos, there is also the opportunity.”

The US now has an opportunity to conclude a meaningful trade deal with China that also has enforcement built into it. Therefore, the American negotiators ought to seize this opportunity and ensure a deal isn’t backed primarily by Chinese promises.

Otherwise, it won’t be the last time a US president fumes about unfair Chinese trading practices.

(By Amitrajeet A Batabyal is Arthur J. Gosnell Professor of Economics, Rochester Institute of Technology)

(This article was originally published on the Conversation. Read the <a href="https://theconversation.com/us-china-trade-talks-will-the-chinese-keep-promises-to-stop-bad-behavior-111900">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 Amitrajeet A Batabyal Talks between the US and China to end the trade war appear to be in trouble with the March 2 deadline for a deal fast approaching. In the ongoing trade talks between the US and China, a lack of trust – key to any successful negotiation – appears to be hobbling the ability to reach a deal.

By Amitrajeet A Batabyal Talks between the US and China to end the trade war appear to be in trouble with the March 2 deadline for a deal fast approaching. In the ongoing trade talks between the US and China, a lack of trust – key to any successful negotiation – appears to be hobbling the ability to reach a deal. Hence it is not clear negotiators will be able to achieve anything substantive before they hit President Donald Trump’s deadline, triggering automatic tariff hikes if there’s no agreement. As a trade economist, I believe the answer to the trust conundrum lies in learning from an international body the president disdains: the World Trade Organisation. Empty words? From the American perspective, a key issue is that in the past the Chinese have made all sorts of promises to address US concerns that they later reneged on. Or, China has taken so long to act that when it finally did it made little difference. Several examples of Chinese promises going unkept readily come to mind. When China joined the World Trade Organization in 2001, it was given “developing country” status. This allowed China to levy high tariffs on imports from the US and Europe even as it benefited from low duties on its exports. The understanding at that time was that as its economy grew, China would gradually adopt market-based economic principles and commit itself to the basic tenets of liberalised trade and globalisation. But this has not happened. Sometime after China joined the WTO, the country imposed a 21 per cent to 30 per cent tariff on cars. It was only this past December, and under pressure because of the current trade talks, that the Chinese finally agreed to temporarily reduce the tariff to 15 per cent. In contrast, the corresponding US tariff on Chinese auto imports has long been 2.5 per cent. More generally, also after becoming a WTO member, China promised to open up its banking, telecommunications and electronic payment processing sectors. But action in these areas has either been non-existent or half-hearted. Even now, the Chinese telecommunications industry remains very much under government control, and the government has effectively precluded Facebook and Google from offering their services in China. Concerns about the reliability of the Chinese are not limited to economic and technological matters. To see this, note that on a state visit to the US in 2015, President Xi Jinping promised not to militarize the artificial islands on disputed reefs that the Chinese were building in the South China Sea. However, we now have clear evidence that he has done exactly what he promised he would not do. Holding China’s feet to the fire Given all this, I believe it would be rather naïve on the part of the US to agree to any Chinese promises in the current trade talks without also building a robust enforcement mechanism into any deal. Indeed, the negotiators themselves seem to understand this, but difficulty finding a way to enforce any agreements – both past and present – is making it harder to come to a deal. And that’s where the WTO and its enforcement mechanisms come in. For example, China agreed to just such a mechanism with its WTO ascension. This enforcement rule permitted a nation to automatically levy tariffs on certain Chinese goods and services if that country’s domestic market was hurt by those same exports. Unfortunately, like most WTO rules, this rule had a finite life and was allowed to lapse at the end in 2013. Even though this mechanism has been infrequently used, President Barack Obama took advantage of it with some success in 2009 to impose tariffs on Chinese-made tires that were harming US manufacturers. If such an enforcement mechanism can be built into a trade deal, then the US would not have to plead its case before some international body before it retaliated against the Chinese. Instead, when confronted with one or more broken promises, it would have the legal right to act unilaterally to hold China accountable. That said, since the current negotiations are between two sovereign nations, the key is to devise an enforcement mechanism that is agreeable to both the US and China. Only then will a resulting trade deal be self-enforcing. Since the US and China are both members of the WTO, another but less potent enforcement mechanism would lie in utilising its dispute settlement mechanism to address any disagreements that may arise after a deal is reached. The US has had success in the past in using this WTO mechanism as well to hold China accountable. A deal worth the paper it’s printed on The venerable Chinese sage Sun Tzu once said that “in the midst of chaos, there is also the opportunity.” The US now has an opportunity to conclude a meaningful trade deal with China that also has enforcement built into it. Therefore, the American negotiators ought to seize this opportunity and ensure a deal isn’t backed primarily by Chinese promises. Otherwise, it won’t be the last time a US president fumes about unfair Chinese trading practices. (By Amitrajeet A Batabyal is Arthur J. Gosnell Professor of Economics, Rochester Institute of Technology) (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.)

US-China trade conflict: Lack of trust hobbling the ability to reach a deal

India is among the several countries that stand to benefit from the ongoing trade tensions between the world's top two economies - the US and China, the UN has said in its latest report.

The US and China are locked in a trade war since President Donald Trump imposed heavy tariffs on imported steel and aluminium items in March last year, a move that sparked fears of a global trade war.

In response, China imposed tit-for-tat tariffs on billions of dollars worth of American imports.

The United Nations experts said Monday that the tit-for-tat trade dispute between China and the United States may do little to protect domestic producers in either country and could have "massive" implications on the global economy unless it is resolved.

Of the $250 billion in Chinese exports that are subject to US tariffs, only about six per cent will be picked up by firms in the US, according to a report by the UN Conference on Trade and Development (UNCTAD).

And of the approximately $85 billion in US exports that are subject to China's tariffs, only about five per cent of this will be taken up by Chinese firms, according to the UN research.

In a bid to meet the US' demand for bringing down the $375 billion bilateral trade deficit, China has pledged to take measures to step-up American imports and investments. March 1, 2019, is the deadline for implementing the measures.

Unless the US and China agree to drop their tariff dispute by March 1, duty on each country's products will rise to 25 per cent, up from the current 10 per cent level, the UN said.

Countries that are expected to benefit the most from the trade war are the EU members as exports in the bloc are likely to grow by $70 billion. Japan and Canada will see exports increase by more than $20 billion each, it said.

Other countries set to benefit from the trade tensions include Australia, with 4.6 per cent export gains, Brazil (3.8) India (3.5), Philippines (3.2) and Vietnam (5), the study said.

Quoting former US Secretary of State Cordell Hull, UNCTAD's Pamela Coke-Hamilton repeated his description of protective tariffs as "a gun that recoils on ourselves", which had also contributed to the Great Depression of the 1930s and the rise of extremism.

"I think that is a single lesson from what we have had here today. If - barring an agreement between the US, China on March 1 - tariffs will escalate to 25 per cent, which is a significant difference from the 10 per cent as it currently exists," Coke-Hamilton said.

The implications of such a development would be "massive", the UNCTAD Director, Division on International Trade in Goods and Services, and Commodities continued, adding that its effects would, first of all, involve "an economic downturn... Due to instability in commodities and financial markets".

"One major concern is the risk that trade tensions could spiral into currency wars, making dollar-denominated debt more difficult to service," the report added.

Imposing tariffs make US-made products cheaper than imported ones and encourage consumers to buy American.&nbsp;

India is among the several countries that stand to benefit from the ongoing trade tensions between the world's top two economies - the US and China, the UN has said in its latest report.

India is among the several countries that stand to benefit from the ongoing trade tensions between the world's top two economies - the US and China, the UN has said in its latest report. The US and China are locked in a trade war since President Donald Trump imposed heavy tariffs on imported steel and aluminium items in March last year, a move that sparked fears of a global trade war. In response, China imposed tit-for-tat tariffs on billions of dollars worth of American imports. The United Nations experts said Monday that the tit-for-tat trade dispute between China and the United States may do little to protect domestic producers in either country and could have "massive" implications on the global economy unless it is resolved. Of the $250 billion in Chinese exports that are subject to US tariffs, only about six per cent will be picked up by firms in the US, according to a report by the UN Conference on Trade and Development (UNCTAD). And of the approximately $85 billion in US exports that are subject to China's tariffs, only about five per cent of this will be taken up by Chinese firms, according to the UN research. In a bid to meet the US' demand for bringing down the $375 billion bilateral trade deficit, China has pledged to take measures to step-up American imports and investments. March 1, 2019, is the deadline for implementing the measures. Unless the US and China agree to drop their tariff dispute by March 1, duty on each country's products will rise to 25 per cent, up from the current 10 per cent level, the UN said. Countries that are expected to benefit the most from the trade war are the EU members as exports in the bloc are likely to grow by $70 billion. Japan and Canada will see exports increase by more than $20 billion each, it said. Other countries set to benefit from the trade tensions include Australia, with 4.6 per cent export gains, Brazil (3.8) India (3.5), Philippines (3.2) and Vietnam (5), the study said. Quoting former US Secretary of State Cordell Hull, UNCTAD's Pamela Coke-Hamilton repeated his description of protective tariffs as "a gun that recoils on ourselves", which had also contributed to the Great Depression of the 1930s and the rise of extremism. "I think that is a single lesson from what we have had here today. If - barring an agreement between the US, China on March 1 - tariffs will escalate to 25 per cent, which is a significant difference from the 10 per cent as it currently exists," Coke-Hamilton said. The implications of such a development would be "massive", the UNCTAD Director, Division on International Trade in Goods and Services, and Commodities continued, adding that its effects would, first of all, involve "an economic downturn... Due to instability in commodities and financial markets". "One major concern is the risk that trade tensions could spiral into currency wars, making dollar-denominated debt more difficult to service," the report added. Imposing tariffs make US-made products cheaper than imported ones and encourage consumers to buy American.

India among countries to benefit from US-China trade war: United Nations

<h1></h1>

*By-&nbsp;Tom Harper

Nearly 30 years ago, Donald Trump complained on a US chat show about the trade practices of Japan. This was during Japan’s boom of the 1980s, which propelled it to become the world’s second-largest economy. Now, China has taken that spot – and Trump is using the same rhetoric to attack it.&nbsp;

China is the bugbear of Trumpian foreign policy. According to one Wall Street Journal commentator, the US president is seeking to unify the world against China just as Reagan sought to isolate the Soviet Union.

Today’s China, as America’s primary economic challenger, can be seen as the latest incarnation of the East Asian model of authoritarian state capitalism. This was pioneered by Japan with its industrialisation and development during the 19th century.

China’s current communist rulers see industrialisation as the “magic key” to Great Power status – made clear from the message behind the Made in China 2025 scheme which asserts:

Since the beginning of industrial civilisation in the middle of the 18th century, it has been proven repeatedly by the rise and fall of world powers that without strong manufacturing, there is no national prosperity. Building internationally competitive manufacturing is the only way China can enhance its strength, protect state security and become a world power.

Ironically, a variant of this approach has been praised by some British MPs, in their suggestion of the Singaporean model as an example for post-Brexit Britain to follow. But they overlook how such a model is one of state capitalism, rather than the free-market nirvana they perceive it to be.

For it is state capitalism which enabled Japan and China to become manufacturing powerhouses. They both started with cheap, poor quality goods, and then created more sophisticated innovations – see, for example, the recent moon landing of a Chinese probe, the Chang’e 4.&nbsp;

The particular nature of China’s challenge is that its authoritarian system&nbsp;undermines the assumption that capitalism and democracy go hand in hand. A capitalist China is not necessarily a democratic China.&nbsp;

The war that never came&nbsp;

The most notable parallel between the rise of Japan in the 1980s, and China today, is the rhetoric used to describe them. While this includes references to seemingly unfair practices alluded to by Trump, it is more drastically articulated in predictions that conflict lies ahead.

This was expressed by Trump’s economic advisor, Peter Navarro, in The Coming China Wars, and followed George Friedman’s 1989 bestseller The Coming War with Japan, which predicted a shooting war between the US and Japan by the turn of the century.

In addition, both today’s China – and Japan three decades ago – have been held up as a cause of economic malaise in the Western world, with politicians promising to “get tough” with these nations. Yet this repeated rhetoric also demonstrates the perils of following such a simplistic vision.

For a start, the predicted Japanese-American conflict was based on the assumption that the end of the Cold War would see a divergence between Japanese and American interests and a dissolution of their alliance. However, rather than falling as the former Soviet communist states did, China went from strength to strength. This served to reaffirm the necessity of America’s alliance with Japan as a counter-balance in Asia.

It was the alliance that granted the US a degree of leverage over Japan, as illustrated by the 1985 Plaza Accord, which, in strengthening the yen, has often been held up as one of the causes of Japan’s subsequent economic slump. Repeating this with China is a far more challenging proposition for Washington.

The similarities in the rhetoric between these periods also illustrate the flaws in placing the blame of current Western economic malaise solely on Japan or China. The former’s economic rise of the 1980s came in the period of deindustrialisation throughout much of the Western world, bringing social dislocation which has not been fully resolved.

Problems and populism&nbsp;

The West’s failure to resolve the transition from manufacturing was amplified by poor global infrastructure and the failure to resolve the causes of the 2008 crisis, which played a significant role in the rise of populism. The impact was palpable in the “Rust Belt” states of the US, and the old factory towns of northern England, focal points for Trump and Brexit respectively.&nbsp;

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These had also been among the perceived losers from the rise of Japan and China, with the belief that success in those countries came at the expense of the old industrial heartlands of the West. This is a sentiment which populist movements have been keen to exploit. Yet while the ascendant economic powers may change, the problems remain unsolved.

So while the rhetoric of the Japanese-American economic rivalry has compelling parallels with the current Sino-US trade conflict, it would be a mistake to follow these too closely. The underlying domestic structural factors behind current problems should not be overlooked in favour of externalising the causes.

Even if Trump achieves a perceived “win” over China, as his predecessors did with Japan, it does little to remedy these problems. Instead, it merely furthers temptation to blame an external “other” when the next wave of problems emerges.&nbsp;

*(Tom Harper joined the University of Surrey as a doctoral researcher after completing a masters in international relations at the University of Sussex. He is currently researching the role imperialism plays in Chinese foreign policy.)

(This article was originally published on The Conversation. Read the <a href="https://theconversation.com/trumps-trade-war-with-china-is-a-blame-game-that-has-been-played-before-against-japan-109923">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

*By- Tom Harper Nearly 30 years ago, Donald Trump complained on a US chat show about the trade practices of Japan. This was during Japan’s boom of the 1980s, which propelled it to become the world’s second-largest economy.

*By- Tom Harper Nearly 30 years ago, Donald Trump complained on a US chat show about the trade practices of Japan. This was during Japan’s boom of the 1980s, which propelled it to become the world’s second-largest economy. Now, China has taken that spot – and Trump is using the same rhetoric to attack it. China is the bugbear of Trumpian foreign policy. According to one Wall Street Journal commentator, the US president is seeking to unify the world against China just as Reagan sought to isolate the Soviet Union. Today’s China, as America’s primary economic challenger, can be seen as the latest incarnation of the East Asian model of authoritarian state capitalism. This was pioneered by Japan with its industrialisation and development during the 19th century. China’s current communist rulers see industrialisation as the “magic key” to Great Power status – made clear from the message behind the Made in China 2025 scheme which asserts: Since the beginning of industrial civilisation in the middle of the 18th century, it has been proven repeatedly by the rise and fall of world powers that without strong manufacturing, there is no national prosperity. Building internationally competitive manufacturing is the only way China can enhance its strength, protect state security and become a world power. Ironically, a variant of this approach has been praised by some British MPs, in their suggestion of the Singaporean model as an example for post-Brexit Britain to follow. But they overlook how such a model is one of state capitalism, rather than the free-market nirvana they perceive it to be. For it is state capitalism which enabled Japan and China to become manufacturing powerhouses. They both started with cheap, poor quality goods, and then created more sophisticated innovations – see, for example, the recent moon landing of a Chinese probe, the Chang’e 4. The particular nature of China’s challenge is that its authoritarian system undermines the assumption that capitalism and democracy go hand in hand. A capitalist China is not necessarily a democratic China. The war that never came The most notable parallel between the rise of Japan in the 1980s, and China today, is the rhetoric used to describe them. While this includes references to seemingly unfair practices alluded to by Trump, it is more drastically articulated in predictions that conflict lies ahead. This was expressed by Trump’s economic advisor, Peter Navarro, in The Coming China Wars, and followed George Friedman’s 1989 bestseller The Coming War with Japan, which predicted a shooting war between the US and Japan by the turn of the century. In addition, both today’s China – and Japan three decades ago – have been held up as a cause of economic malaise in the Western world, with politicians promising to “get tough” with these nations. Yet this repeated rhetoric also demonstrates the perils of following such a simplistic vision. For a start, the predicted Japanese-American conflict was based on the assumption that the end of the Cold War would see a divergence between Japanese and American interests and a dissolution of their alliance. However, rather than falling as the former Soviet communist states did, China went from strength to strength. This served to reaffirm the necessity of America’s alliance with Japan as a counter-balance in Asia. It was the alliance that granted the US a degree of leverage over Japan, as illustrated by the 1985 Plaza Accord, which, in strengthening the yen, has often been held up as one of the causes of Japan’s subsequent economic slump. Repeating this with China is a far more challenging proposition for Washington. The similarities in the rhetoric between these periods also illustrate the flaws in placing the blame of current Western economic malaise solely on Japan or China. The former’s economic rise of the 1980s came in the period of deindustrialisation throughout much of the Western world, bringing social dislocation which has not been fully resolved. Problems and populism The West’s failure to resolve the transition from manufacturing was amplified by poor global infrastructure and the failure to resolve the causes of the 2008 crisis, which played a significant role in the rise of populism. The impact was palpable in the “Rust Belt” states of the US, and the old factory towns of northern England, focal points for Trump and Brexit respectively. × These had also been among the perceived losers from the rise of Japan and China, with the belief that success in those countries came at the expense of the old industrial heartlands of the West. This is a sentiment which populist movements have been keen to exploit. Yet while the ascendant economic powers may change, the problems remain unsolved. So while the rhetoric of the Japanese-American economic rivalry has compelling parallels with the current Sino-US trade conflict, it would be a mistake to follow these too closely. The underlying domestic structural factors behind current problems should not be overlooked in favour of externalising the causes. Even if Trump achieves a perceived “win” over China, as his predecessors did with Japan, it does little to remedy these problems. Instead, it merely furthers temptation to blame an external “other” when the next wave of problems emerges. *(Tom Harper joined the University of Surrey as a doctoral researcher after completing a masters in international relations at the University of Sussex. He is currently researching the role imperialism plays in Chinese foreign policy.) (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)

Trump's trade war with China is a blame game that has been played before – against Japan

By Emil Kirchner

Two new landmark agreements between the EU and Japan come into effect on February 1, 2019: the Economic Partnership Agreement and the Strategic Partnership Agreement. The economic agreement is the largest bilateral trade deal ever made by the EU in terms of market size and will be the largest zone of free trade created in history.

It drastically reduces tariffs between the EU and Japan, paving the way for simpler and faster trade between the two, and therefore an increase in volume. The strategic partnership commits to security cooperation on issues like nuclear proliferation, regional security, international terrorism and organised crime, cyber-security, and energy and climate security.

As Han Dorussen and I explain in our new book EU-Japan Security Cooperation: Trends and Prospects, these agreements come at a crucial time in the development of international trade and global governance. Brexit has the UK trying to redefine its relationship with the EU and potentially forge its own trade policies with the rest of the world.

Perhaps more importantly, the new EU-Japan agreements stand in direct contrast to Donald Trump’s decision to introduce an “America First” trade policy. Since being elected president in 2016, Trump has emphasised bilateral deals, erected trade barriers and undermined international institutions like the World Trade Organisation. Indeed, it was the anticipation of Trump’s nationalist policies, and especially his withdrawal from the Trans-Pacific Partnership (TPP) trade agreement, that gave renewed impetus to the EU and Japan’s lingering negotiations of the two agreements. Large trade agreements take a notoriously long time to negotiate and talks between the EU and Japan first began in 2013.

Japan and the EU – and Germany in particular – are export-driven economies and advocates of open trade. The protectionist stance of President Trump left them feeling vulnerable. So the new economic agreement is seen as strongly reaffirming the rules-based international trading system.

The concessions Japan offered to the EU on agricultural products are a blow to US farmers, who for a long time had been hoping to pry open this sealed market. The EU-Japan deal will emphasise Japan’s commitment to free trade and give further thrust to the newly-formed multilateral trade agreement known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which rose from the ashes of the TPP after the US withdrawal.

Opening up trade

The EU-Japan economic agreement will ultimately remove 97 per cent of the tariffs that Japan applies to European goods and 99 per cent of those applied by the EU. It is estimated that EU companies will save €1 billion a year in duties which they currently pay when exporting to Japan. A number of longstanding regulatory barriers, for example on car exports, will also be removed.

The agreement will open up the Japanese market of 127m consumers to key EU agricultural products and increase EU export opportunities in many other sectors such as financial services. As Japan will scrap duties on agricultural products, the Europeans stand to gain the most from exports of consumer products, such as cheese, pork, and wines.

Japan’s main interest in a trade deal with Europe was to increase its auto industry exports. The EU currently imposes a 10 per cent tariff on Japanese cars. Under the agreement, it will lower this to zero over eight years. 
 
Although cars and auto components account for about a fifth of Japan’s exports to Europe, Japanese car makers’ share of the European market is only about 10 per cent – much lower than in the US or Asia.

Besides these improvements, the economic agreement will strengthen cooperation between Europe and Japan in a range of areas. It will reaffirm their shared commitment to sustainable development and include for the first time a specific commitment to the Paris climate agreement.

EU firms already export more than €58 billion in goods and €28 billion in services to Japan every year. This will grow, and the strategic partnership will lead to the further deepening of EU-Japan relations and engagement across a wide range of global, regional and bilateral thematic issues. It reaffirms the shared values and common principles that form the basis of EU-Japan relations, including human rights, democracy and the rule of law.

Together, the EU and Japan’s economies account for about a third of global GDP. The new trade agreement should, therefore, serve to bolster the global economy, as well as marking a strong commitment to multilateralism by two of the world’s biggest economies.

 
(Emil Kirchner is Emeritus Professor, Department of Government, University of Essex)

(This article was originally published on The Conversation. Read the <a href="https://theconversation.com/eu-japan-trade-deal-comes-into-force-to-create-worlds-biggest-trade-zone-110729">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

By Emil Kirchner Two new landmark agreements between the EU and Japan come into effect on February 1, 2019: the Economic Partnership Agreement and the Strategic Partnership Agreement.

By Emil Kirchner Two new landmark agreements between the EU and Japan come into effect on February 1, 2019: the Economic Partnership Agreement and the Strategic Partnership Agreement. The economic agreement is the largest bilateral trade deal ever made by the EU in terms of market size and will be the largest zone of free trade created in history. It drastically reduces tariffs between the EU and Japan, paving the way for simpler and faster trade between the two, and therefore an increase in volume. The strategic partnership commits to security cooperation on issues like nuclear proliferation, regional security, international terrorism and organised crime, cyber-security, and energy and climate security. As Han Dorussen and I explain in our new book EU-Japan Security Cooperation: Trends and Prospects, these agreements come at a crucial time in the development of international trade and global governance. Brexit has the UK trying to redefine its relationship with the EU and potentially forge its own trade policies with the rest of the world. Perhaps more importantly, the new EU-Japan agreements stand in direct contrast to Donald Trump’s decision to introduce an “America First” trade policy. Since being elected president in 2016, Trump has emphasised bilateral deals, erected trade barriers and undermined international institutions like the World Trade Organisation. Indeed, it was the anticipation of Trump’s nationalist policies, and especially his withdrawal from the Trans-Pacific Partnership (TPP) trade agreement, that gave renewed impetus to the EU and Japan’s lingering negotiations of the two agreements. Large trade agreements take a notoriously long time to negotiate and talks between the EU and Japan first began in 2013. Japan and the EU – and Germany in particular – are export-driven economies and advocates of open trade. The protectionist stance of President Trump left them feeling vulnerable. So the new economic agreement is seen as strongly reaffirming the rules-based international trading system. The concessions Japan offered to the EU on agricultural products are a blow to US farmers, who for a long time had been hoping to pry open this sealed market. The EU-Japan deal will emphasise Japan’s commitment to free trade and give further thrust to the newly-formed multilateral trade agreement known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which rose from the ashes of the TPP after the US withdrawal. Opening up trade The EU-Japan economic agreement will ultimately remove 97 per cent of the tariffs that Japan applies to European goods and 99 per cent of those applied by the EU. It is estimated that EU companies will save €1 billion a year in duties which they currently pay when exporting to Japan. A number of longstanding regulatory barriers, for example on car exports, will also be removed. The agreement will open up the Japanese market of 127m consumers to key EU agricultural products and increase EU export opportunities in many other sectors such as financial services. As Japan will scrap duties on agricultural products, the Europeans stand to gain the most from exports of consumer products, such as cheese, pork, and wines. Japan’s main interest in a trade deal with Europe was to increase its auto industry exports. The EU currently imposes a 10 per cent tariff on Japanese cars. Under the agreement, it will lower this to zero over eight years. Although cars and auto components account for about a fifth of Japan’s exports to Europe, Japanese car makers’ share of the European market is only about 10 per cent – much lower than in the US or Asia. Besides these improvements, the economic agreement will strengthen cooperation between Europe and Japan in a range of areas. It will reaffirm their shared commitment to sustainable development and include for the first time a specific commitment to the Paris climate agreement. EU firms already export more than €58 billion in goods and €28 billion in services to Japan every year. This will grow, and the strategic partnership will lead to the further deepening of EU-Japan relations and engagement across a wide range of global, regional and bilateral thematic issues. It reaffirms the shared values and common principles that form the basis of EU-Japan relations, including human rights, democracy and the rule of law. Together, the EU and Japan’s economies account for about a third of global GDP. The new trade agreement should, therefore, serve to bolster the global economy, as well as marking a strong commitment to multilateralism by two of the world’s biggest economies. (Emil Kirchner is Emeritus Professor, Department of Government, University of Essex) (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)

EU-Japan trade deal comes into force to create the world’s biggest trade zone

The United States and China launched critical trade talks on<a href="http://www.wionews.com/world/us-china-trade-talks-trump-to-meet-chinese-vice-premier-this-week-193558"> Wednesday amid deep differences over Washington's </a>demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 US tariff hike.

The two sides met next door to the White House in the highest-level talks since US President Donald Trump and Chinese President Xi Jinping agreed a 90-day truce in their trade war in December.

People familiar with the <a href="http://www.wionews.com/business-economy/china-us-trade-tension-a-major-risk-to-global-growth-imf-chief-192497">talks and trade experts watching them</a> say that, so far, there has been little indication that Chinese officials are willing to address core US demands to protect American intellectual property rights and end policies that Washington says force U.S. companies to transfer technology to Chinese firms.

The US complaints, along with accusations of Chinese cyber theft of US&nbsp;trade secrets and a systematic campaign to acquire US technology firms, were used by the Trump administration to justify punitive US tariffs on $250 billion worth of Chinese imports.

Cabinet-level officials, led by Chinese Vice Premier Liu He and US&nbsp;Trade Representative Robert Lighthizer, gathered in the Eisenhower Executive Office Building next to the White House.

During a photo opportunity at the start of the scheduled two days of talks, Lighthizer, Treasury Secretary Steven Mnuchin and other top Trump administration officials sat silently across a long table from their Chinese counterparts, ignoring a reporter's questions.

The talks began two days after the United States charged Chinese telecommunications company Huawei Technologies Co Ltd and its chief financial officer, Meng Wanzhou, with conspiring to violate U.S. sanctions on Iran by doing business through a subsidiary it tried to hide.

Meng was arrested in Canada on December&nbsp;1 at the request of the United States, which is seeking to have her extradited.

The talks in Washington are expected to be tense, with little indication so far that Chinese officials are willing to address core US demands to fully protect American intellectual property rights and end policies that Washington has said force US companies to transfer technology to Chinese firms.

The US&nbsp;complaints, along with accusations of Chinese cyber theft of US&nbsp;trade secrets and a systematic campaign to acquire US technology firms, were used by the Trump administration to justify punitive US&nbsp;tariffs on $250 billion worth of Chinese imports.

Trump has threatened to raise tariffs on $200 billion of goods to 25 per cent from 10 per cent on March 2 if an agreement cannot be reached. He has also threatened new tariffs on the remainder of Chinese goods shipped to the United States. China has retaliated with tariffs of its own, but has suspended some and is allowing some purchases of US soybeans during the talks.

Chinese officials deny that their policies coerce technology transfers.

The United States and China launched critical trade talks on Wednesday amid deep differences over Washington's demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 US tariff hike.

The United States and China launched critical trade talks on Wednesday amid deep differences over Washington's demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 US tariff hike. The two sides met next door to the White House in the highest-level talks since US President Donald Trump and Chinese President Xi Jinping agreed a 90-day truce in their trade war in December. People familiar with the talks and trade experts watching them say that, so far, there has been little indication that Chinese officials are willing to address core US demands to protect American intellectual property rights and end policies that Washington says force U.S. companies to transfer technology to Chinese firms. The US complaints, along with accusations of Chinese cyber theft of US trade secrets and a systematic campaign to acquire US technology firms, were used by the Trump administration to justify punitive US tariffs on $250 billion worth of Chinese imports. Cabinet-level officials, led by Chinese Vice Premier Liu He and US Trade Representative Robert Lighthizer, gathered in the Eisenhower Executive Office Building next to the White House. During a photo opportunity at the start of the scheduled two days of talks, Lighthizer, Treasury Secretary Steven Mnuchin and other top Trump administration officials sat silently across a long table from their Chinese counterparts, ignoring a reporter's questions. The talks began two days after the United States charged Chinese telecommunications company Huawei Technologies Co Ltd and its chief financial officer, Meng Wanzhou, with conspiring to violate U.S. sanctions on Iran by doing business through a subsidiary it tried to hide. Meng was arrested in Canada on December 1 at the request of the United States, which is seeking to have her extradited. The talks in Washington are expected to be tense, with little indication so far that Chinese officials are willing to address core US demands to fully protect American intellectual property rights and end policies that Washington has said force US companies to transfer technology to Chinese firms. The US complaints, along with accusations of Chinese cyber theft of US trade secrets and a systematic campaign to acquire US technology firms, were used by the Trump administration to justify punitive US tariffs on $250 billion worth of Chinese imports. Trump has threatened to raise tariffs on $200 billion of goods to 25 per cent from 10 per cent on March 2 if an agreement cannot be reached. He has also threatened new tariffs on the remainder of Chinese goods shipped to the United States. China has retaliated with tariffs of its own, but has suspended some and is allowing some purchases of US soybeans during the talks. Chinese officials deny that their policies coerce technology transfers.

US, China trade talks begin amid deep differences

Thucydides, the great historian of the Peloponnesian Wars between Athens and Sparta, held by some to the doyen of the school of the realist school of international relations famously said: “What made war inevitable was the growth of Athenian power and the fear that this caused in Sparta”. This assertion, in the 20th century, formulated into a coinage by Harvard professor, Graham Allison, who called it the “Thucydides Trap” referred to the fear that a rising power caused in an incumbent one which then escalated toward war. &nbsp;&nbsp;

The "Thucydides Trap" appears to have a searing resonance in the relations between the United States and China with the former being the incumbent power and the latter a rising one. Echoes of the trap, while resplendent in most domains and areas of the relationship between the two also came when the United States sent two warships through the Taiwan Strait in the first such operation this year. &nbsp;&nbsp;

Taiwan being a major flashpoint between the United States and China, the voyage risks further heightening tensions with China, which considers Taiwan its own and has not ruled out the use of force to bring the self-ruled island under its control. While this particular incident or event is more in the nature of posturing designed to send a message to China but, in the grand scheme of things, it could be held as a prelude to a putative militarised dynamic and tenor of relations between the two countries.

All this assumes salience against the backdrop of the Trump presidency which has held China in its crosshairs. Be it the trade wars initiated by the American president, or other forms of disputes and tensions thereof, it is increasingly becoming clear that the United States is stymieing China’s efforts to attain Great Power status. 
 
Inevitably or perhaps naturally, China will not only resent this stymieing but also make counter efforts to check, balance or hedge the United States. What will ensue is friction and frisson which might, at some point in time, lend themselves to an outright confrontation between the two.

In the process, there will be an inexorable drift to the “Thucydides Trap” which might become a self-fulfilling prophecy.

An alarming scenario, it must be checked and contained the soonest for if war occurs between the United States and China, the strides of progress that the world has made will be frittered and, in an extreme scenario, mankind’s survival might be at risk. The question is how?

The answer lies in the realm of both politics and economics. As the wit has said, “all war is bad politics”. This is a maxim that powers that be across the China-United States divide must take to heart and devise means and mechanism of a political nature that precludes the option of war. In the realm of the immediate, this could mean instituting and crystallising confidence-building measures that aim at reassurance and not confrontation and conflict.&nbsp;

The complement to this approach must be disavowing mercantilist protectionist approaches of the political economy toward each other and actually deepening trade and financial linkages. While this “complex interdependence”, historically, did not prevent the first World War, but deepening trade and financial linkages, because they lead to economic growth and development for members enmeshed into its framework, create stakes and opportunities which make war not impossible but improbable. 
&nbsp; 
It is the cumulative confluence of the two that might create propitious conditions between China and the United States and preclude the drift toward war. But, alas, the actual and real condition of the world and domestic politics across the world suggest that this salubrious condition or set of conditions might not actually come to pass. The “return” of the nation-state and its concomitant, nationalism, along with protectionist mercantilism besides leading to what has been called “ deglobalisation” is also making the world a more edgy and a fraught place. Among other things, this has heightened the salience of geopolitics and competition thereof whose corollary is heightened conflict and tension.&nbsp;

Without any real checks to militarised competition between the major states of the international system and a flawed and weak global governance institutional architecture, what might actually come to pass is the “Thucydides Trap” which, broken down, amidst the contemporary geopolitical and world political configuration might mean war between China and the United States. 
 
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Thucydides, the great historian of the Peloponnesian Wars between Athens and Sparta, held by some to the doyen of the school of the realist school of international relations famously said: “What made war inevitable was the growth of Athenian power and the fear that this caused in Sparta”.

Thucydides, the great historian of the Peloponnesian Wars between Athens and Sparta, held by some to the doyen of the school of the realist school of international relations famously said: “What made war inevitable was the growth of Athenian power and the fear that this caused in Sparta”. This assertion, in the 20th century, formulated into a coinage by Harvard professor, Graham Allison, who called it the “Thucydides Trap” referred to the fear that a rising power caused in an incumbent one which then escalated toward war. The "Thucydides Trap" appears to have a searing resonance in the relations between the United States and China with the former being the incumbent power and the latter a rising one. Echoes of the trap, while resplendent in most domains and areas of the relationship between the two also came when the United States sent two warships through the Taiwan Strait in the first such operation this year. Taiwan being a major flashpoint between the United States and China, the voyage risks further heightening tensions with China, which considers Taiwan its own and has not ruled out the use of force to bring the self-ruled island under its control. While this particular incident or event is more in the nature of posturing designed to send a message to China but, in the grand scheme of things, it could be held as a prelude to a putative militarised dynamic and tenor of relations between the two countries. All this assumes salience against the backdrop of the Trump presidency which has held China in its crosshairs. Be it the trade wars initiated by the American president, or other forms of disputes and tensions thereof, it is increasingly becoming clear that the United States is stymieing China’s efforts to attain Great Power status. Inevitably or perhaps naturally, China will not only resent this stymieing but also make counter efforts to check, balance or hedge the United States. What will ensue is friction and frisson which might, at some point in time, lend themselves to an outright confrontation between the two. In the process, there will be an inexorable drift to the “Thucydides Trap” which might become a self-fulfilling prophecy. An alarming scenario, it must be checked and contained the soonest for if war occurs between the United States and China, the strides of progress that the world has made will be frittered and, in an extreme scenario, mankind’s survival might be at risk. The question is how? The answer lies in the realm of both politics and economics. As the wit has said, “all war is bad politics”. This is a maxim that powers that be across the China-United States divide must take to heart and devise means and mechanism of a political nature that precludes the option of war. In the realm of the immediate, this could mean instituting and crystallising confidence-building measures that aim at reassurance and not confrontation and conflict. The complement to this approach must be disavowing mercantilist protectionist approaches of the political economy toward each other and actually deepening trade and financial linkages. While this “complex interdependence”, historically, did not prevent the first World War, but deepening trade and financial linkages, because they lead to economic growth and development for members enmeshed into its framework, create stakes and opportunities which make war not impossible but improbable. It is the cumulative confluence of the two that might create propitious conditions between China and the United States and preclude the drift toward war. But, alas, the actual and real condition of the world and domestic politics across the world suggest that this salubrious condition or set of conditions might not actually come to pass. The “return” of the nation-state and its concomitant, nationalism, along with protectionist mercantilism besides leading to what has been called “ deglobalisation” is also making the world a more edgy and a fraught place. Among other things, this has heightened the salience of geopolitics and competition thereof whose corollary is heightened conflict and tension. Without any real checks to militarised competition between the major states of the international system and a flawed and weak global governance institutional architecture, what might actually come to pass is the “Thucydides Trap” which, broken down, amidst the contemporary geopolitical and world political configuration might mean war between China and the United States. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

China-United States relations and the 'Thucydides Trap'

One of the disquieting aspects of India’s foreign trade is the rapidly growing imbalance with China, its largest trade partner.&nbsp;

This is an issue that has reverberated repeatedly through the concerns raised by a number of sectoral interests, the textiles industry being one of the more recent ones having petitioned the government for higher tariffs in order to protect their sector.&nbsp;

At the same time, however, there seems to be very little, if any, overall understanding about the implications of the imbalance in India-China trade, specifically the growing penetration of the Chinese products in the Indian economy.

In order to put the India-China trade imbalance in perspective, it necessary to see how the trade policies of the two neighbours have evolved since the beginning of this millennium.&nbsp;

This cut-off has a special significance for China; it became a member of the World Trade Organization (WTO) in 2001. With this step, China realised the goal of almost fully integrating with the global economy, which was set after Deng Xiaoping brought the country out of its isolation and triggered the process of economic reforms in 1978.&nbsp;

That a confident China had emerged following its WTO accession was to be proven by its trade performance in the 2000s. Before it joined the WTO, China’s share in global exports had not reached 4 per cent, but by 2006, the share had doubled and by the end of the decade it was 10 per cent. These were definite signs that China had the momentum to capture global markets.

India, on the other hand, fast-tracked its trade liberalisation agenda by the turn of the millennium. The trigger for doing so was provided by India’s accession to the Information Technology Agreement (ITA) in 1998, under which commitments were taken to eliminate tariffs on information technology products by 2005.&nbsp;

Alongside, a decision was taken to unilaterally lower tariffs on most manufacturing products, which incidentally coincided with the phase of high growth. Thus, average tariffs on industrial products, which was 31 per cent in 2000-01, was slashed to less than 12 per cent by 2006.&nbsp;

It is pertinent to note here that this sharp decline in the levels of tariffs happened when the National Manufacturing Competitiveness Council (NMCC), which was established by the UPA Government in 2004, sounded alarm bells over the near stagnant share of manufacturing.&nbsp;

In its “The National Strategy for Manufacturing” unveiled in 2006, the NMCC argued that “one of the major reasons for the reduced level of contribution by manufacturing has been the inability of the country to build and maintain competitiveness needed to meet the global challenges as well as to develop a larger domestic market through low-cost production”.&nbsp;

To this day, and after several initiatives to make the manufacturing sector more competitive in the past 12 years, NMCC’s observation remains true.

How have the India-China trade dynamics played out since the early 2000s? Before India began its deep tariff cuts, China was outside the list of top five import sources for India, having a share of less than 3 per cent in India’s total imports.&nbsp;

In 2000-01, India’s imports were $1.5 billion and exports were $831 million, and the trade deficit was a modest $671 million. Imports from China recorded a dramatic increase from 2003-04, up from $4 billion to $32 billion in 2008-09. By 2014-15, Chinese imports were above $60 billion, and in the previous financial year, it had exceeded $76 billion.&nbsp;

On the other hand, India’s exports to China remained extremely sluggish, which was hardly surprising in light of the comments by NMCC. From $3 billion in 2003-04, exports reached $10 billion in 2007-08. In 2012-13, Indian exports peaked at $18 billion, but five years thereafter it could export no more than $13 billion.&nbsp;

Consequently, the trade deficit expanded drastically to over $63 billion in 2017-18. In 2016-17, India’s trade deficit with China accounted for over 47 per cent of its overall trade deficit; declining a tad in the following year.

More than the increase in imports, it is its composition of trade that is of serious concern. China has targeted the Indian market primarily in two commodity groups, namely electrical and electronic equipment and pharmaceuticals.&nbsp;

Almost 60 per cent of India’s import requirements of electrical and electronic equipment were met by China, and more than 75 per cent of the active pharmaceutical ingredient, the raw material used by India’s generic pharmaceutical industry, were imported from China.&nbsp;

In 2017-18, China supplied 80 per cent of the antibiotics imported by India, besides supplying the bulk of electronic products and components.&nbsp;

Clearly, some of the key sectors of the Indian economy are critically dependent on China. In sharp contrast, India’s top exports were mostly intermediate products and raw materials. These included cathodes, petroleum oils, intermediate products for the producing films, plastic and iron ore and concentrates.

The United Nations Commodity Trade Statistics database provides a useful way of assessing the pattern of trade between countries by classifying trade flows by the levels of technology and production sectors.&nbsp;

According to the figures from this database for 2017, manufactured products constituted 55 per cent of India’s non-oil exports to China, while the corresponding figure for China was as high as 95 per cent.

This implies that primary commodities were a significant share of India’s exports to its largest trade partner, which is consistent with China’s strategy to function as the “factory of the world” by sourcing raw materials from its trading partners.&nbsp;

But for India, this pattern of trade is reminiscent of its colonial past, when Britain fuelled its industries by exploiting its colonies and used the latter as captive markets for its finished products. 
 
(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-the-ultimate-captive-market-2710618">original article)</a>

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

 
&nbsp;

One of the disquieting aspects of India’s foreign trade is the rapidly growing imbalance with China, its largest trade partner. This is an issue that has reverberated repeatedly through the concerns raised by a number of sectoral interests, the textiles industry being one of the more recent ones having petitioned the government for higher tariffs in order to protect their sector.

One of the disquieting aspects of India’s foreign trade is the rapidly growing imbalance with China, its largest trade partner. This is an issue that has reverberated repeatedly through the concerns raised by a number of sectoral interests, the textiles industry being one of the more recent ones having petitioned the government for higher tariffs in order to protect their sector. At the same time, however, there seems to be very little, if any, overall understanding about the implications of the imbalance in India-China trade, specifically the growing penetration of the Chinese products in the Indian economy. In order to put the India-China trade imbalance in perspective, it necessary to see how the trade policies of the two neighbours have evolved since the beginning of this millennium. This cut-off has a special significance for China; it became a member of the World Trade Organization (WTO) in 2001. With this step, China realised the goal of almost fully integrating with the global economy, which was set after Deng Xiaoping brought the country out of its isolation and triggered the process of economic reforms in 1978. That a confident China had emerged following its WTO accession was to be proven by its trade performance in the 2000s. Before it joined the WTO, China’s share in global exports had not reached 4 per cent, but by 2006, the share had doubled and by the end of the decade it was 10 per cent. These were definite signs that China had the momentum to capture global markets. India, on the other hand, fast-tracked its trade liberalisation agenda by the turn of the millennium. The trigger for doing so was provided by India’s accession to the Information Technology Agreement (ITA) in 1998, under which commitments were taken to eliminate tariffs on information technology products by 2005. Alongside, a decision was taken to unilaterally lower tariffs on most manufacturing products, which incidentally coincided with the phase of high growth. Thus, average tariffs on industrial products, which was 31 per cent in 2000-01, was slashed to less than 12 per cent by 2006. It is pertinent to note here that this sharp decline in the levels of tariffs happened when the National Manufacturing Competitiveness Council (NMCC), which was established by the UPA Government in 2004, sounded alarm bells over the near stagnant share of manufacturing. In its “The National Strategy for Manufacturing” unveiled in 2006, the NMCC argued that “one of the major reasons for the reduced level of contribution by manufacturing has been the inability of the country to build and maintain competitiveness needed to meet the global challenges as well as to develop a larger domestic market through low-cost production”. To this day, and after several initiatives to make the manufacturing sector more competitive in the past 12 years, NMCC’s observation remains true. How have the India-China trade dynamics played out since the early 2000s? Before India began its deep tariff cuts, China was outside the list of top five import sources for India, having a share of less than 3 per cent in India’s total imports. In 2000-01, India’s imports were $1.5 billion and exports were $831 million, and the trade deficit was a modest $671 million. Imports from China recorded a dramatic increase from 2003-04, up from $4 billion to $32 billion in 2008-09. By 2014-15, Chinese imports were above $60 billion, and in the previous financial year, it had exceeded $76 billion. On the other hand, India’s exports to China remained extremely sluggish, which was hardly surprising in light of the comments by NMCC. From $3 billion in 2003-04, exports reached $10 billion in 2007-08. In 2012-13, Indian exports peaked at $18 billion, but five years thereafter it could export no more than $13 billion. Consequently, the trade deficit expanded drastically to over $63 billion in 2017-18. In 2016-17, India’s trade deficit with China accounted for over 47 per cent of its overall trade deficit; declining a tad in the following year. More than the increase in imports, it is its composition of trade that is of serious concern. China has targeted the Indian market primarily in two commodity groups, namely electrical and electronic equipment and pharmaceuticals. Almost 60 per cent of India’s import requirements of electrical and electronic equipment were met by China, and more than 75 per cent of the active pharmaceutical ingredient, the raw material used by India’s generic pharmaceutical industry, were imported from China. In 2017-18, China supplied 80 per cent of the antibiotics imported by India, besides supplying the bulk of electronic products and components. Clearly, some of the key sectors of the Indian economy are critically dependent on China. In sharp contrast, India’s top exports were mostly intermediate products and raw materials. These included cathodes, petroleum oils, intermediate products for the producing films, plastic and iron ore and concentrates. The United Nations Commodity Trade Statistics database provides a useful way of assessing the pattern of trade between countries by classifying trade flows by the levels of technology and production sectors. According to the figures from this database for 2017, manufactured products constituted 55 per cent of India’s non-oil exports to China, while the corresponding figure for China was as high as 95 per cent. This implies that primary commodities were a significant share of India’s exports to its largest trade partner, which is consistent with China’s strategy to function as the “factory of the world” by sourcing raw materials from its trading partners. But for India, this pattern of trade is reminiscent of its colonial past, when Britain fuelled its industries by exploiting its colonies and used the latter as captive markets for its finished products. (This article was originally published on The 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)

How have India-China trade dynamics played out since early 2000s

The International Monetary Fund on Monday cut its <a href="http://www.wionews.com/business-economy/imf-says-trade-war-already-hurting-asia-may-cut-global-growth-forecasts-184777">world economic growth forecasts</a> for 2019 and 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilise a slowing global economy.

In its second downgrade in three months, <a href="http://www.wionews.com/world/america-first-imfs-lagarde-urges-us-others-to-reject-dystopian-path-181545">the global lender also cited</a> a bigger-than-expected slowdown in China's economy and a possible "No Deal" Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets.

The IMF predicted the global economy to grow at 3.5 per cent in 2019 and 3.6 per cent in 2020, down 0.2 and 0.1 percentage point respectively from last October's forecasts.

The new forecasts, released ahead of this week's gathering of world leaders and business executives in the Swiss ski resort of Davos, show that policymakers may need to come up with plans to deal with an end to years of solid global growth.

"Risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook," the IMF said in an update to its World Economic Outlook report.

"Higher trade policy uncertainty and concerns over escalation and retaliation would lower business investment, disrupt supply chains and slow productivity growth. The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth."

The downgrades reflected signs of weakness in Europe, with its export powerhouse Germany hurt by new fuel emission standards for cars and with Italy under market pressure due to Rome's recent budget standoff with the European Union.

Growth in the euro zone is set to moderate from 1.8 per cent in 2018 to 1.6 per cent in 2019, 0.3 percentage point lower than projected three months ago, the IMF said.

The IMF also cut its 2019 growth forecast for developing countries to 4.5 per cent, down 0.2 percentage point from the previous projection and a slowdown from 4.7 percent in 2018.

"Emerging market and developing economies have been tested by difficult external conditions over the past few months amid trade tensions, rising U.S. interest rates, dollar appreciation, capital outflows, and volatile oil prices," the IMF said.

The IMF maintained its U.S. growth projections of 2.5 per cent this year and 1.8 per cent in 2020, pointing to continued strength in domestic demand.

It also kept its China growth forecast at 6.2 per cent in both 2019 and 2020, but said economic activity could miss expectations if trade tensions persist, even with state efforts to spur growth by boosting fiscal spending and bank lending.

"As seen in 2015–16, concerns about the health of China's economy can trigger abrupt, wide-reaching sell-offs in financial and commodity markets that place its trading partners, commodity exporters, and other emerging markets under pressure," it said.

Britain is expected to achieve 1.5 per cent growth this year though there is uncertainty over the projection, which is based on the assumption of an orderly exit from the EU, the IMF said.

The rare bright spot was Japan, with the IMF revising up its forecast by 0.2 percentage point to 1.1 per cent this year due to an expected boost from the government's spending measures, which aim to offset a scheduled sales-tax hike in October.

The IMF has been urging policymakers to carry out structural reforms while the global economy enjoys solid growth, with its managing director, Christine Lagarde, telling them to "fix the roof while the sun is shining". The IMF has stressed the need to address income inequality and reform the financial sector.

However, as growth momentum peaks and risks to the outlook rise, policymakers must now focus on policies to prevent further slowdowns, the IMF said.

"The main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilizing an already slowing global economy," it added.

The International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilise a slowing global economy.

The International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilise a slowing global economy. In its second downgrade in three months, the global lender also cited a bigger-than-expected slowdown in China's economy and a possible "No Deal" Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets. The IMF predicted the global economy to grow at 3.5 per cent in 2019 and 3.6 per cent in 2020, down 0.2 and 0.1 percentage point respectively from last October's forecasts. The new forecasts, released ahead of this week's gathering of world leaders and business executives in the Swiss ski resort of Davos, show that policymakers may need to come up with plans to deal with an end to years of solid global growth. "Risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook," the IMF said in an update to its World Economic Outlook report. "Higher trade policy uncertainty and concerns over escalation and retaliation would lower business investment, disrupt supply chains and slow productivity growth. The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth." The downgrades reflected signs of weakness in Europe, with its export powerhouse Germany hurt by new fuel emission standards for cars and with Italy under market pressure due to Rome's recent budget standoff with the European Union. Growth in the euro zone is set to moderate from 1.8 per cent in 2018 to 1.6 per cent in 2019, 0.3 percentage point lower than projected three months ago, the IMF said. The IMF also cut its 2019 growth forecast for developing countries to 4.5 per cent, down 0.2 percentage point from the previous projection and a slowdown from 4.7 percent in 2018. "Emerging market and developing economies have been tested by difficult external conditions over the past few months amid trade tensions, rising U.S. interest rates, dollar appreciation, capital outflows, and volatile oil prices," the IMF said. The IMF maintained its U.S. growth projections of 2.5 per cent this year and 1.8 per cent in 2020, pointing to continued strength in domestic demand. It also kept its China growth forecast at 6.2 per cent in both 2019 and 2020, but said economic activity could miss expectations if trade tensions persist, even with state efforts to spur growth by boosting fiscal spending and bank lending. "As seen in 2015–16, concerns about the health of China's economy can trigger abrupt, wide-reaching sell-offs in financial and commodity markets that place its trading partners, commodity exporters, and other emerging markets under pressure," it said. Britain is expected to achieve 1.5 per cent growth this year though there is uncertainty over the projection, which is based on the assumption of an orderly exit from the EU, the IMF said. The rare bright spot was Japan, with the IMF revising up its forecast by 0.2 percentage point to 1.1 per cent this year due to an expected boost from the government's spending measures, which aim to offset a scheduled sales-tax hike in October. The IMF has been urging policymakers to carry out structural reforms while the global economy enjoys solid growth, with its managing director, Christine Lagarde, telling them to "fix the roof while the sun is shining". The IMF has stressed the need to address income inequality and reform the financial sector. However, as growth momentum peaks and risks to the outlook rise, policymakers must now focus on policies to prevent further slowdowns, the IMF said. "The main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilizing an already slowing global economy," it added.

IMF cuts global growth forecast due to US-China trade tensions

By Christopher Dent

The clock is ticking for China and the US to resolve their trade dispute. Some progress was made at the last round of talks (January 7-9) but negotiators must find a comprehensive agreement by March 2.&nbsp;

If they fail, the US government plans to raise tariffs from 10 per cent to 25 per cent on $200 billion of Chinese imports. This would have an enormous impact not just on US-China bilateral trade but also on many other countries due to global supply chain linkages.

The US president, Donald Trump, wishes to adjust the “terms of trade” between both countries, addressing what he alleges are China’s “unfair” trading practices. Many observers believe this is a battle not just about trade but also about economic and technological supremacy.

The Trump administration accuses China of stealing technology from American companies. It has also been critical of the Chinese government’s strategic plans to make the country a world leader in industry sectors such as aerospace, renewable energy, robotics and electric vehicles. The recent successful landing of a Chinese spacecraft on the Moon would have caused further consternation among Americans fearful of China’s new technological capacities.

The US says it wants China to become a free market economy and ditch its state management approach. Ironically, the credibility of America’s position on this matter is undermined by Trump’s own protectionist stance on trade, which itself constitutes significant state intervention in the marketplace.

But, despite their political and economic differences, the reality is that the US and China’s economies are deeply interconnected through various layers of commercial, financial and production links. The two are so entwined that they have been dubbed a symbiotic “Chimerica” economy.

Economic interdependence

US-China economic interdependence has to be carefully managed and many companies are critical of the Trump administration’s decision to raise tariffs. They rightly warn that aggressive US actions against China will ultimately harm American firms, workers and consumers. What’s more, the world’s two largest national economies lie at the core of an ever more integrated global economy. Any significant disruption to their relationship will have major ramifications for businesses worldwide.

From his actions and tweeted thinking to date, it appears that Trump is failing to acknowledge the extent of US-China economic interdependence, or is choosing to ignore it. While the US trade deficit of $336 billion with China in 2017 is at some level a cause for concern, China recycles much of its surplus back through buying US government securities.

Taking the car industry as an example, we can reasonably assume that Trump wishes to see more cars made by Ford, General Motors and other American firms in the US, which get sold both at home and in foreign markets. Ideally, in Trump’s view, they would also be sourcing materials and parts from US-based companies, thus overall generating more jobs and prosperity for Americans. But this cannot be sustainably achieved through protectionist trade measures.

Trump’s adoption of a defensive economic nationalist position and a simplistic “imports bad, exports good” mindset chimes with a 19th-century view of the world economy. Then it was the norm for companies to organise production in one nation and simply export from it. Today, technological advances mean companies increasingly organise their production across nations, mainly for reasons of cost efficiency, making goods cheaper to buy and providing wider consumer choice. In many of the world’s major industries, it makes no economic sense today to do otherwise.

Competitive advantage

For companies, the ultimate arbiter of success is the consumer. The fundamental reason why the sales of American car manufacturers have fallen over the years – both at home and in export markets – is not due to “unfair” trade practices but because they lack competitiveness. The same logic applies to other industries.

Sales of foreign cars in Japan illustrates this. While the Japanese car market is hard for foreign firms to penetrate, Japan does not apply import tariffs in this sector. So both European and US firms face the same challenges in satisfying the discerning Japanese consumer.

From 2013 to 2016, Japan’s imports of US cars fell from 23,381 to 19,933, whereas imports of European vehicles increased from 239,090 to 251,155. If Trump wishes American car makers to expand production and exports, they need to produce more competitive and desirable products.

Sometimes, this is extraordinarily difficult to achieve in industries experiencing deep structural decline, such as the US steel sector. There are, of course, many other sectors where American firms have developed a competitive advantage over their foreign rivals, such as cinema and television shows, popular culture, financial services and university education.

Higher tariffs on US imports of goods from China and other countries will in most cases be passed on as higher prices to American consumers, raising inflation and, in turn, interest rates. One of the ironies of imposing import tariffs on goods from China is that a high volume of these will come from US companies such as Apple and Dell, which assemble their products cost competitively in China, then export them to US consumers. Trump calls for these firms to relocate their production back to the US, but comparatively much higher labour and other costs would lead to higher prices for consumers and inflation.

It is time for the US president to end his short-sighted and self-harming trade policies, and fully appreciate the inter-connected nature of the 21st-century global economy and society. The future health of the global economy depends on a good working partnership between the US and China. Both countries must quickly end this trade war and focus instead on establishing more harmonious relations – for all our sakes.

(Christopher Dent is Senior Lecturer, Edge Hill University)

(This article was originally published on The Conversation. Read the <a href="https://theconversation.com/why-there-will-be-no-winners-from-the-us-china-trade-war-109822">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 Christopher Dent The clock is ticking for China and the US to resolve their trade dispute. Some progress was made at the last round of talks (January 7-9) but negotiators must find a comprehensive agreement by March 2.

By Christopher Dent The clock is ticking for China and the US to resolve their trade dispute. Some progress was made at the last round of talks (January 7-9) but negotiators must find a comprehensive agreement by March 2. If they fail, the US government plans to raise tariffs from 10 per cent to 25 per cent on $200 billion of Chinese imports. This would have an enormous impact not just on US-China bilateral trade but also on many other countries due to global supply chain linkages. The US president, Donald Trump, wishes to adjust the “terms of trade” between both countries, addressing what he alleges are China’s “unfair” trading practices. Many observers believe this is a battle not just about trade but also about economic and technological supremacy. The Trump administration accuses China of stealing technology from American companies. It has also been critical of the Chinese government’s strategic plans to make the country a world leader in industry sectors such as aerospace, renewable energy, robotics and electric vehicles. The recent successful landing of a Chinese spacecraft on the Moon would have caused further consternation among Americans fearful of China’s new technological capacities. The US says it wants China to become a free market economy and ditch its state management approach. Ironically, the credibility of America’s position on this matter is undermined by Trump’s own protectionist stance on trade, which itself constitutes significant state intervention in the marketplace. But, despite their political and economic differences, the reality is that the US and China’s economies are deeply interconnected through various layers of commercial, financial and production links. The two are so entwined that they have been dubbed a symbiotic “Chimerica” economy. Economic interdependence US-China economic interdependence has to be carefully managed and many companies are critical of the Trump administration’s decision to raise tariffs. They rightly warn that aggressive US actions against China will ultimately harm American firms, workers and consumers. What’s more, the world’s two largest national economies lie at the core of an ever more integrated global economy. Any significant disruption to their relationship will have major ramifications for businesses worldwide. From his actions and tweeted thinking to date, it appears that Trump is failing to acknowledge the extent of US-China economic interdependence, or is choosing to ignore it. While the US trade deficit of $336 billion with China in 2017 is at some level a cause for concern, China recycles much of its surplus back through buying US government securities. Taking the car industry as an example, we can reasonably assume that Trump wishes to see more cars made by Ford, General Motors and other American firms in the US, which get sold both at home and in foreign markets. Ideally, in Trump’s view, they would also be sourcing materials and parts from US-based companies, thus overall generating more jobs and prosperity for Americans. But this cannot be sustainably achieved through protectionist trade measures. Trump’s adoption of a defensive economic nationalist position and a simplistic “imports bad, exports good” mindset chimes with a 19th-century view of the world economy. Then it was the norm for companies to organise production in one nation and simply export from it. Today, technological advances mean companies increasingly organise their production across nations, mainly for reasons of cost efficiency, making goods cheaper to buy and providing wider consumer choice. In many of the world’s major industries, it makes no economic sense today to do otherwise. Competitive advantage For companies, the ultimate arbiter of success is the consumer. The fundamental reason why the sales of American car manufacturers have fallen over the years – both at home and in export markets – is not due to “unfair” trade practices but because they lack competitiveness. The same logic applies to other industries. Sales of foreign cars in Japan illustrates this. While the Japanese car market is hard for foreign firms to penetrate, Japan does not apply import tariffs in this sector. So both European and US firms face the same challenges in satisfying the discerning Japanese consumer. From 2013 to 2016, Japan’s imports of US cars fell from 23,381 to 19,933, whereas imports of European vehicles increased from 239,090 to 251,155. If Trump wishes American car makers to expand production and exports, they need to produce more competitive and desirable products. Sometimes, this is extraordinarily difficult to achieve in industries experiencing deep structural decline, such as the US steel sector. There are, of course, many other sectors where American firms have developed a competitive advantage over their foreign rivals, such as cinema and television shows, popular culture, financial services and university education. Higher tariffs on US imports of goods from China and other countries will in most cases be passed on as higher prices to American consumers, raising inflation and, in turn, interest rates. One of the ironies of imposing import tariffs on goods from China is that a high volume of these will come from US companies such as Apple and Dell, which assemble their products cost competitively in China, then export them to US consumers. Trump calls for these firms to relocate their production back to the US, but comparatively much higher labour and other costs would lead to higher prices for consumers and inflation. It is time for the US president to end his short-sighted and self-harming trade policies, and fully appreciate the inter-connected nature of the 21st-century global economy and society. The future health of the global economy depends on a good working partnership between the US and China. Both countries must quickly end this trade war and focus instead on establishing more harmonious relations – for all our sakes. (Christopher Dent is Senior Lecturer, Edge Hill University) (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)

Why there will be no winners from the US-China trade war

US vice-president Mike Pence has said <a href="http://www.wionews.com/world/china-already-leads-the-world-in-some-military-technology-pentagon-report-190597">China is using "debt diplomacy"</a> and "unfair" trade practices to expand its influence, and has been "put on notice". 
The vice president was speaking at a global summit of American envoys on Wednesday. 
&nbsp;&nbsp; &nbsp; 
"China, as we've observed, is using debt <a href="http://www.wionews.com/world/i-think-we-are-going-to-be-able-to-do-trade-deal-with-china-trump-190288">diplomacy and unfair trade practices</a> to expand its influence," Pence said in his address to global chiefs of mission conference at the Foggy Bottom headquarters of the State Department.

He said "as I made clear on that visit to the region just a few short weeks ago, the United States will always stand for a free and open Indo-Pacific where all countries can enjoy freedom of navigation and open trade."&nbsp;

The conference was attended by US Ambassador to India Ken Juster among others.

"The truth is, too often in recent years China has chosen a path of disregard of the laws and norms that have kept the world safe and prosperous for more than half a century and the days of the United States looking the other way are over. Perhaps most importantly, we've put China on notice," the US vice president said.

He said with President Trump's direction "we've placed tariffs on $250 billion of Chinese goods", with the highest tariff specifically targeting the advanced industries that Beijing is attempting to "capture and control, the high parts of the modern economy".

Pence said as the president's has made clear, the US is prepared to levy even more tariffs until China makes much needed structural changes and signs a trade deal that works, not only for their nation but for the US too.&nbsp;

"We remain hopeful that China will come to the table. Even as negotiations take place as we speak, that China will come to the table and finally enter into a fair and reciprocal trade relationship," he said.

Pence told his envoys that the US also needs a better relationship with China to understand their relationship across the Indo-Pacific.

"We've all seen the aggressive efforts in the South China Sea by China but the United States of America, as I said before and I say again, will continue to stand with nations across the region for a free and open Indo-Pacific and for freedom of navigation on the seven seas of the world," he said.

"That strong stand is resulting in dialogue and in progress, not only with China but with nations around the world. And what's more, some of our greatest challenges, some of our most heinous enemies are in retreat," Pence said.

US vice-president Mike Pence has said China is using "debt diplomacy" and "unfair" trade practices to expand its influence, and has been "put on notice". The vice president was speaking at a global summit of American envoys on Wednesday.

US vice-president Mike Pence has said China is using "debt diplomacy" and "unfair" trade practices to expand its influence, and has been "put on notice". The vice president was speaking at a global summit of American envoys on Wednesday. "China, as we've observed, is using debt diplomacy and unfair trade practices to expand its influence," Pence said in his address to global chiefs of mission conference at the Foggy Bottom headquarters of the State Department. He said "as I made clear on that visit to the region just a few short weeks ago, the United States will always stand for a free and open Indo-Pacific where all countries can enjoy freedom of navigation and open trade." The conference was attended by US Ambassador to India Ken Juster among others. "The truth is, too often in recent years China has chosen a path of disregard of the laws and norms that have kept the world safe and prosperous for more than half a century and the days of the United States looking the other way are over. Perhaps most importantly, we've put China on notice," the US vice president said. He said with President Trump's direction "we've placed tariffs on $250 billion of Chinese goods", with the highest tariff specifically targeting the advanced industries that Beijing is attempting to "capture and control, the high parts of the modern economy". Pence said as the president's has made clear, the US is prepared to levy even more tariffs until China makes much needed structural changes and signs a trade deal that works, not only for their nation but for the US too. "We remain hopeful that China will come to the table. Even as negotiations take place as we speak, that China will come to the table and finally enter into a fair and reciprocal trade relationship," he said. Pence told his envoys that the US also needs a better relationship with China to understand their relationship across the Indo-Pacific. "We've all seen the aggressive efforts in the South China Sea by China but the United States of America, as I said before and I say again, will continue to stand with nations across the region for a free and open Indo-Pacific and for freedom of navigation on the seven seas of the world," he said. "That strong stand is resulting in dialogue and in progress, not only with China but with nations around the world. And what's more, some of our greatest challenges, some of our most heinous enemies are in retreat," Pence said.

US will always stand for open Indo-Pacific, we have put China on notice: Pence

US President &nbsp;Trump has said that his <a href="http://www.wionews.com/world/us-fed-could-rethink-rate-hikes-as-trump-trade-wars-drag-on-economy-185760">trade and tariff policies have started</a> working and many countries, including India, have opened up their markets for American poultry and agricultural products that were not allowed previously.

Addressing the <a href="http://www.wionews.com/world/explaining-the-us-china-trade-war-which-grabbed-spotlight-in-2018-185043">100th annual convention of the American Farm</a> Bureau Federation on Monday, he said, "India and Morocco have opened their markets to our poultry exports. We do so much for them, it's incredible. Japan opened its market to US exports of potatoes from Idaho and lamb from the great State of Texas."

He also said that under the Trump administration, the US is turning all of that around with fair trade deals that put American farmers, ranchers, and in fact put America first.&nbsp;

"That's what I'm interested in, American first," he added.

For the first time in a quarter of a century, Argentina recently opened its market for American pork exports, Trump said.&nbsp;

"They (Argentina) needed something. I said, you have to open it up to pork, and they said, okay. I said, why didn't you do it before? They said, nobody ever asked us. A lot of it is that. You would be amazed. Nobody ever asked us," the US President said.&nbsp;

Similarly, he said that beef from the US has been shipped to Brazil for the first time since 2003. "They're going to have a great new leader. They say he's the Donald Trump of South America. Do you believe it," Trump told the cheering farmers.

Asserting that the US has taken the toughest ever actions to confront China's unfair trade practices that hurt American farmers and ranchers, he said,"This includes China's theft of trade secrets from American agribusiness."

He said he could not believe how complicated their business is with the seeds and the genetic farming.&nbsp;

"It's incredible. People don't know this. But your secrets were being stolen by China and, in all fairness, other countries. We want a fair deal for American farmers removing China's arbitrary bans on agricultural imports, safeguarding our intellectual property, and providing fair market access to all American producers," the US President said.

Trump said the US has also made history by finalising an agreement to replace the "horrible" North American Free Trade Agreement (NAFTA) with a brand-new US-Mexico-Canada Agreement, called the USMCA.&nbsp;

Alleging that the NAFTA was one of the worst trade deals ever made by a country, he said the new landmark trade deal will increase exports of wheat from Montana, dairy from Wisconsin, chicken from Georgia, and products from farmers and ranchers all across the country.

"As part of the USMCA, Canada agreed to give fair treatment to the US wheat farmers. They will now grade American wheat just like they grade their own," he said.

According to Trump, over the last 15 years there has been a continual decline in the US' share of agricultural trade all throughout the world.&nbsp;

"It's all going in the wrong direction. It's changing now. Wait till you see what happens. We do the right deal with China, you're talking about massive - and they're already backordering, right? They're already back. I told them. I said you got to start ordering. You're going to order. They're going to order, and they're already started," he said.

"We're turning all of that around with fair trade deals that put American farmers, ranchers, and in fact put America first. That's what I'm interested in, American first," the US President said.

US President Trump has said that his trade and tariff policies have started working and many countries, including India, have opened up their markets for American poultry and agricultural products that were not allowed previously.

US President Trump has said that his trade and tariff policies have started working and many countries, including India, have opened up their markets for American poultry and agricultural products that were not allowed previously. Addressing the 100th annual convention of the American Farm Bureau Federation on Monday, he said, "India and Morocco have opened their markets to our poultry exports. We do so much for them, it's incredible. Japan opened its market to US exports of potatoes from Idaho and lamb from the great State of Texas." He also said that under the Trump administration, the US is turning all of that around with fair trade deals that put American farmers, ranchers, and in fact put America first. "That's what I'm interested in, American first," he added. For the first time in a quarter of a century, Argentina recently opened its market for American pork exports, Trump said. "They (Argentina) needed something. I said, you have to open it up to pork, and they said, okay. I said, why didn't you do it before? They said, nobody ever asked us. A lot of it is that. You would be amazed. Nobody ever asked us," the US President said. Similarly, he said that beef from the US has been shipped to Brazil for the first time since 2003. "They're going to have a great new leader. They say he's the Donald Trump of South America. Do you believe it," Trump told the cheering farmers. Asserting that the US has taken the toughest ever actions to confront China's unfair trade practices that hurt American farmers and ranchers, he said,"This includes China's theft of trade secrets from American agribusiness." He said he could not believe how complicated their business is with the seeds and the genetic farming. "It's incredible. People don't know this. But your secrets were being stolen by China and, in all fairness, other countries. We want a fair deal for American farmers removing China's arbitrary bans on agricultural imports, safeguarding our intellectual property, and providing fair market access to all American producers," the US President said. Trump said the US has also made history by finalising an agreement to replace the "horrible" North American Free Trade Agreement (NAFTA) with a brand-new US-Mexico-Canada Agreement, called the USMCA. Alleging that the NAFTA was one of the worst trade deals ever made by a country, he said the new landmark trade deal will increase exports of wheat from Montana, dairy from Wisconsin, chicken from Georgia, and products from farmers and ranchers all across the country. "As part of the USMCA, Canada agreed to give fair treatment to the US wheat farmers. They will now grade American wheat just like they grade their own," he said. According to Trump, over the last 15 years there has been a continual decline in the US' share of agricultural trade all throughout the world. "It's all going in the wrong direction. It's changing now. Wait till you see what happens. We do the right deal with China, you're talking about massive - and they're already backordering, right? They're already back. I told them. I said you got to start ordering. You're going to order. They're going to order, and they're already started," he said. "We're turning all of that around with fair trade deals that put American farmers, ranchers, and in fact put America first. That's what I'm interested in, American first," the US President said.

Tariff policies working, India, Morocco have opened markets to our poultry exports: Trump

US President Donald Trump said on Sunday that trade talks with China were going very well and that weakness in the Chinese economy gave Beijing a reason to work towards a deal.

"I think that gives them a great incentive to negotiate," Trump told reporters at the White House.

The comments by the US President have come ahead of the meeting between the negotiators of the two countries&nbsp;in Beijing.

The officials of the two countries will meet for the first US-China face-to-face trade talks since the presidents of the two countries met in December and agreed on a 90-day truce in the trade war.

Trump has slapped import tariffs on hundreds of billions of dollars of Chinese goods as he seeks concessions from Beijing on issues ranging from industrial subsidies to hacking. China has retaliated. The tit-for-tat tariffs have disrupted trade, hurt manufacturing, roiled international markets and slowed the global economy.

While Trump and other officials have said talks between the two sides are progressing well, they have given no details on concessions that China has made. Some US demands would require structural reform that may be unpalatable for Chinese leaders. China would deepen reform but will not yield on issues it deems to be its core national interests, a commentary in the ruling Communist Party's official newspaper said on Wednesday.

(With inputs from agencies)

US President Donald Trump said on Sunday that trade talks with China were going very well and that weakness in the Chinese economy gave Beijing a reason to work towards a deal.

US President Donald Trump said on Sunday that trade talks with China were going very well and that weakness in the Chinese economy gave Beijing a reason to work towards a deal. "I think that gives them a great incentive to negotiate," Trump told reporters at the White House. The comments by the US President have come ahead of the meeting between the negotiators of the two countries in Beijing. The officials of the two countries will meet for the first US-China face-to-face trade talks since the presidents of the two countries met in December and agreed on a 90-day truce in the trade war. Trump has slapped import tariffs on hundreds of billions of dollars of Chinese goods as he seeks concessions from Beijing on issues ranging from industrial subsidies to hacking. China has retaliated. The tit-for-tat tariffs have disrupted trade, hurt manufacturing, roiled international markets and slowed the global economy. While Trump and other officials have said talks between the two sides are progressing well, they have given no details on concessions that China has made. Some US demands would require structural reform that may be unpalatable for Chinese leaders. China would deepen reform but will not yield on issues it deems to be its core national interests, a commentary in the ruling Communist Party's official newspaper said on Wednesday. (With inputs from agencies)

Weakness in China economy gives Beijing incentive for trade deal: Trump

Apple Inc&nbsp;on Wednesday took the rare step of cutting its quarterly sales forecast, with Chief Executive Tim Cook blaming slowing iPhone sales in China, whose economy has been dragged down by uncertainty around U.S.-China trade relations.

The news sent Apple shares tumbling in after-hours trade and triggered a broader selloff in the stock market.

The revenue cut for the just-ended quarter raises questions about whether Apple, the face of American business in many parts of the world, is being punished by Chinese officials or consumers in favour of local rivals such as Huawei Technology Cos Ltd, whose pricey smartphones compete with the iPhone and which has been under discussion by the Trump administration for a possible sales ban over suggestions that its telecommunications equipment could be used to spy on Americans.

Cook told CNBC that Apple products have not been targeted by the Chinese government, though some consumers may have elected not to buy an iPhone or other Apple device because it is an American company.

“The much larger issue is the slowing of the (Chinese) economy, and then the trade tension that has further pressured it,” Cook said.

Some analysts, however, questioned the impact of Apple's own actions, such as its unyielding pursuit of high selling prices for its products.

Apple on Wednesday lowered its forecast to $84 billion in revenue for its fiscal first quarter ended December 29, below analysts' estimate of $91.5 billion, according to IBES data from Refinitiv. Apple originally forecasts revenue of between $89 billion and $93 billion.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," Cook said in a letter to investors. "In fact, most of our revenue shortfall to our guidance, and over 100 per cent of our year-over-year worldwide revenue decline occurred in Greater China across iPhone, Mac and iPad."

Wednesday was the first time that Apple issued a warning on its revenue guidance ahead of releasing quarterly results since the iPhone was launched in 2007.

Apple shares skidded 7.7 per cent in after-hours trade, dragging the company's market value below $700 billion. In the broader market, the S&amp;P 500 futures&nbsp;fell 1.5 per cent. In the US government bond market, a typical safe-haven, the yield on the benchmark 10- year, which moves inversely to the bond's price, sank to an 11-month low.

Precursors to a warning

Apple's move was not entirely a surprise. In November, the Cupertino, California-based company said it would quit disclosing unit sales data for iPhones and other hardware items, leading many analysts to worry that a drop in iPhone sales was coming. And after several component makers in November forecast weaker-than-expected sales, some market watchers called the peak for iPhones in several key markets.

In November, Cook cited slowing growth in emerging markets such as Brazil, India and Russia for lower-than-anticipated sales estimates for the company's fiscal first quarter. But Cook specifically said he "would not put China in that category" of countries with troubled growth.

That all came before the damage to the Chinese economy from trade tensions with the United States and long-simmering structural issues became evident.

Apple is now the highest-profile multinational corporation to warn that the economic slowdown in China could hurt its business. Automakers such as Ford Motor Co, Hyundai Motor Co and Nissan Motor Co all previously said they planned to cut production in the country.

But Apple has held firm on its premium pricing strategy in China despite the risk of a slower economy.

"The question for investors will be the extent to which Apple’s aggressive pricing has exacerbated this situation and what this means for the company’s longer-term pricing power within its iPhone franchise," James Cordwell, an analyst at Atlantic Equities, told Reuters.

In the latest fiscal year, ended Sept. 29, unit sales of the iPhone were essentially flat from the prior year, while iPhone revenue expanded 18 per cent to $166.7 billion. That growth came entirely from higher prices.

Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel, said Cook's comments on the impact of the U.S. trade tensions with China "might be a dig at (US&nbsp;President Donald) Trump, but mostly he may be using the trade turmoil as an excuse for some missteps they’ve made over the last year."

But some investors were heartened by Apple's plans on using its cash pile.

In his letter, Cook said Apple has $130 billion in net cash and that it intends to continue its efforts to reduce that cash balance to net zero, which the company has so far accomplished through dividend increases and share buybacks.

"We would anticipate the company increasing share buybacks on the weakness to return capital to shareholders at discount prices," said Trip Miller, managing partner at Apple shareholder Gullane Capital Partners.

The news sent Apple shares tumbling in after-hours trade and triggered a broader selloff in the stock market.

Apple Inc on Wednesday took the rare step of cutting its quarterly sales forecast, with Chief Executive Tim Cook blaming slowing iPhone sales in China, whose economy has been dragged down by uncertainty around U.S.-China trade relations. The news sent Apple shares tumbling in after-hours trade and triggered a broader selloff in the stock market. The revenue cut for the just-ended quarter raises questions about whether Apple, the face of American business in many parts of the world, is being punished by Chinese officials or consumers in favour of local rivals such as Huawei Technology Cos Ltd, whose pricey smartphones compete with the iPhone and which has been under discussion by the Trump administration for a possible sales ban over suggestions that its telecommunications equipment could be used to spy on Americans. Cook told CNBC that Apple products have not been targeted by the Chinese government, though some consumers may have elected not to buy an iPhone or other Apple device because it is an American company. “The much larger issue is the slowing of the (Chinese) economy, and then the trade tension that has further pressured it,” Cook said. Some analysts, however, questioned the impact of Apple's own actions, such as its unyielding pursuit of high selling prices for its products. Apple on Wednesday lowered its forecast to $84 billion in revenue for its fiscal first quarter ended December 29, below analysts' estimate of $91.5 billion, according to IBES data from Refinitiv. Apple originally forecasts revenue of between $89 billion and $93 billion. "While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," Cook said in a letter to investors. "In fact, most of our revenue shortfall to our guidance, and over 100 per cent of our year-over-year worldwide revenue decline occurred in Greater China across iPhone, Mac and iPad." Wednesday was the first time that Apple issued a warning on its revenue guidance ahead of releasing quarterly results since the iPhone was launched in 2007. Apple shares skidded 7.7 per cent in after-hours trade, dragging the company's market value below $700 billion. In the broader market, the S&P 500 futures fell 1.5 per cent. In the US government bond market, a typical safe-haven, the yield on the benchmark 10- year, which moves inversely to the bond's price, sank to an 11-month low. Precursors to a warning Apple's move was not entirely a surprise. In November, the Cupertino, California-based company said it would quit disclosing unit sales data for iPhones and other hardware items, leading many analysts to worry that a drop in iPhone sales was coming. And after several component makers in November forecast weaker-than-expected sales, some market watchers called the peak for iPhones in several key markets. In November, Cook cited slowing growth in emerging markets such as Brazil, India and Russia for lower-than-anticipated sales estimates for the company's fiscal first quarter. But Cook specifically said he "would not put China in that category" of countries with troubled growth. That all came before the damage to the Chinese economy from trade tensions with the United States and long-simmering structural issues became evident. Apple is now the highest-profile multinational corporation to warn that the economic slowdown in China could hurt its business. Automakers such as Ford Motor Co, Hyundai Motor Co and Nissan Motor Co all previously said they planned to cut production in the country. But Apple has held firm on its premium pricing strategy in China despite the risk of a slower economy. "The question for investors will be the extent to which Apple’s aggressive pricing has exacerbated this situation and what this means for the company’s longer-term pricing power within its iPhone franchise," James Cordwell, an analyst at Atlantic Equities, told Reuters. In the latest fiscal year, ended Sept. 29, unit sales of the iPhone were essentially flat from the prior year, while iPhone revenue expanded 18 per cent to $166.7 billion. That growth came entirely from higher prices. Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel, said Cook's comments on the impact of the U.S. trade tensions with China "might be a dig at (US President Donald) Trump, but mostly he may be using the trade turmoil as an excuse for some missteps they’ve made over the last year." But some investors were heartened by Apple's plans on using its cash pile. In his letter, Cook said Apple has $130 billion in net cash and that it intends to continue its efforts to reduce that cash balance to net zero, which the company has so far accomplished through dividend increases and share buybacks. "We would anticipate the company increasing share buybacks on the weakness to return capital to shareholders at discount prices," said Trip Miller, managing partner at Apple shareholder Gullane Capital Partners.

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