US President Donald Trump returned home early Sunday from Argentina, where he reached a <a href="http://www.wionews.com/world/us-says-it-is-suspending-new-china-tariffs-for-90-days-180809">ceasefire in a trade war</a> with China but snubbed action on climate change and other trade disputes at the Group of 20 summit.

The end of Trump's latest tense foray into international diplomacy comes as America prepares to say a final farewell to former president George HW&nbsp;Bush, who died on Friday at the age of 94.

Bush's death may offer Trump a temporary political respite -- lawmakers are reportedly discussing a stopgap budget bill that would push back a potential government shutdown until after Bush's funeral services.

On Air Force One, Trump told reporters he would "absolutely consider it and probably" accept such a measure.

Trump and Chinese President Xi Jinping brokered a trade deal of sorts over steaks and Argentine wine in Buenos Aires, agreeing to suspend any new tariffs while new negotiations are pursued.

But a summit-ending statement from the G20 reiterated that the United States has rejected a global agreement on climate change, and omitted pledges to combat protectionism that were a mainstay of the world's leading economies in the pre-Trump era.

US President Donald Trump returned home early Sunday from Argentina, where he reached a ceasefire in a trade war with China but snubbed action on climate change and other trade disputes at the Group of 20 summit.

US President Donald Trump returned home early Sunday from Argentina, where he reached a ceasefire in a trade war with China but snubbed action on climate change and other trade disputes at the Group of 20 summit. The end of Trump's latest tense foray into international diplomacy comes as America prepares to say a final farewell to former president George HW Bush, who died on Friday at the age of 94. Bush's death may offer Trump a temporary political respite -- lawmakers are reportedly discussing a stopgap budget bill that would push back a potential government shutdown until after Bush's funeral services. On Air Force One, Trump told reporters he would "absolutely consider it and probably" accept such a measure. Trump and Chinese President Xi Jinping brokered a trade deal of sorts over steaks and Argentine wine in Buenos Aires, agreeing to suspend any new tariffs while new negotiations are pursued. But a summit-ending statement from the G20 reiterated that the United States has rejected a global agreement on climate change, and omitted pledges to combat protectionism that were a mainstay of the world's leading economies in the pre-Trump era.

Trump back in US after thorny G20 summit, China talks

Asian markets were mixed Tuesday as dealers focused on crunch G20 talks between Donald Trump and Xi Jinping, with the US president warning he will ramp up his trade war with China if the two do not reach a deal.

With the economic superpowers in the middle of an increasingly bitter standoff, there are hopes the two leaders will be able to work out an agreement that brings them back from the brink of a tariffs row that threatens to dent global growth.

In an interview with the Wall Street Journal published Monday, Trump said he thought it "highly unlikely" the US would hold off more than doubling duties on $250 billion of Chinese imports if there is no breakthrough.

"If we don't make a deal, then I'm going to put the $267 billion additional on," he told the newspaper, referring to the remainder of Chinese imports that so far have not been hit with tariffs.

"The only deal would be China has to open up their country to competition from the United States."

While some observers suggested the comments were a typical Trump ploy to apply maximum pressure on Beijing heading into the meeting, there remain fears about what the tycoon has in mind.

"It doesn't sound like we will see Donald the Deal Maker but instead Trump the Trade Warrior at G20," said Stephen Innes, head of Asia-Pacific trade at OANDA.

Asian traders moved cautiously in early exchanges after Monday's global rally, which was fuelled by rising oil prices, Italy's softer tone in its budget standoff with Brussels and Britain's Brexit agreement with the European Union.

Oil outlook warning

Tokyo ended the morning 0.1 per cent higher, Shanghai added 0.1 per cent and Sydney rose 0.5 per cent but Hong Kong and Singapore each slipped 0.6 per cent.

Seoul and Wellington both added 0.3 per cent but Taipei shed 0.6 per cent and Manila gave up 0.5 per cent.

While the meeting is the main event this week, investors are also keeping an eye on speeches from top Federal Reserve officials including boss Jerome Powell, which could signal a softer pace of interest rate hikes.

Rising US borrowing costs -- fuelled by surging US growth -- have been a major cause of concern for investors but recent comments from the central banker appear to show a more dovish outlook for 2019 as the global economy slows.

On oil markets both main contracts remained under pressure despite Monday's jump, with market-watchers waiting for next month's gathering of OPEC and non-OPEC members hoping they will announce a cut in output.

The commodity has been hammered since early October by a series of issues including the uncertain global outlook, the trade war, rising supplies, slowing demand and weakness in China.

As trade tensions begin to bite on the global economy, analysts are predicting slower growth into next year, meaning there would be less demand for oil.&nbsp;

"It has been our long-held view that slower global economic activity would be a factor weighing on oil demand in 2019 and that the market would move into surplus," London-based Capital Economics said.

Key figures around 0245 GMT

Tokyo - Nikkei 225: UP 0.1 percent at 21,843.37 (break)

Hong Kong - Hang Seng: DOWN 0.6 per cent at 26,226.26

Shanghai - Composite: UP 0.4 percent at 2,586.54

Euro/dollar: UP at $1.1332 from $1.1326 at 2130 GMT

Euro/pound: UP at 88.46 pence from 88.44 pence

Pound/dollar: UP at $1.2811 from $1.2806&nbsp;

Oil - West Texas Intermediate: DOWN 26 cents at $51.37 per barrel&nbsp;

Oil - Brent Crude: DOWN 17 cents at $60.31 per barrel

New York - Dow Jones: UP 1.5 percent at 24,640.24 (close)

London - FTSE 100: UP 1.2 percent at 7,036.00 (close)

Asian markets were mixed Tuesday as dealers focused on crunch G20 talks between Donald Trump and Xi Jinping, with the US president warning he will ramp up his trade war with China if the two do not reach a deal.

Asian markets were mixed Tuesday as dealers focused on crunch G20 talks between Donald Trump and Xi Jinping, with the US president warning he will ramp up his trade war with China if the two do not reach a deal. With the economic superpowers in the middle of an increasingly bitter standoff, there are hopes the two leaders will be able to work out an agreement that brings them back from the brink of a tariffs row that threatens to dent global growth. In an interview with the Wall Street Journal published Monday, Trump said he thought it "highly unlikely" the US would hold off more than doubling duties on $250 billion of Chinese imports if there is no breakthrough. "If we don't make a deal, then I'm going to put the $267 billion additional on," he told the newspaper, referring to the remainder of Chinese imports that so far have not been hit with tariffs. "The only deal would be China has to open up their country to competition from the United States." While some observers suggested the comments were a typical Trump ploy to apply maximum pressure on Beijing heading into the meeting, there remain fears about what the tycoon has in mind. "It doesn't sound like we will see Donald the Deal Maker but instead Trump the Trade Warrior at G20," said Stephen Innes, head of Asia-Pacific trade at OANDA. Asian traders moved cautiously in early exchanges after Monday's global rally, which was fuelled by rising oil prices, Italy's softer tone in its budget standoff with Brussels and Britain's Brexit agreement with the European Union. Oil outlook warning Tokyo ended the morning 0.1 per cent higher, Shanghai added 0.1 per cent and Sydney rose 0.5 per cent but Hong Kong and Singapore each slipped 0.6 per cent. Seoul and Wellington both added 0.3 per cent but Taipei shed 0.6 per cent and Manila gave up 0.5 per cent. While the meeting is the main event this week, investors are also keeping an eye on speeches from top Federal Reserve officials including boss Jerome Powell, which could signal a softer pace of interest rate hikes. Rising US borrowing costs -- fuelled by surging US growth -- have been a major cause of concern for investors but recent comments from the central banker appear to show a more dovish outlook for 2019 as the global economy slows. On oil markets both main contracts remained under pressure despite Monday's jump, with market-watchers waiting for next month's gathering of OPEC and non-OPEC members hoping they will announce a cut in output. The commodity has been hammered since early October by a series of issues including the uncertain global outlook, the trade war, rising supplies, slowing demand and weakness in China. As trade tensions begin to bite on the global economy, analysts are predicting slower growth into next year, meaning there would be less demand for oil. "It has been our long-held view that slower global economic activity would be a factor weighing on oil demand in 2019 and that the market would move into surplus," London-based Capital Economics said. Key figures around 0245 GMT Tokyo - Nikkei 225: UP 0.1 percent at 21,843.37 (break) Hong Kong - Hang Seng: DOWN 0.6 per cent at 26,226.26 Shanghai - Composite: UP 0.4 percent at 2,586.54 Euro/dollar: UP at $1.1332 from $1.1326 at 2130 GMT Euro/pound: UP at 88.46 pence from 88.44 pence Pound/dollar: UP at $1.2811 from $1.2806 Oil - West Texas Intermediate: DOWN 26 cents at $51.37 per barrel Oil - Brent Crude: DOWN 17 cents at $60.31 per barrel New York - Dow Jones: UP 1.5 percent at 24,640.24 (close) London - FTSE 100: UP 1.2 percent at 7,036.00 (close)

Asian markets mixed as Trump threatens to ramp up trade war

The World Trade Organization agreed Wednesday to hear complaints from a range of countries over new US steel and aluminium tariffs, as well as complaints from Washington over retaliatory duties.

The WTO's Dispute Settlement Body (DSB) agreed to establish panels to review US President Donald Trump's decision to hit a long line of countries with tariffs of 25 per cent on steel and 10 per cent on aluminium.

The DSB will create separate panels for the complaints by the European Union, China, Canada, Mexico, Norway, Russia and Turkey, after the US said it would not agree to a single panel to hear all of them.

The DSB agreed Wednesday to Washington's request for three panels to rule on the legality of retaliatory tariffs imposed by Canada, China, Mexico and the European Union.

It also agreed to a US call for a panel to be created to review "certain Chinese measures pertaining to the protection of intellectual property rights."&nbsp;

Marking a departure from a decades-long US-led drive for free trade, Trump has justified the steep tariffs with claims that massive flows of imports to the United States threaten national security.

Washington invoked a rarely used WTO exception that allows a country to take "any action which it considers necessary for the protection of its essential security interests."

Speaking at Wednesday's meeting, US Ambassador Dennis Shea warned of the "risks posed to the WTO dispute settlement system when a member challenges measures taken for the protection of essential security interests."

The US delegation also cautioned that any review of measures taken for national security reasons would undermine the "legitimacy" and "even the viability of the WTO as a whole".

The tariff spat has escalated into an all-out trade war between the US and China and growing trade tensions between Washington and many of its traditional allies.

The decision to establish the panels follows rounds of failed consultations between the parties and mark an escalation in an ongoing showdown at the WTO around Trump's controversial trade policies.

The first requests to establish the panels were rejected last month, prompting the sides to file second requests.

Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.

The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.

The World Trade Organization agreed Wednesday to hear complaints from a range of countries over new US steel and aluminium tariffs, as well as complaints from Washington over retaliatory duties.

The World Trade Organization agreed Wednesday to hear complaints from a range of countries over new US steel and aluminium tariffs, as well as complaints from Washington over retaliatory duties. The WTO's Dispute Settlement Body (DSB) agreed to establish panels to review US President Donald Trump's decision to hit a long line of countries with tariffs of 25 per cent on steel and 10 per cent on aluminium. The DSB will create separate panels for the complaints by the European Union, China, Canada, Mexico, Norway, Russia and Turkey, after the US said it would not agree to a single panel to hear all of them. The DSB agreed Wednesday to Washington's request for three panels to rule on the legality of retaliatory tariffs imposed by Canada, China, Mexico and the European Union. It also agreed to a US call for a panel to be created to review "certain Chinese measures pertaining to the protection of intellectual property rights." Marking a departure from a decades-long US-led drive for free trade, Trump has justified the steep tariffs with claims that massive flows of imports to the United States threaten national security. Washington invoked a rarely used WTO exception that allows a country to take "any action which it considers necessary for the protection of its essential security interests." Speaking at Wednesday's meeting, US Ambassador Dennis Shea warned of the "risks posed to the WTO dispute settlement system when a member challenges measures taken for the protection of essential security interests." The US delegation also cautioned that any review of measures taken for national security reasons would undermine the "legitimacy" and "even the viability of the WTO as a whole". The tariff spat has escalated into an all-out trade war between the US and China and growing trade tensions between Washington and many of its traditional allies. The decision to establish the panels follows rounds of failed consultations between the parties and mark an escalation in an ongoing showdown at the WTO around Trump's controversial trade policies. The first requests to establish the panels were rejected last month, prompting the sides to file second requests. Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through. The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.

World Trade Organisation to rule in spat over US tariffs

The World Trade Organisation (WTO) has agreed to hear complaints from a range of countries over United States’ steel and aluminium tariffs, as well as complaints from Washington over retaliatory duties. The August trade body’s Dispute Settlement Body(DBS) will establish panels to review US President Donald Trump's decision to hit a long line of countries with tariffs of 25 per cent on steel and 10 per cent on aluminium. In more senses than one, this is unalloyed good news.&nbsp;

The reasons pertain to the very nature of the WTO, the international trade and economics architecture which accrued from long and painful deliberations and negotiations post the Second World War and the extent global governance architecture and their survival.

It may be pointed out here that Donald Trump in his schemata and diagnosis of what plagued America, has opted for a narrow mercantilism and the protectionism that it entails, to “make America great again(MAGA). This approach as axiomatically entailed a confrontational stance not only with countries as diverse as China, Mexico, Canada and the European Union but also constitutes an assault on the intergovernmental and global governance architecture in place. 
&nbsp; 
The WTO, whose precursor was the General Agreement on Trade and Tariffs (GATT), has been a positive enabler of and for global trade, so much so that after the inception of the GATT and the then WTO world trade demonstrated a stupendous increase, even more than world output.&nbsp;

While economists continue to debate, contend and even quibble over the contribution of freer trade to economic growth and development, it has been empirically demonstrated that over the past six decades or so, there has been an unprecedented decline in global poverty rates. This decline has been attributed to the freeing of trade in goods and, to an extent, services. The WTO and its precursor have been central to these sanguine developments. However, there has also been a corresponding increase in inequality in many countries, especially in the Western world, including the United States. The reasons accrue not merely from the nature of trade and trade opening but the political economy and inadequate policy grids to deal with freer trade and its immediate consequences.

The WTO not only brought freed trade but also brought countries closer and enmeshed these into a complex interdependence paradigm which has been held to be an antidote to political conflicts and even war. But, enter Trump, and his version of trade and trade policy, there has been a veritable assault not only on international relations and world order in place after the Second Great War but also on intergovernmental organizations like the WTO. If Trump succeeds in decimating this order, world politics and economics will devolve into a zero-sum game where states and nations will seek to take advantage over other states, among other things. This zero-sum competition will have spillover political consequences with global and local conflicts looming on the horizon.&nbsp;

The corollary effect would also be felt on globalisation (which has already been impeded) and will be supplanted by deglobalisation. Added up, the world will be actually poorer, in the expansive sense and definition of the term. Even the United States will not be immune to negative structural winds from deglobalisation and shrinkage of world trade. While there might be immediate “windfalls” to reap, in the long term, the country will also be stung. 
&nbsp; 
With no one to turn to for dispute resolution, the zero-sum conflict between constituent states of the international system, would not merely fracture the international trading system but also its apex bodies like the WTO, leading to anarchy in the economic, trade and financial domains.&nbsp;

However, now with the putative activism of the WTO’s &nbsp;Dispute Settlement Body (DSB), there are reasons for hope. The world trade architecture might be salvaged and its institutions might occupy “pride of place” over visceral and reflexive mercantilism and protectionism. In the ultimate analysis, as history demonstrates, trade cannot entirely be the solvent of political conflicts but it can, to a large extent, dissipate these. The Japanese trading state might serve as a classic example of trade and trade policy ameliorating the worst instincts of a given nation. 
 
Alarmingly, if the WTO does not step up or is actually ignored, the zero-sum economic competition could take an uglier form and shape, with political divisions and conflicts supplanting these. Saving the WTO and making it central to trade and its concomitants is then not only an economic imperative but also a political and a moral one.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

The World Trade Organisation (WTO) has agreed to hear complaints from a range of countries over United States’ steel and aluminium tariffs, as well as complaints from Washington over retaliatory duties.

The World Trade Organisation (WTO) has agreed to hear complaints from a range of countries over United States’ steel and aluminium tariffs, as well as complaints from Washington over retaliatory duties. The August trade body’s Dispute Settlement Body(DBS) will establish panels to review US President Donald Trump's decision to hit a long line of countries with tariffs of 25 per cent on steel and 10 per cent on aluminium. In more senses than one, this is unalloyed good news. The reasons pertain to the very nature of the WTO, the international trade and economics architecture which accrued from long and painful deliberations and negotiations post the Second World War and the extent global governance architecture and their survival. It may be pointed out here that Donald Trump in his schemata and diagnosis of what plagued America, has opted for a narrow mercantilism and the protectionism that it entails, to “make America great again(MAGA). This approach as axiomatically entailed a confrontational stance not only with countries as diverse as China, Mexico, Canada and the European Union but also constitutes an assault on the intergovernmental and global governance architecture in place. The WTO, whose precursor was the General Agreement on Trade and Tariffs (GATT), has been a positive enabler of and for global trade, so much so that after the inception of the GATT and the then WTO world trade demonstrated a stupendous increase, even more than world output. While economists continue to debate, contend and even quibble over the contribution of freer trade to economic growth and development, it has been empirically demonstrated that over the past six decades or so, there has been an unprecedented decline in global poverty rates. This decline has been attributed to the freeing of trade in goods and, to an extent, services. The WTO and its precursor have been central to these sanguine developments. However, there has also been a corresponding increase in inequality in many countries, especially in the Western world, including the United States. The reasons accrue not merely from the nature of trade and trade opening but the political economy and inadequate policy grids to deal with freer trade and its immediate consequences. The WTO not only brought freed trade but also brought countries closer and enmeshed these into a complex interdependence paradigm which has been held to be an antidote to political conflicts and even war. But, enter Trump, and his version of trade and trade policy, there has been a veritable assault not only on international relations and world order in place after the Second Great War but also on intergovernmental organizations like the WTO. If Trump succeeds in decimating this order, world politics and economics will devolve into a zero-sum game where states and nations will seek to take advantage over other states, among other things. This zero-sum competition will have spillover political consequences with global and local conflicts looming on the horizon. The corollary effect would also be felt on globalisation (which has already been impeded) and will be supplanted by deglobalisation. Added up, the world will be actually poorer, in the expansive sense and definition of the term. Even the United States will not be immune to negative structural winds from deglobalisation and shrinkage of world trade. While there might be immediate “windfalls” to reap, in the long term, the country will also be stung. With no one to turn to for dispute resolution, the zero-sum conflict between constituent states of the international system, would not merely fracture the international trading system but also its apex bodies like the WTO, leading to anarchy in the economic, trade and financial domains. However, now with the putative activism of the WTO’s Dispute Settlement Body (DSB), there are reasons for hope. The world trade architecture might be salvaged and its institutions might occupy “pride of place” over visceral and reflexive mercantilism and protectionism. In the ultimate analysis, as history demonstrates, trade cannot entirely be the solvent of political conflicts but it can, to a large extent, dissipate these. The Japanese trading state might serve as a classic example of trade and trade policy ameliorating the worst instincts of a given nation. Alarmingly, if the WTO does not step up or is actually ignored, the zero-sum economic competition could take an uglier form and shape, with political divisions and conflicts supplanting these. Saving the WTO and making it central to trade and its concomitants is then not only an economic imperative but also a political and a moral one. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Trade conflict: World Trade Organisation's primacy must be restored

US stocks dropped and the Nasdaq fell 3 per cent on Monday as investors dumped Apple, internet and other technology shares, further shaking confidence in a group of stocks that has propelled the long bull market.

Conflicting signals over the state of play between the United States and China on their trade dispute added to caution in the market.

Shares of Apple Inc fell after the Wall Street Journal reported the company had cut production orders in recent weeks for all three iPhone models launched in September.

The iPhone maker's stock dropped 4.0 per cent to $185.86 and is now down 19.9 per cent from its October 3 record closing high in the wake of a disappointing holiday quarter sales forecast and weak outlooks from several suppliers. The S&amp;P 500 technology index, down 3.8 per cent, led sector losses.

Other market leaders - including the 'FANG' stocks - also fell sharply. Shares of Facebook&nbsp;were down 5.7 per cent, Amazon.com was down 5.1 per cent, Netflix fell 5.5 per cent and Alphabet fell 3.8 per cent.

Since the FANG outperformance run peaked on August 30, the group has underperformed the S&amp;P 500 by 16.25 per cent. That is their worst underperformance since the first half of 2014 when they underperformed by around 20 per cent.

"You're seeing that rotation away from tech. Certainly, the indexes are much more growth-oriented because of the sheer size of those companies now, and they dominate the indexes," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "You're going to have more underperformance of the growth names."

The S&amp;P utilities and real estate sectors were the only two that ended in positive territory.

The Dow Jones Industrial Average fell 395.78 points, or 1.56 per cent, to 25,017.44, the S&amp;P 500 lost 45.54 points, or 1.66 per cent, to 2,690.73 and the Nasdaq Composite dropped 219.40 points, or 3.03 per cent, to 7,028.48.

Comments by New York Federal Reserve President John Williams on Monday that the US central bank is pushing ahead with gradual rate-hike plans next month as it marches towards a more normal policy stance may have added pressure to stocks.

Some investors questioned whether the Fed will be able to continue raising interest rates, possibly harming growth.

Richard Clarida, the Fed's newly appointed vice chair, said on Friday that US rates are nearing Fed estimates of a neutral rate, which "makes sense."

Over the weekend, Asia-Pacific leaders meeting in Papua New Guinea failed to agree on a communique for the first time, with US-China trade worries on the forefront.

US Vice President Mike Pence said in a blunt speech on Saturday the United States will not back down from its trade dispute with China unless Beijing bows to US demands, dampening Friday's trade optimism that was fuelled by comments from President Donald Trump.

Shares of Apple suppliers were also hit, including Lumentum Holdings Inc, Universal Display Corp, Cirrus Logic Inc and Skyworks Solutions Inc.

The Philadelphia SE Semiconductor index, which includes some Apple suppliers, dropped 3.9 per cent, extending losses from the previous session.

"Lots of times we get a rally started the Friday after Thanksgiving, which is this week. If some of these dominos fall on the positive side, we could see this trend reverse," said Bucky Hellwig, senior vice president at BB&amp;T Wealth Management in Birmingham, Alabama.

"But right now there are several things working against the market - the Fed, the uncertainty with regard to the trade deal with China and some sector disappointments, particularly in technology."

Trading volumes were thin at the start of the holiday-shortened week ahead of Thanksgiving on Thursday and a shorter session on Friday, which brings slight volatility to markets, traders said.

About 7.7 billion shares changed hands on US exchanges. That compares with the 8.7 billion daily average for the past 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 2.72-to-1 ratio; on Nasdaq, a 2.94-to-1 ratio favoured decliners.

The S&amp;P 500 posted 28 new 52-week highs and 18 new lows; the Nasdaq Composite recorded 17 new highs and 159 new lows.

US stocks dropped and the Nasdaq fell 3 per cent on Monday as investors dumped Apple, internet and other technology shares, further shaking confidence in a group of stocks that has propelled the long bull market.

US stocks dropped and the Nasdaq fell 3 per cent on Monday as investors dumped Apple, internet and other technology shares, further shaking confidence in a group of stocks that has propelled the long bull market. Conflicting signals over the state of play between the United States and China on their trade dispute added to caution in the market. Shares of Apple Inc fell after the Wall Street Journal reported the company had cut production orders in recent weeks for all three iPhone models launched in September. The iPhone maker's stock dropped 4.0 per cent to $185.86 and is now down 19.9 per cent from its October 3 record closing high in the wake of a disappointing holiday quarter sales forecast and weak outlooks from several suppliers. The S&P 500 technology index, down 3.8 per cent, led sector losses. Other market leaders - including the 'FANG' stocks - also fell sharply. Shares of Facebook were down 5.7 per cent, Amazon.com was down 5.1 per cent, Netflix fell 5.5 per cent and Alphabet fell 3.8 per cent. Since the FANG outperformance run peaked on August 30, the group has underperformed the S&P 500 by 16.25 per cent. That is their worst underperformance since the first half of 2014 when they underperformed by around 20 per cent. "You're seeing that rotation away from tech. Certainly, the indexes are much more growth-oriented because of the sheer size of those companies now, and they dominate the indexes," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "You're going to have more underperformance of the growth names." The S&P utilities and real estate sectors were the only two that ended in positive territory. The Dow Jones Industrial Average fell 395.78 points, or 1.56 per cent, to 25,017.44, the S&P 500 lost 45.54 points, or 1.66 per cent, to 2,690.73 and the Nasdaq Composite dropped 219.40 points, or 3.03 per cent, to 7,028.48. Comments by New York Federal Reserve President John Williams on Monday that the US central bank is pushing ahead with gradual rate-hike plans next month as it marches towards a more normal policy stance may have added pressure to stocks. Some investors questioned whether the Fed will be able to continue raising interest rates, possibly harming growth. Richard Clarida, the Fed's newly appointed vice chair, said on Friday that US rates are nearing Fed estimates of a neutral rate, which "makes sense." Over the weekend, Asia-Pacific leaders meeting in Papua New Guinea failed to agree on a communique for the first time, with US-China trade worries on the forefront. US Vice President Mike Pence said in a blunt speech on Saturday the United States will not back down from its trade dispute with China unless Beijing bows to US demands, dampening Friday's trade optimism that was fuelled by comments from President Donald Trump. Shares of Apple suppliers were also hit, including Lumentum Holdings Inc, Universal Display Corp, Cirrus Logic Inc and Skyworks Solutions Inc. The Philadelphia SE Semiconductor index, which includes some Apple suppliers, dropped 3.9 per cent, extending losses from the previous session. "Lots of times we get a rally started the Friday after Thanksgiving, which is this week. If some of these dominos fall on the positive side, we could see this trend reverse," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. "But right now there are several things working against the market - the Fed, the uncertainty with regard to the trade deal with China and some sector disappointments, particularly in technology." Trading volumes were thin at the start of the holiday-shortened week ahead of Thanksgiving on Thursday and a shorter session on Friday, which brings slight volatility to markets, traders said. About 7.7 billion shares changed hands on US exchanges. That compares with the 8.7 billion daily average for the past 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 2.72-to-1 ratio; on Nasdaq, a 2.94-to-1 ratio favoured decliners. The S&P 500 posted 28 new 52-week highs and 18 new lows; the Nasdaq Composite recorded 17 new highs and 159 new lows.

Wall Street tumbles as Apple, internet stocks swoon

The trade war between the US and China has heightened tensions in global markets and increased volatility in international prices, especially in some key commodities.

While the US tries to ‘correct’ its worsening trade deficit with China by raising punitive tariffs across key sectors like steel and aluminium, China has retaliated by launching tariff lines across sectors that are likely to hurt US exports the most.

However, given the highly interconnected nature of today’s trade, the repercussions of the bilateral trade war are likely to be felt multilaterally across countries, sectors and businesses.

One of the core principles of economics is that free trade can potentially benefit everyone. While the past is riddled with stories of how free trade has catapulted nations into prosperity — the most notable in the recent past being the East Asian Tigers and China — yet, there is growing evidence to suggest that free trade brings with it losers and winners.

If the redistribution of wealth between the losers and winners is drastic, this can generate resentment. This partly explains the growing backlash against free trade, especially in the West. These were the countries which benefited the most from free trade in their early stages of development in the 19th and 20th centuries.

However, towards the end of the 20th century and in the beginning of the 21st century, as the lower-income countries began gaining manufacturing competitiveness through their abundant but cheap labour, the manufacturing base of the western countries gradually began to erode as multinational corporations (MNCs) started shift their manufacturing centres to the lower income countries, like China, Vietnam and Bangladesh.

The richer countries continued to specialise in the tertiary and other highly skilled sectors, which could employ only a limited amount of the vast manufacturing labour that was now left without jobs. Thus, while free trade benefitted the richer nations as a whole, the gains from trade were captured by the top few, widening inequality in these nations.&nbsp;

The growing protectionism in the West needs to be seen in this light. Coming to the context of trade in general, the recent trade war is unlikely to be long lived. Both US and China are mutually dependent on each other. While punitive tariffs can give short-term benefits by redistributing the gains from trade, the longer solution is not to restrict free trade but use other redistributive measures, such as income or wealth taxation.

India is a small player in the global trade scenario, making up less than 2 per cent of global trade. Yet, the recent trade war is likely to have a negative fallout not just on our steel and aluminium exports but also our current account deficit (CAD) and the worsening of the rupee.

The way forward is to engage multilateral forums like the World Trade Organization (WTO), strengthening multilateralism, and using trade diplomacy with our major trading partners, notably the US and China. At the same time, steps to enhance export competitiveness need to continue, as raising labour-intensive exports is the surest way to promote sustainable growth.

Author is a research scholar at DSE

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-widening-inequality-among-nations-2686763">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

The trade war between the US and China has heightened tensions in global markets and increased volatility in international prices, especially in some key commodities.

The trade war between the US and China has heightened tensions in global markets and increased volatility in international prices, especially in some key commodities. While the US tries to ‘correct’ its worsening trade deficit with China by raising punitive tariffs across key sectors like steel and aluminium, China has retaliated by launching tariff lines across sectors that are likely to hurt US exports the most. However, given the highly interconnected nature of today’s trade, the repercussions of the bilateral trade war are likely to be felt multilaterally across countries, sectors and businesses. One of the core principles of economics is that free trade can potentially benefit everyone. While the past is riddled with stories of how free trade has catapulted nations into prosperity — the most notable in the recent past being the East Asian Tigers and China — yet, there is growing evidence to suggest that free trade brings with it losers and winners. If the redistribution of wealth between the losers and winners is drastic, this can generate resentment. This partly explains the growing backlash against free trade, especially in the West. These were the countries which benefited the most from free trade in their early stages of development in the 19th and 20th centuries. However, towards the end of the 20th century and in the beginning of the 21st century, as the lower-income countries began gaining manufacturing competitiveness through their abundant but cheap labour, the manufacturing base of the western countries gradually began to erode as multinational corporations (MNCs) started shift their manufacturing centres to the lower income countries, like China, Vietnam and Bangladesh. The richer countries continued to specialise in the tertiary and other highly skilled sectors, which could employ only a limited amount of the vast manufacturing labour that was now left without jobs. Thus, while free trade benefitted the richer nations as a whole, the gains from trade were captured by the top few, widening inequality in these nations. The growing protectionism in the West needs to be seen in this light. Coming to the context of trade in general, the recent trade war is unlikely to be long lived. Both US and China are mutually dependent on each other. While punitive tariffs can give short-term benefits by redistributing the gains from trade, the longer solution is not to restrict free trade but use other redistributive measures, such as income or wealth taxation. India is a small player in the global trade scenario, making up less than 2 per cent of global trade. Yet, the recent trade war is likely to have a negative fallout not just on our steel and aluminium exports but also our current account deficit (CAD) and the worsening of the rupee. The way forward is to engage multilateral forums like the World Trade Organization (WTO), strengthening multilateralism, and using trade diplomacy with our major trading partners, notably the US and China. At the same time, steps to enhance export competitiveness need to continue, as raising labour-intensive exports is the surest way to promote sustainable growth. Author is a research scholar at DSE (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Widening inequality among nations

Chinese Premier Li Keqiang said on Monday Beijing will further open up its economy in the face of rising protectionism, as he headed for meetings with Asia-Pacific leaders in Singapore that are expected to focus on trade tensions.

Li's remarks in an article in Singapore's Straits Times newspaper, ahead of his arrival in the city-state later in the day, came as Singapore's Prime Minister Lee Hsien Loong called for more regional integration, saying multilateralism was under threat from political pressures.

"China has opened its door to the world; we will never close it but open it even wider," Li said in the article, in which he called for an "open world economy" in the face of "rising protectionism and unilateralism". He did not directly refer to China's bruising trade war with the United States.

Notably absent from this week's meetings is US President Donald Trump, who has said several existing multilateral trade deals are unfair, and has railed against China over intellectual property theft, entry barriers to US businesses and a gaping trade deficit.

Vice President Mike Pence will attend instead of Trump, and Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe are among those also expected to join Li and the ten-member member Association of Southeast Asian Nations (ASEAN).

It was not clear if Li and Pence will hold separate talks on the sidelines of the meetings, which would be a prelude to a summit scheduled between Trump and Chinese President Xi Jinping at the end of the month in Buenos Aires.

The encounter, if it happens, would come on the heels of high-level talks in Washington where the two sides aired their main differences but appeared to attempt controlling the damage to relations that has worsened with tit-for-tat tariffs in recent months.

Meanwhile, in remarks at a business summit on Monday ahead of this week's meetings, Singapore PM Lee said:

"ASEAN has great potential, but fully realising it depends on whether we choose to become more integrated, and work resolutely towards this goal in a world where multilateralism is fraying under political pressures".

Lee has previously warned that the US-China trade war could have a "big, negative impact" on Singapore, and the city-state's central bank has warned it could soon drag on the economy.

Both Singapore and China are expected to rally support for the Regional Comprehensive Economic Partnership (RCEP) pact now being negotiated, showcased to be the free trade deal that will encompass more than a third of the world's GDP.

The pact includes 16 countries, including China, India, Japan and South Korea, but not the United States. Li said China would work to "expedite" RCEP negotiations this week.

Also on Monday, the ten-member ASEAN group reached their first ever deal on e-commerce aimed at helping boost cross-border transactions in the region.

Chinese Premier Li Keqiang said on Monday Beijing will further open up its economy in the face of rising protectionism, as he headed for meetings with Asia-Pacific leaders in Singapore that are expected to focus on trade tensions.

Chinese Premier Li Keqiang said on Monday Beijing will further open up its economy in the face of rising protectionism, as he headed for meetings with Asia-Pacific leaders in Singapore that are expected to focus on trade tensions. Li's remarks in an article in Singapore's Straits Times newspaper, ahead of his arrival in the city-state later in the day, came as Singapore's Prime Minister Lee Hsien Loong called for more regional integration, saying multilateralism was under threat from political pressures. "China has opened its door to the world; we will never close it but open it even wider," Li said in the article, in which he called for an "open world economy" in the face of "rising protectionism and unilateralism". He did not directly refer to China's bruising trade war with the United States. Notably absent from this week's meetings is US President Donald Trump, who has said several existing multilateral trade deals are unfair, and has railed against China over intellectual property theft, entry barriers to US businesses and a gaping trade deficit. Vice President Mike Pence will attend instead of Trump, and Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe are among those also expected to join Li and the ten-member member Association of Southeast Asian Nations (ASEAN). It was not clear if Li and Pence will hold separate talks on the sidelines of the meetings, which would be a prelude to a summit scheduled between Trump and Chinese President Xi Jinping at the end of the month in Buenos Aires. The encounter, if it happens, would come on the heels of high-level talks in Washington where the two sides aired their main differences but appeared to attempt controlling the damage to relations that has worsened with tit-for-tat tariffs in recent months. Meanwhile, in remarks at a business summit on Monday ahead of this week's meetings, Singapore PM Lee said: "ASEAN has great potential, but fully realising it depends on whether we choose to become more integrated, and work resolutely towards this goal in a world where multilateralism is fraying under political pressures". Lee has previously warned that the US-China trade war could have a "big, negative impact" on Singapore, and the city-state's central bank has warned it could soon drag on the economy. Both Singapore and China are expected to rally support for the Regional Comprehensive Economic Partnership (RCEP) pact now being negotiated, showcased to be the free trade deal that will encompass more than a third of the world's GDP. The pact includes 16 countries, including China, India, Japan and South Korea, but not the United States. Li said China would work to "expedite" RCEP negotiations this week. Also on Monday, the ten-member ASEAN group reached their first ever deal on e-commerce aimed at helping boost cross-border transactions in the region.

China says will further open up its economy, slams rising protectionism

By Stephen Chan

As China and the US continue their trade war, what will be the outcome for Africa?

This trade war should not be seen in isolation, and the new year will bring a changed world. China and Russia will cooperate as the new Silk Road begins to join Asia and Europe with a transport and communications corridor Marco Polo could not even imagine.

Russia, Turkey and Iran – once unlikely partners in the Syrian conflict – will form a new Middle East axis to rival that of the US, Israel and Saudi Arabia, with none of the latent instabilities of the latter with its Zionist and Islamic ingredients.

And the US, under Donald Trump, is likely to continue to view Africa – in all but name – as that collection of “shit hole” countries derided by the American president at his undiplomatic, offensive and unthinking worst.

After two years without one, the US will have a permanent assistant secretary of state for Africa – the highest State Department official with an Africa portfolio. Tibor Nagy also comes with a sound reputation as a seasoned diplomat. But will he have any clout on Capitol Hill? And can any official be effective in a State Department that Trump and the former US secretary of state, Rex Tillerson, have slashed and burned?

May’s dancing and used clothes

If the US doesn’t care much for Africa, neither really does the UK. Theresa May’s dismal efforts at dancing on her Africa tour summed up a clumsy view of what the continent needs.

The UK posture is summed up by the position of minister of state for Africa – now held by Harriet Baldwin – with responsibilities in two departments: the Foreign Office and International Development. These are two very different departments and the joint position is both a money-saving device – two ministers for the price of one – and also a confusion of policy as to how the UK should approach Africa. Indeed, perhaps the beleaguered minister’s main responsibility is the search for new UK trading partners in the wake of Brexit.

The US approach to Africa, meanwhile, was summed up in measures launched between May and September 2018: basically, the suspension by the US of trade benefits to Rwanda because of Rwanda’s refusal to import &nbsp;used clothes from the US. In continental terms, the sums are tiny, but the principle enunciated by Rwandan president, Paul Kagame, was stark.

If the volume of used clothes continues or increases, there can be no development of a Rwandan textile industry. In effect, the US is dumping textiles on Rwanda in much the same way as it once dumped grain so cheaply that African farmers could not even begin to compete and agriculture could not develop. For Trump, in his trade wars not just with China but with the world, blue collar manufacturing in his heartland is more important than good relations with anyone.

For a populist president this is dangerous but perhaps understandable. But who has drawn first blood in this US-China standoff? Chinese economic growth has slowed – but only to 6.5 per cent a year, a growth figure for which most other countries would die. The value of the Chinese yuan against the dollar seems destined to fall, but Chinese reserves, divided almost equally between foreign and domestic reserves, of about $60-$70 trillion, are more than enough to weather the storms to come. Added to what the Chinese did during the US financial crisis of 2007 to 2010 – buying up huge quantities of US toxic debt – China has far more leverage on the US economy than the US has on China’s.

China and Africa 
 
For Africa, it means business with China remains a reality. This relationship has, however, taken on two key new characteristics of late. The first is that China expects its loans to be repaid. Indeed, there is no doubt that a new fiscal propriety is now expected by the Chinese.

The second, very closely connected development – and one which curiously seems not to have been noticed or taken seriously by African leaders – is that increasingly Chinese liquidity is made available not on a state-to-state basis but on a Chinese bank to African state basis.

They may be Chinese state banks – but a bank is a bank, and a bank needs to ensure its loans are repaid and its lending to assets ratio is robust. The use of banks reflects a global Chinese turn to the creation of international and regional banks and funds, most noticeable in Asia-Pacific. The Chinese capitalise these regional funds to the tune of about $50 billion a time. But this means the beginning of a new Chinese global financial infrastructure that seems deliberately designed to rival the IMF and the World Bank. It’s not just a trade war but a war over who will control the world’s financial flows in the long term.

For Africa, the choice is between growth with borrowed liquidity and growth without – the latter being very difficult. Investment doesn’t come out of anything, so wise spending of borrowed liquidity is key. It cannot be just for standby budgetary support without product and without exportable value – which is why the Chinese turned down Zimbabwe’s desperate pleas for exactly that.

An uncertain future 
 
The future will embroil Africa even more in the trade wars to come. What Africa needs to do is to industrialise – to add manufacturing to its raw materials. The long-awaited oil refinery in Nigeria is the perfect example. How a significant oil-producing country could spend so many years exporting crude and then reimporting it as a refined product beggars description. The revenue streams would have always been greater if it had been exported refined.

Trouble is, African industry will create jobs in Africa but take away blue collar jobs elsewhere. And the West won’t like that.

But what about China? African governments must navigate the attractions of the quick fix via Chinese loans, and seek the development of long-term industrial capacity. Or will the next decade be another of missed opportunities – with trade wars steamrollering an Africa whose response will be to plunge again deeper and deeper into debt?

(Stephen Chan is Professor of World Politics, SOAS, University of London)

This article was originally published on The Conversation. Read the <a href="https://theconversation.com/will-us-china-trade-war-ruin-africa-or-offer-new-opportunities-national-leaders-must-decide-106499">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 Stephen Chan As China and the US continue their trade war, what will be the outcome for Africa? This trade war should not be seen in isolation, and the new year will bring a changed world.

By Stephen Chan As China and the US continue their trade war, what will be the outcome for Africa? This trade war should not be seen in isolation, and the new year will bring a changed world. China and Russia will cooperate as the new Silk Road begins to join Asia and Europe with a transport and communications corridor Marco Polo could not even imagine. Russia, Turkey and Iran – once unlikely partners in the Syrian conflict – will form a new Middle East axis to rival that of the US, Israel and Saudi Arabia, with none of the latent instabilities of the latter with its Zionist and Islamic ingredients. And the US, under Donald Trump, is likely to continue to view Africa – in all but name – as that collection of “shit hole” countries derided by the American president at his undiplomatic, offensive and unthinking worst. After two years without one, the US will have a permanent assistant secretary of state for Africa – the highest State Department official with an Africa portfolio. Tibor Nagy also comes with a sound reputation as a seasoned diplomat. But will he have any clout on Capitol Hill? And can any official be effective in a State Department that Trump and the former US secretary of state, Rex Tillerson, have slashed and burned? May’s dancing and used clothes If the US doesn’t care much for Africa, neither really does the UK. Theresa May’s dismal efforts at dancing on her Africa tour summed up a clumsy view of what the continent needs. The UK posture is summed up by the position of minister of state for Africa – now held by Harriet Baldwin – with responsibilities in two departments: the Foreign Office and International Development. These are two very different departments and the joint position is both a money-saving device – two ministers for the price of one – and also a confusion of policy as to how the UK should approach Africa. Indeed, perhaps the beleaguered minister’s main responsibility is the search for new UK trading partners in the wake of Brexit. The US approach to Africa, meanwhile, was summed up in measures launched between May and September 2018: basically, the suspension by the US of trade benefits to Rwanda because of Rwanda’s refusal to import used clothes from the US. In continental terms, the sums are tiny, but the principle enunciated by Rwandan president, Paul Kagame, was stark. If the volume of used clothes continues or increases, there can be no development of a Rwandan textile industry. In effect, the US is dumping textiles on Rwanda in much the same way as it once dumped grain so cheaply that African farmers could not even begin to compete and agriculture could not develop. For Trump, in his trade wars not just with China but with the world, blue collar manufacturing in his heartland is more important than good relations with anyone. For a populist president this is dangerous but perhaps understandable. But who has drawn first blood in this US-China standoff? Chinese economic growth has slowed – but only to 6.5 per cent a year, a growth figure for which most other countries would die. The value of the Chinese yuan against the dollar seems destined to fall, but Chinese reserves, divided almost equally between foreign and domestic reserves, of about $60-$70 trillion, are more than enough to weather the storms to come. Added to what the Chinese did during the US financial crisis of 2007 to 2010 – buying up huge quantities of US toxic debt – China has far more leverage on the US economy than the US has on China’s. China and Africa For Africa, it means business with China remains a reality. This relationship has, however, taken on two key new characteristics of late. The first is that China expects its loans to be repaid. Indeed, there is no doubt that a new fiscal propriety is now expected by the Chinese. The second, very closely connected development – and one which curiously seems not to have been noticed or taken seriously by African leaders – is that increasingly Chinese liquidity is made available not on a state-to-state basis but on a Chinese bank to African state basis. They may be Chinese state banks – but a bank is a bank, and a bank needs to ensure its loans are repaid and its lending to assets ratio is robust. The use of banks reflects a global Chinese turn to the creation of international and regional banks and funds, most noticeable in Asia-Pacific. The Chinese capitalise these regional funds to the tune of about $50 billion a time. But this means the beginning of a new Chinese global financial infrastructure that seems deliberately designed to rival the IMF and the World Bank. It’s not just a trade war but a war over who will control the world’s financial flows in the long term. For Africa, the choice is between growth with borrowed liquidity and growth without – the latter being very difficult. Investment doesn’t come out of anything, so wise spending of borrowed liquidity is key. It cannot be just for standby budgetary support without product and without exportable value – which is why the Chinese turned down Zimbabwe’s desperate pleas for exactly that. An uncertain future The future will embroil Africa even more in the trade wars to come. What Africa needs to do is to industrialise – to add manufacturing to its raw materials. The long-awaited oil refinery in Nigeria is the perfect example. How a significant oil-producing country could spend so many years exporting crude and then reimporting it as a refined product beggars description. The revenue streams would have always been greater if it had been exported refined. Trouble is, African industry will create jobs in Africa but take away blue collar jobs elsewhere. And the West won’t like that. But what about China? African governments must navigate the attractions of the quick fix via Chinese loans, and seek the development of long-term industrial capacity. Or will the next decade be another of missed opportunities – with trade wars steamrollering an Africa whose response will be to plunge again deeper and deeper into debt? (Stephen Chan is Professor of World Politics, SOAS, University of London) 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)

Will US-China trade war ruin Africa or offer new opportunities?

The BSE benchmark Sensex Friday soared over 413 points to 34,845.15 and the NSE Nifty raced past 10,500 on widespread gains amid fresh foreign fund inflows, fall in global crude prices and rising rupee.

Positive leads from most other Asian markets on easing concerns over the US-China trade war, too, buoyed sentiments here.

The 30-share Sensex climbed 413.15 points, or 1.20 per cent, to quote at 34,845.15. The gauge had shed 10 points in Thursday's volatile session.

The NSE Nifty leaped 122.85 points, or 1.18 per cent, to 10,503.30.

Investor sentiment got a big push after Brent crude, the international benchmark, dropped below the USD 73-mark to quote at a seven-month low of USD 72.65 by falling 3.48 per cent, traders said.

Adding to the upbeat mood, strengthening rupee against the dollar and a firm trend at other Asian markets, tracking overnight gains at the Wall Street after US President Donald Trump said trade talks with China were "moving along nicely".

Foreign institutional investors (FIIs), which had been selling on the Indian bourses, made fresh purchases worth Rs 348.75 crore Thursday, while DIIs sold shares to the tune of Rs 509.17 crore, provisional data showed.

The big gainers were Asian Paint, Yes Bank, Bajaj Auto, Hero MotoCorp, IndusInd Bank, Tata Motors, M&amp;M, Maruti Suzuki, SBI, L&amp;T, Axis Bank, ITC, Bharti Airtel, HUL, RIL, Kotak Bank and ICICI Bank, gaining up to 5.80 per cent.

Shares of state-run oil market companies such as HPCL, BPCL and IOC rose up to 3.76 per cent, largely supported by fall in crude prices in the global market.

All the sectoral indices led by auto, consumer durables and oil &amp; gas were trading in the positive zone, with gains of up to 2.65 per cent.

Elsewhere in Asia, Hong Kong's Hang Seng rose 2.37 per cent, Shanghai Composite Index was up 1.21 per cent, Japan's Nikkei gained 0.70 per cent, and Korea rallied 2.13 per cent.

The US Dow Jones Industrial Average had gained 1.06 per cent in Thursday's session.&nbsp;

The BSE benchmark Sensex Friday soared over 413 points to 34,845.15 and the NSE Nifty raced past 10,500 on widespread gains amid fresh foreign fund inflows, fall in global crude prices and rising rupee.

The BSE benchmark Sensex Friday soared over 413 points to 34,845.15 and the NSE Nifty raced past 10,500 on widespread gains amid fresh foreign fund inflows, fall in global crude prices and rising rupee. Positive leads from most other Asian markets on easing concerns over the US-China trade war, too, buoyed sentiments here. The 30-share Sensex climbed 413.15 points, or 1.20 per cent, to quote at 34,845.15. The gauge had shed 10 points in Thursday's volatile session. The NSE Nifty leaped 122.85 points, or 1.18 per cent, to 10,503.30. Investor sentiment got a big push after Brent crude, the international benchmark, dropped below the USD 73-mark to quote at a seven-month low of USD 72.65 by falling 3.48 per cent, traders said. Adding to the upbeat mood, strengthening rupee against the dollar and a firm trend at other Asian markets, tracking overnight gains at the Wall Street after US President Donald Trump said trade talks with China were "moving along nicely". Foreign institutional investors (FIIs), which had been selling on the Indian bourses, made fresh purchases worth Rs 348.75 crore Thursday, while DIIs sold shares to the tune of Rs 509.17 crore, provisional data showed. The big gainers were Asian Paint, Yes Bank, Bajaj Auto, Hero MotoCorp, IndusInd Bank, Tata Motors, M&M, Maruti Suzuki, SBI, L&T, Axis Bank, ITC, Bharti Airtel, HUL, RIL, Kotak Bank and ICICI Bank, gaining up to 5.80 per cent. Shares of state-run oil market companies such as HPCL, BPCL and IOC rose up to 3.76 per cent, largely supported by fall in crude prices in the global market. All the sectoral indices led by auto, consumer durables and oil & gas were trading in the positive zone, with gains of up to 2.65 per cent. Elsewhere in Asia, Hong Kong's Hang Seng rose 2.37 per cent, Shanghai Composite Index was up 1.21 per cent, Japan's Nikkei gained 0.70 per cent, and Korea rallied 2.13 per cent. The US Dow Jones Industrial Average had gained 1.06 per cent in Thursday's session.

Sensex rallies over 400 points on strong global cues, falling crude prices

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

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

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

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

Chinese Premier Li Keqiang told a visiting delegation of seven US Republican lawmakers on Thursday that he hoped their two countries can meet "halfway" amid friction over trade, security and other issues.

Relations between Washington and Beijing have grown tense since US President Donald Trump activated new tariffs on roughly half of the Chinese imports this summer while Beijing fired back with tariffs on most US products.

Some of the US lawmakers attending the meeting with Li in China's leadership compound have expressed concern over Trump's trade tactics.

"Over the past four decades, the China-US relationship has had its share of ups and downs, but, generally speaking, it has been moving forward all along," Li told the US delegation.

"We do hope that China and the United States will meet each other halfway and work together in the spirit of mutual respect and equality," Li said.

The working relationship between the two capitals has been further tested recently by a speech by US Vice President Mike Pence accusing China of military aggression and technology theft.

On Wednesday, Washington indicted 10 Chinese, including two intelligence officers, alleging a hacking scheme to steal technology from US companies.

Li suggested it was still possible to get relations back on track.

"In this way, our two countries will be able to overcome differences and have the wisdom to overcome the obstacles and move our relationship forward on an even sounder track," he said.

Senator Lamar Alexander of Tennessee, a critic of the Trump tariffs, led the group of Republican lawmakers.

"Your country and our country are competitors but not adversaries. And we believe that with mutual respect we can continue to prosper together," Alexander told Li.

"I would like to take this time to, first introduce my delegation, second to make a request that I think will be not easy but not so hard for China to do and, third to discuss trade," Alexander said before reporters were ushered out.

This summer the senator lamented the devastating effect the tariffs were having on his home state.

Chinese Premier Li Keqiang told a visiting delegation of seven US Republican lawmakers on Thursday that he hoped their two countries can meet "halfway" amid friction over trade, security and other issues.

Chinese Premier Li Keqiang told a visiting delegation of seven US Republican lawmakers on Thursday that he hoped their two countries can meet "halfway" amid friction over trade, security and other issues. Relations between Washington and Beijing have grown tense since US President Donald Trump activated new tariffs on roughly half of the Chinese imports this summer while Beijing fired back with tariffs on most US products. Some of the US lawmakers attending the meeting with Li in China's leadership compound have expressed concern over Trump's trade tactics. "Over the past four decades, the China-US relationship has had its share of ups and downs, but, generally speaking, it has been moving forward all along," Li told the US delegation. "We do hope that China and the United States will meet each other halfway and work together in the spirit of mutual respect and equality," Li said. The working relationship between the two capitals has been further tested recently by a speech by US Vice President Mike Pence accusing China of military aggression and technology theft. On Wednesday, Washington indicted 10 Chinese, including two intelligence officers, alleging a hacking scheme to steal technology from US companies. Li suggested it was still possible to get relations back on track. "In this way, our two countries will be able to overcome differences and have the wisdom to overcome the obstacles and move our relationship forward on an even sounder track," he said. Senator Lamar Alexander of Tennessee, a critic of the Trump tariffs, led the group of Republican lawmakers. "Your country and our country are competitors but not adversaries. And we believe that with mutual respect we can continue to prosper together," Alexander told Li. "I would like to take this time to, first introduce my delegation, second to make a request that I think will be not easy but not so hard for China to do and, third to discuss trade," Alexander said before reporters were ushered out. This summer the senator lamented the devastating effect the tariffs were having on his home state.

Chinese premier meets US lawmakers amid tensions; hope two countries can meet 'halfway'

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

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

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

Negotiating the fault lines

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

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

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

More twists and turns in US-China trade war

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

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

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

The dilemmas of China’s economic rise

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

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

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

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

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

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

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

Russia and China draw closer over rivalry with the US

<a href="http://www.wionews.com/west-asia/iranian-president-hassan-rouhani-slams-donald-trump-administration-over-sanctions-167698">Iranian President Rouhani slams Trump administration over sanctions</a>

Iranian President Hassan Rouhani on Tuesday lashed out at the sanctions reinstated by the Donald Trump-led United States administration, saying that they amounted to "economic terrorism" and "economic war", while speaking at the ongoing 73rd session of the United Nations General Assembly (UNGA).

<a href="http://www.wionews.com/world/irans-corrupt-dictatorship-plundering-its-people-pay-aggression-abroad-donald-trump-un-167667">Iran's 'corrupt dictatorship' is plundering its people: Trump at UN</a>

US President Donald Trump criticized Iran on Tuesday as a "corrupt dictatorship" that is plundering the Iranian people to pay for aggression abroad, using his speech to the United Nations General Assembly to lay down a tough message for Tehran.

<a href="http://www.wionews.com/world/bill-cosby-imprisoned-10-years-sexual-assault-167690">Bill Cosby imprisoned for up to 10 years for sexual assault</a>

Bill Cosby was marched out of court in shackles on Tuesday after a judge branded him a "predator" and sentenced him to between three and 10 years in prison for sexual assault, capping the downfall of the once-beloved comedian known as "America's Dad."

<a href="http://www.wionews.com/south-asia/i-can-say-lot-dont-want-worsen-situation-pak-fm-qureshi-cancelled-talks-india-167692">I can say a lot but don't want to worsen situation: Pak FM Qureshi on cancelled talks with India&nbsp;</a>

Pakistan Foreign Minister Shah Mehmood Qureshi on Tuesday reacted to India's decision of calling off talks with Pakistan on the sidelines of the United Nations General Assembly in New York, United States. Qureshi noted that he can a say a lot over the incident but that would only add to the existing issues and hamper peace.&nbsp;

<a href="http://www.wionews.com/business-economy/us-china-trade-war-dims-asias-2019-growth-outlook-adb-167703">US-China trade war dims Asia's 2019 growth outlook: ADB</a>

Developing Asia could grow more slowly than previously thought next year as the US-China trade war inflicts collateral damage on the region's export-reliant economies, the Asian Development Bank (ADB) said on Wednesday.

Tightening global liquidity could also weigh on business activity by pushing up borrowing costs, while capital outflows are also a risk.

Iranian President Rouhani slams Trump administration over sanctions Iranian President Hassan Rouhani on Tuesday lashed out at the sanctions reinstated by the Donald Trump-led United States administration, saying that they amounted to "economic terrorism" and "economic war", while speaking at the ongoing 73rd session of the United Nations General Assembly (UNGA).

Iranian President Rouhani slams Trump administration over sanctions Iranian President Hassan Rouhani on Tuesday lashed out at the sanctions reinstated by the Donald Trump-led United States administration, saying that they amounted to "economic terrorism" and "economic war", while speaking at the ongoing 73rd session of the United Nations General Assembly (UNGA). Iran's 'corrupt dictatorship' is plundering its people: Trump at UN US President Donald Trump criticized Iran on Tuesday as a "corrupt dictatorship" that is plundering the Iranian people to pay for aggression abroad, using his speech to the United Nations General Assembly to lay down a tough message for Tehran. Bill Cosby imprisoned for up to 10 years for sexual assault Bill Cosby was marched out of court in shackles on Tuesday after a judge branded him a "predator" and sentenced him to between three and 10 years in prison for sexual assault, capping the downfall of the once-beloved comedian known as "America's Dad." I can say a lot but don't want to worsen situation: Pak FM Qureshi on cancelled talks with India Pakistan Foreign Minister Shah Mehmood Qureshi on Tuesday reacted to India's decision of calling off talks with Pakistan on the sidelines of the United Nations General Assembly in New York, United States. Qureshi noted that he can a say a lot over the incident but that would only add to the existing issues and hamper peace. US-China trade war dims Asia's 2019 growth outlook: ADB Developing Asia could grow more slowly than previously thought next year as the US-China trade war inflicts collateral damage on the region's export-reliant economies, the Asian Development Bank (ADB) said on Wednesday. Tightening global liquidity could also weigh on business activity by pushing up borrowing costs, while capital outflows are also a risk.

News brief: Big stories of the day

Developing Asia could grow more slowly than previously thought next year as the US-China trade war inflicts collateral damage on the region's export-reliant economies, the Asian Development Bank (ADB) said on Wednesday.

Tightening global liquidity could also weigh on business activity by pushing up borrowing costs, while capital outflows are also a risk.

The Manila-based institution kept its 2018 economic growth estimate for the region at 6.0 per cent in an update of its Asian Development Outlook. But it trimmed next year's forecast to 5.8 per cent from 5.9 per cent.

"Downside risks to the outlook are intensifying", said ADB Chief Economist Yasuyuki Sawada, pointing to the potential impact of US-Sino trade tensions on regional supply chains and the risk of sudden capital outflows if the Federal Reserve raises interest rates even more quickly.

The ADB's 5.8 per cent growth estimate for 2019 would be the slowest for the region - made up of 45 countries in the Asia-Pacific region - since it clocked a 4.9 per cent growth in 2001.

The United States and China imposed fresh tariffs on each other's goods on Monday as the world's biggest economies showed no signs of backing down from an increasingly bitter trade dispute that is expected to hit global economic growth.&nbsp;

China's economy is expected to grow 6.3 per cent in 2019, the ADB said, slower than its 6.4 per cent forecast in July and weaker than its 6.6 per cent growth estimate for 2018, which was unchanged from its previous projection.

Beijing has set a growth target of around 6.5 per cent this year, the same as last year, which it handily beat with an expansion of 6.9 per cent.

South Asia is poised to remain as the fastest growing in the region as the ADB maintained its growth estimates of 7.0 per cent for this year and 7.2 per cent for next year.

However, moderating export growth, quickening inflation, net capital outflows and a worsening balance of payments dimmed the growth outlook for Southeast Asia, with growth this year projected to slow to 5.1 per cent from the July forecast of 5.2 per cent.

"Policymakers have at their disposal an array of policy tools with which to manage pockets of vulnerability and maintain stability, but they must be applied carefully," Sawada said.

Inflation across the region is expected to remain under control, helped by country-specific factors like moderate food price inflation in India and China and fuel subsidies in Indonesia and Malaysia, the ADB said.

It maintained this year's inflation projection at 2.8 per cent but raised the forecast for next year to 2.8 per cent from 2.7 per cent in July.

Developing Asia could grow more slowly than previously thought next year as the US-China trade war inflicts collateral damage on the region's export-reliant economies, the Asian Development Bank (ADB) said on Wednesday.

Developing Asia could grow more slowly than previously thought next year as the US-China trade war inflicts collateral damage on the region's export-reliant economies, the Asian Development Bank (ADB) said on Wednesday. Tightening global liquidity could also weigh on business activity by pushing up borrowing costs, while capital outflows are also a risk. The Manila-based institution kept its 2018 economic growth estimate for the region at 6.0 per cent in an update of its Asian Development Outlook. But it trimmed next year's forecast to 5.8 per cent from 5.9 per cent. "Downside risks to the outlook are intensifying", said ADB Chief Economist Yasuyuki Sawada, pointing to the potential impact of US-Sino trade tensions on regional supply chains and the risk of sudden capital outflows if the Federal Reserve raises interest rates even more quickly. The ADB's 5.8 per cent growth estimate for 2019 would be the slowest for the region - made up of 45 countries in the Asia-Pacific region - since it clocked a 4.9 per cent growth in 2001. The United States and China imposed fresh tariffs on each other's goods on Monday as the world's biggest economies showed no signs of backing down from an increasingly bitter trade dispute that is expected to hit global economic growth. China's economy is expected to grow 6.3 per cent in 2019, the ADB said, slower than its 6.4 per cent forecast in July and weaker than its 6.6 per cent growth estimate for 2018, which was unchanged from its previous projection. Beijing has set a growth target of around 6.5 per cent this year, the same as last year, which it handily beat with an expansion of 6.9 per cent. South Asia is poised to remain as the fastest growing in the region as the ADB maintained its growth estimates of 7.0 per cent for this year and 7.2 per cent for next year. However, moderating export growth, quickening inflation, net capital outflows and a worsening balance of payments dimmed the growth outlook for Southeast Asia, with growth this year projected to slow to 5.1 per cent from the July forecast of 5.2 per cent. "Policymakers have at their disposal an array of policy tools with which to manage pockets of vulnerability and maintain stability, but they must be applied carefully," Sawada said. Inflation across the region is expected to remain under control, helped by country-specific factors like moderate food price inflation in India and China and fuel subsidies in Indonesia and Malaysia, the ADB said. It maintained this year's inflation projection at 2.8 per cent but raised the forecast for next year to 2.8 per cent from 2.7 per cent in July.

US-China trade war dims Asia's 2019 growth outlook: ADB

Secretary of State Mike Pompeo vowed that the United States would emerge victorious in an intensifying trade war with China, a day before Washington imposes $200 billion worth of tariffs.

"We are going to win it," Pompeo said in an interview on Fox News broadcast Sunday.

"We're going to get an outcome which forces China to behave in a way that if you want to be a power -- a global power -- transparency, rule of law, you don't steal intellectual property," he said.

Pompeo said that President Donald Trump "very much likes" his Chinese counterpart Xi Jinping but said he would press policies that "the American workers deserve."

Even before Trump's election, the United States has complained vigorously that China has been unfair to US businesses and has stolen technology by forcing firms to reveal secrets as a condition to operate in the fast-growing Asian economy.

But Trump has taken an increasingly hard line on trade around the world, with $200 billion in tariffs on Chinese exports set to take effect on Monday.

China has retaliated by hitting $60 billion in US products and the world's two largest economies have already imposed tariffs of $50 billion on each other.

In a first, the Trump administration has also punished a unit of China's defence ministry for buying fighter jets and missiles from Russia in defiance of sanctions on Moscow.

Secretary of State Mike Pompeo vowed that the United States would emerge victorious in an intensifying trade war with China, a day before Washington imposes $200 billion worth of tariffs.

Secretary of State Mike Pompeo vowed that the United States would emerge victorious in an intensifying trade war with China, a day before Washington imposes $200 billion worth of tariffs. "We are going to win it," Pompeo said in an interview on Fox News broadcast Sunday. "We're going to get an outcome which forces China to behave in a way that if you want to be a power -- a global power -- transparency, rule of law, you don't steal intellectual property," he said. Pompeo said that President Donald Trump "very much likes" his Chinese counterpart Xi Jinping but said he would press policies that "the American workers deserve." Even before Trump's election, the United States has complained vigorously that China has been unfair to US businesses and has stolen technology by forcing firms to reveal secrets as a condition to operate in the fast-growing Asian economy. But Trump has taken an increasingly hard line on trade around the world, with $200 billion in tariffs on Chinese exports set to take effect on Monday. China has retaliated by hitting $60 billion in US products and the world's two largest economies have already imposed tariffs of $50 billion on each other. In a first, the Trump administration has also punished a unit of China's defence ministry for buying fighter jets and missiles from Russia in defiance of sanctions on Moscow.

We are going to win it: Pompeo on US-China trade war

US Commerce Secretary Wilbur Ross said Sunday trade talks have been "friendly and frank" as the US and China continued with the second day of negotiations in Beijing aimed at de-escalating tensions between the two sides.&nbsp

The world's two largest economies have been at loggerheads over trade and industrial practices for months with the talks under way in the Chinese capital the third formal round of negotiations.&nbsp

The discussions are intended to ease tensions after Washington said it would follow through with tariffs on Chinese imports despite a truce reached between the two sides in the US last month.

"Our meetings so far have been friendly and frank, and covered some useful topics about specific export items," Ross told the Chinese trade team led by Vice Premier Liu He, President Xi Jinping's right-hand-man on economic issues.

Liu offered the US team a "special welcome" to Beijing for the talks.

The visit comes as fears of an all-out global trade war intensified after the European Union, Canada and Mexico drew up retaliatory measures to Washington's stinging steel and aluminium tariffs that came into effect on Friday.

On Saturday, Washington's main allies delivered a unified message of shock and dismay at a Group of Seven ministerial meeting, urging President Donald Trump to rescind the punishing metal tariffs.

The planned US sanctions on Beijing include restrictions on Chinese investment, export controls and 25 per cent tariffs on $50 billion in Chinese tech goods.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods.

But it has also taken conciliatory measures to address some of the Trump administration's concerns and insisted that it hopes to avoid a damaging trade war.

Ross and the large American delegation had dinner Saturday evening with their Chinese hosts.

"It has been a great pleasure to spend yesterday with you and we are especially grateful for last night's dinner," Ross said as he met with Liu at the Diaoyutai state guesthouse.

Washington's positions in the trade talks with Beijing have shifted as Trump's team of hardliners and more mainstream advisors compete to push their views.&nbsp

Treasury Secretary Steven Mnuchin, who announced the tariff truce with China, said at the G7 summit in Canada that the US was pushing for "structural changes" to the Chinese economy.

"If there are structural changes that allow our companies to compete fairly, by definition that will deal with the trade deficit alone," Mnuchin said Saturday, according to Bloomberg News.

The world's two largest economies have been at loggerheads over trade and industrial practices for months with the talks underway in the Chinese capital the third formal round of negotiations

US Commerce Secretary Wilbur Ross said Sunday trade talks have been "friendly and frank" as the US and China continued with the second day of negotiations in Beijing aimed at de-escalating tensions between the two sides. The world's two largest economies have been at loggerheads over trade and industrial practices for months with the talks under way in the Chinese capital the third formal round of negotiations. The discussions are intended to ease tensions after Washington said it would follow through with tariffs on Chinese imports despite a truce reached between the two sides in the US last month. "Our meetings so far have been friendly and frank, and covered some useful topics about specific export items," Ross told the Chinese trade team led by Vice Premier Liu He, President Xi Jinping's right-hand-man on economic issues. Liu offered the US team a "special welcome" to Beijing for the talks. The visit comes as fears of an all-out global trade war intensified after the European Union, Canada and Mexico drew up retaliatory measures to Washington's stinging steel and aluminium tariffs that came into effect on Friday. On Saturday, Washington's main allies delivered a unified message of shock and dismay at a Group of Seven ministerial meeting, urging President Donald Trump to rescind the punishing metal tariffs. The planned US sanctions on Beijing include restrictions on Chinese investment, export controls and 25 per cent tariffs on $50 billion in Chinese tech goods. China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods. But it has also taken conciliatory measures to address some of the Trump administration's concerns and insisted that it hopes to avoid a damaging trade war. Ross and the large American delegation had dinner Saturday evening with their Chinese hosts. "It has been a great pleasure to spend yesterday with you and we are especially grateful for last night's dinner," Ross said as he met with Liu at the Diaoyutai state guesthouse. Washington's positions in the trade talks with Beijing have shifted as Trump's team of hardliners and more mainstream advisors compete to push their views. Treasury Secretary Steven Mnuchin, who announced the tariff truce with China, said at the G7 summit in Canada that the US was pushing for "structural changes" to the Chinese economy. "If there are structural changes that allow our companies to compete fairly, by definition that will deal with the trade deficit alone," Mnuchin said Saturday, according to Bloomberg News.

'Frank' trade discussions in Beijing: US commerce secretary

European&nbsp;shares&nbsp;will&nbsp;end&nbsp;2018&nbsp;just&nbsp;ahead of their&nbsp;January&nbsp;peak, recovering from current levels as a resilient economy gradually overcomes a temporary slowdown and corporate earnings continue to rise, a&nbsp;Reuters&nbsp;poll&nbsp;showed.

The&nbsp;poll&nbsp;was taken May 15-30, largely before a mounting political crisis in Italy sparked worries over a possible breakup of the euro zone, triggering a heavy sell-off in Italian assets.

The pan-European&nbsp;STOXX 600 benchmark index is expected to reach 406 points by year-end, according to the&nbsp;poll&nbsp;of 29 brokers, fund managers and analysts, up 5.6 percent from Tuesday's close and 4.3 percent on the year.

That will be enough for the index to surpass a 29-month high of 403.7 points it reached in January.

Eurozone blue-chips are expected to rise a bit further, up 7.9 percent from Tuesday's close to 3,700 points, according to the median of 37 responses.

Prospects for&nbsp;European&nbsp;shares&nbsp;faded at the beginning of the year as economic growth slowed more than expected, raising concerns there will be no return to boom.

But analysts were optimistic economic activity should be robust enough to modestly prop up shares&nbsp;and company earnings.

"For now, synchronized economic expansion, solid earnings growth and still relatively low volatility levels look supportive for global equity markets", Deutsche Asset Management analysts said.

According to Thomson&nbsp;Reuters&nbsp;IBES estimates, earnings for STOXX 600 companies are expected to grow 8.7 percent in&nbsp;2018&nbsp;on revenues up 5.1 percent.

A majority of investors in Europe answered "yes" when asked if they thought global stocks would continue to rise in&nbsp;2018.

Among the risks identified by investors are Italy, Brexit talks, a US-China trade war, oil prices surging&nbsp;above&nbsp;100 dollars a barrel or international tensions involving Iran or North Korea.

"The economic picture stays positive but political risks are the top concern," said Tomas Hildebrandt, senior portfolio manager at Evli Bank in Helsinki.

A faster-than-expected acceleration in US&nbsp;inflation and interest rates is also seen as a threat after a rise in American wages took the market by surprise in February.

With the current rise in the dollar, investors said they believed the biggest risk of a sell-off was in emerging markets, where returns looked less attractive given rising US&nbsp;government bond yields.

A mounting political crisis in Italy sparked worries over a possible breakup of the eurozone, triggering a heavy sell-off in Italian assets

European shares will end 2018 just ahead of their January peak, recovering from current levels as a resilient economy gradually overcomes a temporary slowdown and corporate earnings continue to rise, a Reuters poll showed. The poll was taken May 15-30, largely before a mounting political crisis in Italy sparked worries over a possible breakup of the euro zone, triggering a heavy sell-off in Italian assets. The pan-European STOXX 600 benchmark index is expected to reach 406 points by year-end, according to the poll of 29 brokers, fund managers and analysts, up 5.6 percent from Tuesday's close and 4.3 percent on the year. That will be enough for the index to surpass a 29-month high of 403.7 points it reached in January. Eurozone blue-chips are expected to rise a bit further, up 7.9 percent from Tuesday's close to 3,700 points, according to the median of 37 responses. Prospects for European shares faded at the beginning of the year as economic growth slowed more than expected, raising concerns there will be no return to boom. But analysts were optimistic economic activity should be robust enough to modestly prop up shares and company earnings. "For now, synchronized economic expansion, solid earnings growth and still relatively low volatility levels look supportive for global equity markets", Deutsche Asset Management analysts said. According to Thomson Reuters IBES estimates, earnings for STOXX 600 companies are expected to grow 8.7 percent in 2018 on revenues up 5.1 percent. A majority of investors in Europe answered "yes" when asked if they thought global stocks would continue to rise in 2018. Among the risks identified by investors are Italy, Brexit talks, a US-China trade war, oil prices surging above 100 dollars a barrel or international tensions involving Iran or North Korea. "The economic picture stays positive but political risks are the top concern," said Tomas Hildebrandt, senior portfolio manager at Evli Bank in Helsinki. A faster-than-expected acceleration in US inflation and interest rates is also seen as a threat after a rise in American wages took the market by surprise in February. With the current rise in the dollar, investors said they believed the biggest risk of a sell-off was in emerging markets, where returns looked less attractive given rising US government bond yields.

European shares to end 2018 just above January peak: Report

US Treasury Secretary Steven Mnuchin confirmed Sunday that Washington and Beijing have agreed to back off from imposing tariffs on each other, a day after reaching an accord on slashing the American trade deficit with China.

"We have made very meaningful progress and we agreed on a framework," Mnuchin told Fox News Sunday. "So right now we have agreed to put the tariffs on hold while we try to execute the framework."

China's Vice Premier Liu He, who led a high-level delegation to the United States this week, meantime confirmed that "the two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other," official Chinese news agency Xinhua reported.&nbsp

The apparent detente between the two economic giants follows months of increasing tensions that have set markets on edge over fears of a damaging trade war. &nbsp

The US-Chinese thaw raised concerns in some other countries still facing potential US tariffs, however, with France saying it could come "at the expense of Europe."

Mnuchin emphasized Sunday that the sides had also discussed structural changes by Beijing "to make sure that we have a fair ability to compete" in its vast market.&nbsp

Unfreezing the ice

As each side worked to set expectations, Liu cautioned that "unfreezing the ice cannot be done in a day" and that structural changes "will take time."

Mnuchin added a caution of his own, emphasizing that if China did not respect its commitments, Trump could "always decide to put the tariffs back on."

In the absence of an agreement, US levies on $50 billion of Chinese imports could have taken effect as early as next week. Tariffs on steel and aluminum were put in place in March.

A joint statement issued Saturday in Washington said Beijing would "significantly" increase its purchases of American goods, but offered few details.&nbsp

Last year, the United States had a $375.2 billion trade deficit with China, and Washington reportedly had demanded the deficit be slashed by at least $200 billion by 2020.

Targets not disclosed

Asked on Fox whether the agreement addressed the $200 billion demand, Mnuchin said, "We have specific targets" but that he would not disclose them publicly. &nbsp

He said they were set "industry by industry."

Trump's threats of further tariffs had prompted Beijing to warn it would target US agricultural exports, aircraft, and even whiskey.

Against that fraught backdrop, teams led by Mnuchin and Liu met earlier this month in Beijing. &nbsp

Both sides said further talks are planned to flesh out details.

"There was a consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China," Saturday's joint statement said.

It added that "China will significantly increase purchases of United States goods and services."

Mnuchin said there would be "a very big increase" in Chinese purchases of US agricultural supplies -- by 35 percent to 45 percent this year -- as well as a potential doubling of energy purchases.

And Liu said the new cooperation would extend to medical care, high-tech products and finance, according to Xinhua.

The two sides also agreed to strengthen cooperation on protecting intellectual property -- a long-standing source of US discontent.

Korean complication

The trade issue is complicated by the impending summit meeting in Singapore between Trump and North Korean leader Kim Jong Un, who has consulted with Chinese leader Xi Jinping.&nbsp

China is North Korea's biggest trade partner, and Trump has called on it repeatedly to press Pyongyang to rein in its nuclear and missile programs.

Meantime, the effects of the new US-Chinese warming were being nervously assessed in other countries, with French Economy Minister Bruno Le Maire warning Sunday that it could exact a cost from Europe.

"The United States and China risk entering an agreement at the expense of Europe if Europe is not capable of showing a firm hand," he told CNEWS television.

Trump earlier this month granted the EU, along with Canada and Mexico, only a 30-day reprieve from threatened steel and aluminum tariffs.&nbsp

"The United States wants to make Europe and European countries pay for China's bad behavior," Le Maire said. "All of that is totally absurd and incomprehensible for allies."

The apparent detente between the two economic giants follows months of increasing tensions that have set markets on edge over fears of a damaging trade war

US Treasury Secretary Steven Mnuchin confirmed Sunday that Washington and Beijing have agreed to back off from imposing tariffs on each other, a day after reaching an accord on slashing the American trade deficit with China. "We have made very meaningful progress and we agreed on a framework," Mnuchin told Fox News Sunday. "So right now we have agreed to put the tariffs on hold while we try to execute the framework." China's Vice Premier Liu He, who led a high-level delegation to the United States this week, meantime confirmed that "the two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other," official Chinese news agency Xinhua reported. The apparent detente between the two economic giants follows months of increasing tensions that have set markets on edge over fears of a damaging trade war. The US-Chinese thaw raised concerns in some other countries still facing potential US tariffs, however, with France saying it could come "at the expense of Europe." Mnuchin emphasized Sunday that the sides had also discussed structural changes by Beijing "to make sure that we have a fair ability to compete" in its vast market. Unfreezing the ice As each side worked to set expectations, Liu cautioned that "unfreezing the ice cannot be done in a day" and that structural changes "will take time." Mnuchin added a caution of his own, emphasizing that if China did not respect its commitments, Trump could "always decide to put the tariffs back on." In the absence of an agreement, US levies on $50 billion of Chinese imports could have taken effect as early as next week. Tariffs on steel and aluminum were put in place in March. A joint statement issued Saturday in Washington said Beijing would "significantly" increase its purchases of American goods, but offered few details. Last year, the United States had a $375.2 billion trade deficit with China, and Washington reportedly had demanded the deficit be slashed by at least $200 billion by 2020. Targets not disclosed Asked on Fox whether the agreement addressed the $200 billion demand, Mnuchin said, "We have specific targets" but that he would not disclose them publicly. He said they were set "industry by industry." Trump's threats of further tariffs had prompted Beijing to warn it would target US agricultural exports, aircraft, and even whiskey. Against that fraught backdrop, teams led by Mnuchin and Liu met earlier this month in Beijing. Both sides said further talks are planned to flesh out details. "There was a consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China," Saturday's joint statement said. It added that "China will significantly increase purchases of United States goods and services." Mnuchin said there would be "a very big increase" in Chinese purchases of US agricultural supplies -- by 35 percent to 45 percent this year -- as well as a potential doubling of energy purchases. And Liu said the new cooperation would extend to medical care, high-tech products and finance, according to Xinhua. The two sides also agreed to strengthen cooperation on protecting intellectual property -- a long-standing source of US discontent. Korean complication The trade issue is complicated by the impending summit meeting in Singapore between Trump and North Korean leader Kim Jong Un, who has consulted with Chinese leader Xi Jinping. China is North Korea's biggest trade partner, and Trump has called on it repeatedly to press Pyongyang to rein in its nuclear and missile programs. Meantime, the effects of the new US-Chinese warming were being nervously assessed in other countries, with French Economy Minister Bruno Le Maire warning Sunday that it could exact a cost from Europe. "The United States and China risk entering an agreement at the expense of Europe if Europe is not capable of showing a firm hand," he told CNEWS television. Trump earlier this month granted the EU, along with Canada and Mexico, only a 30-day reprieve from threatened steel and aluminum tariffs. "The United States wants to make Europe and European countries pay for China's bad behavior," Le Maire said. "All of that is totally absurd and incomprehensible for allies."

US, China back off on tariffs, easing trade tensions

Europe could end up rueing a potential new deal between China and the United States after the two sides stepped back from a trade war, France's Economy Minister Bruno Le Maire warned Sunday.

"The United States and China risk entering an agreement at the expense of Europe if Europe is not capable of showing a firm hand," Le Maire told CNEWS television.

"The United States wants to make Europe and European countries pay for China's bad behaviour. All of that is totally absurd and incomprehensible for allies," he said.

His comments came after a joint statement issued in Washington said Beijing had agreed to reduce its trade deficit, "significantly" increasing purchases of American goods.

Trump had threatened China with tariffs on up to $150 billion (127 billion euros) of imports, prompting Beijing to warn it would target US agricultural exports, aircraft, and even whiskey.

US levies on $50 billion of Chinese imports could have come into effect as early as next week.

Trump had in March imposed steep tariffs on Chinese steel and aluminium imports, though it exports comparatively little of the metals to the US market.

Le Maire said French President Emmanuel Macron had been "very clear" on his request for "total and definitive exemption from American tariffs".

Trump announced earlier this month that the EU would be shielded from his steel and aluminium tariffs along with Mexico and Canada, but only for another 30 days.

On Friday, the EU told the World Trade Organization that it was ready to unfurl retaliatory measures against US metal tariffs, which would include European tariffs on motorcycles and bourbon.

Europe could end up rueing a potential new deal between China and the United States after the two sides stepped back from a trade war, France's Economy Minister Bruno Le Maire warned Sunday

Europe could end up rueing a potential new deal between China and the United States after the two sides stepped back from a trade war, France's Economy Minister Bruno Le Maire warned Sunday. "The United States and China risk entering an agreement at the expense of Europe if Europe is not capable of showing a firm hand," Le Maire told CNEWS television. "The United States wants to make Europe and European countries pay for China's bad behaviour. All of that is totally absurd and incomprehensible for allies," he said. His comments came after a joint statement issued in Washington said Beijing had agreed to reduce its trade deficit, "significantly" increasing purchases of American goods. Trump had threatened China with tariffs on up to $150 billion (127 billion euros) of imports, prompting Beijing to warn it would target US agricultural exports, aircraft, and even whiskey. US levies on $50 billion of Chinese imports could have come into effect as early as next week. Trump had in March imposed steep tariffs on Chinese steel and aluminium imports, though it exports comparatively little of the metals to the US market. Le Maire said French President Emmanuel Macron had been "very clear" on his request for "total and definitive exemption from American tariffs". Trump announced earlier this month that the EU would be shielded from his steel and aluminium tariffs along with Mexico and Canada, but only for another 30 days. On Friday, the EU told the World Trade Organization that it was ready to unfurl retaliatory measures against US metal tariffs, which would include European tariffs on motorcycles and bourbon.

US-China trade deal could cost Europe: France's Economy Minister Bruno Le Maire

Top officials from China and the United States reached a consensus on some aspects of the countries'&nbsptrade row, but disagreements over other issues remain "relatively big", China said on Friday.&nbsp

A statement from the nation's state-run Xinhua news agency at the end of the talks gave little indication that there had been agreements on the biggest issues, stressing instead that there had been exchanges of opinion. The two sides, though, committed to resolving their trade disputes through dialogue, Xinhua said.&nbsp

The Americans have yet to give their account of the talks.&nbsp

In one specific sign of progress, US&nbspnegotiators agreed to bring up with US&nbspPresident Donald Trump the question of a ban on US&nbspcompanies selling goods and software to Chinese telecommunication equipment maker ZTE Cororation&nbspafter

representations from the Chinese side, the report said. ZTE faced the seven-year ban after the US&nbspsaid it failed to keep to an agreement it made after breaching US&nbspsanctions.

The talks over the past two days have involved a high-level US&nbsptrade delegation led by Treasury Secretary Steven Mnuchin and top Chinese officials, including Vice Premier Liu He, following months of threats and counter threats from both sides in a series of disputes over trade practices.&nbsp

The US&nbspteam has already left Beijing and is heading back to the US, a US&nbspofficial told Reuters early on Friday evening.&nbsp

The trade discussions had been "candid, efficient and constructive," Xinhua said, but gave almost no details on what the officials had agreed.&nbsp

The officials exchanged opinions on resolving tariffs and non-tariffs measures, on expanding two-way investment and the protection of intellectual property, and on expanding US&nbspexports to China and bilateral services trade, Xinhua reported. It gave no indication of what actions might be taken based on those exchanges.

"My impression was that (the talks) didn't go well given the rhetoric," said Kevin Lai, senior economist at Daiwa Capital markets in Hong Kong. "I think the divide is still very big."

In an editorial on its website, widely-read Chinese state-run tabloid the Global Times cited people close to the talks as saying the Chinese "hit back hard" at US&nbspcriticism, letting them know that China won't give in.&nbsp

The United States has proposed tariffs on $50 billion of Chinese goods under its so-called "Section 301" intellectual property probe. Those could go into effect in June following the completion of a 60-day consultation period, but activation plans have been kept vague.

China has said its own retaliatory tariffs on US&nbspgoods, including soybeans and aircraft, will go into effect if the US&nbspduties are imposed.&nbsp

The US&nbsptariffs focus heavily on technology products benefiting from the "Made in China 2025" programme, which promotes the development of 10 sectors including aerospace, robotics and clean-energy cars.

Punitive action

A breakthrough deal to fundamentally change China's economic policies was viewed as highly unlikely during the two-day visit, though any signs of meaningful progress in the dispute could delay any punitive action from the US

"We are having very good conversations," Mnuchin told reporters earlier on Friday as he left his hotel.&nbsp

US&nbspPresident Donald Trump on Thursday praised his relationship with Chinese President Xi Jinping as the US delegation began their talks, which were held at a state guest house in the western part of the Chinese capital.&nbsp

Trump has targeted China's massive trade surplus with the United States, in recent months demanding a $100 billion annual reduction in the $375 billion US&nbspgoods trade deficit with China.&nbsp

According to two sources with knowledge of the matter, the US&nbspdelegation submitted a document to the Chinese before the talks asking China to cut its trade surplus with the United States by $200 billion by 2020 and lower tariffs on all products to levels no higher than those imposed by the United States.

The delegation also asked China to halt subsidies for advanced technology, the sources said.&nbsp

Chinese officials believed the proposal was "unfair," the Wall Street Journal reported, quoting people with knowledge of the negotiations.

"I think the US&nbspis asking for the impossible. Reducing the deficit by $200 billion by 2020 is quite an unrealistic demand, but it may also be a negotiation tactic to start high first," said Tommy Xie, economist at OCBC Bank in Singapore.&nbsp

In a proposal submitted by the Chinese side, Beijing offered to increase US&nbspimports and lower tariffs on some goods, including cars, according to the sources.

But China requested that the US&nbsptreat Chinese investment equally under national security reviews, stop issuing any new restrictions on investment, and halt a proposal to implement 25 per cent tariffs under its Section 301 probe.&nbsp

China also offered to reconsider anti-dumping duties on US&nbspsorghum, according to the proposal.&nbsp

No illusions

US-based trade experts have said they expected Beijing to offer Trump's team a package of policy changes that may include some previously announced moves, such as a phase-out of joint venture requirements for some sectors, autos tariff reductions and increased purchases of US&nbspgoods.

US&nbspcomplaints about Chinese intellectual property abuses are at the core of the current dispute. The Trump administration says US&nbspcompanies lose hundreds of billions of dollars annually to China's theft of trade secrets.

Members of the Trump administration's delegation to Beijing for talks to try to stave off a trade war between the world's two largest economies included US&nbspTrade Representative Robert Lighthizer, a hard-line and experienced trade negotiator.&nbsp

Lighthizer said on Tuesday it was not his objective to change China's economic system, but that he would try to find ways to limit the damage it causes to the United States and open it further for US&nbspcompanies.&nbsp

Some economists noted that the deficit with China was the natural result of the large amount of manufacturing assembly of US&nbspproducts, such as iPhones, that takes place in China.

"As long as China remains the assembly hub of the world, it's always going to have a large trade surplus with developed consumer countries like the US&nbspand the EU&nbspand that's not necessarily a problem," said Julian Evans-Pritchard, senior China economist at Capital Economics.&nbsp

The US&nbspdelegation also included Commerce Secretary Wilbur Ross and White House trade and manufacturing adviser Peter Navarro, a noted China trade hawk.

Navarro advised Trump throughout his 2016 election campaign, during which the candidate routinely threatened to impose a 45 per cent across-the-board tariff on Chinese goods as a way to level the playing field for American workers. 
&nbsp

The Americans have yet to give their account of the talks.

Top officials from China and the United States reached a consensus on some aspects of the countries'&nbsptrade row, but disagreements over other issues remain "relatively big", China said on Friday. A statement from the nation's state-run Xinhua news agency at the end of the talks gave little indication that there had been agreements on the biggest issues, stressing instead that there had been exchanges of opinion. The two sides, though, committed to resolving their trade disputes through dialogue, Xinhua said. The Americans have yet to give their account of the talks. In one specific sign of progress, US&nbspnegotiators agreed to bring up with US&nbspPresident Donald Trump the question of a ban on US&nbspcompanies selling goods and software to Chinese telecommunication equipment maker ZTE Cororation&nbspafter representations from the Chinese side, the report said. ZTE faced the seven-year ban after the US&nbspsaid it failed to keep to an agreement it made after breaching US&nbspsanctions. The talks over the past two days have involved a high-level US&nbsptrade delegation led by Treasury Secretary Steven Mnuchin and top Chinese officials, including Vice Premier Liu He, following months of threats and counter threats from both sides in a series of disputes over trade practices. The US&nbspteam has already left Beijing and is heading back to the US, a US&nbspofficial told Reuters early on Friday evening. The trade discussions had been "candid, efficient and constructive," Xinhua said, but gave almost no details on what the officials had agreed. The officials exchanged opinions on resolving tariffs and non-tariffs measures, on expanding two-way investment and the protection of intellectual property, and on expanding US&nbspexports to China and bilateral services trade, Xinhua reported. It gave no indication of what actions might be taken based on those exchanges. "My impression was that (the talks) didn't go well given the rhetoric," said Kevin Lai, senior economist at Daiwa Capital markets in Hong Kong. "I think the divide is still very big." In an editorial on its website, widely-read Chinese state-run tabloid the Global Times cited people close to the talks as saying the Chinese "hit back hard" at US&nbspcriticism, letting them know that China won't give in. The United States has proposed tariffs on $50 billion of Chinese goods under its so-called "Section 301" intellectual property probe. Those could go into effect in June following the completion of a 60-day consultation period, but activation plans have been kept vague. China has said its own retaliatory tariffs on US&nbspgoods, including soybeans and aircraft, will go into effect if the US&nbspduties are imposed. The US&nbsptariffs focus heavily on technology products benefiting from the "Made in China 2025" programme, which promotes the development of 10 sectors including aerospace, robotics and clean-energy cars. Punitive action A breakthrough deal to fundamentally change China's economic policies was viewed as highly unlikely during the two-day visit, though any signs of meaningful progress in the dispute could delay any punitive action from the US "We are having very good conversations," Mnuchin told reporters earlier on Friday as he left his hotel. US&nbspPresident Donald Trump on Thursday praised his relationship with Chinese President Xi Jinping as the US delegation began their talks, which were held at a state guest house in the western part of the Chinese capital. Trump has targeted China's massive trade surplus with the United States, in recent months demanding a $100 billion annual reduction in the $375 billion US&nbspgoods trade deficit with China. According to two sources with knowledge of the matter, the US&nbspdelegation submitted a document to the Chinese before the talks asking China to cut its trade surplus with the United States by $200 billion by 2020 and lower tariffs on all products to levels no higher than those imposed by the United States. The delegation also asked China to halt subsidies for advanced technology, the sources said. Chinese officials believed the proposal was "unfair," the Wall Street Journal reported, quoting people with knowledge of the negotiations. "I think the US&nbspis asking for the impossible. Reducing the deficit by $200 billion by 2020 is quite an unrealistic demand, but it may also be a negotiation tactic to start high first," said Tommy Xie, economist at OCBC Bank in Singapore. In a proposal submitted by the Chinese side, Beijing offered to increase US&nbspimports and lower tariffs on some goods, including cars, according to the sources. But China requested that the US&nbsptreat Chinese investment equally under national security reviews, stop issuing any new restrictions on investment, and halt a proposal to implement 25 per cent tariffs under its Section 301 probe. China also offered to reconsider anti-dumping duties on US&nbspsorghum, according to the proposal. No illusions US-based trade experts have said they expected Beijing to offer Trump's team a package of policy changes that may include some previously announced moves, such as a phase-out of joint venture requirements for some sectors, autos tariff reductions and increased purchases of US&nbspgoods. US&nbspcomplaints about Chinese intellectual property abuses are at the core of the current dispute. The Trump administration says US&nbspcompanies lose hundreds of billions of dollars annually to China's theft of trade secrets. Members of the Trump administration's delegation to Beijing for talks to try to stave off a trade war between the world's two largest economies included US&nbspTrade Representative Robert Lighthizer, a hard-line and experienced trade negotiator. Lighthizer said on Tuesday it was not his objective to change China's economic system, but that he would try to find ways to limit the damage it causes to the United States and open it further for US&nbspcompanies. Some economists noted that the deficit with China was the natural result of the large amount of manufacturing assembly of US&nbspproducts, such as iPhones, that takes place in China. "As long as China remains the assembly hub of the world, it's always going to have a large trade surplus with developed consumer countries like the US&nbspand the EU&nbspand that's not necessarily a problem," said Julian Evans-Pritchard, senior China economist at Capital Economics. The US&nbspdelegation also included Commerce Secretary Wilbur Ross and White House trade and manufacturing adviser Peter Navarro, a noted China trade hawk. Navarro advised Trump throughout his 2016 election campaign, during which the candidate routinely threatened to impose a 45 per cent across-the-board tariff on Chinese goods as a way to level the playing field for American workers.

China, US reach some deals in trade row but Beijing says differences still relatively big

US&nbspTreasury Secretary Steven Mnuchin said on Saturday he may travel to China, a move that could ease tensions between the world's two largest economies, as international policymakers acknowledged Beijing needs to change its trade practices.

The United States has threatened to impose tariffs on up to $150 billion of Chinese imports to try to force changes in Beijing's industrial policies, which Washington says are aimed at acquiring American intellectual property.

Mnuchin told reporters he was continuing to have discussions with his Chinese counterparts to try to resolve the differences over trade, but said he may go to Beijing.&nbsp

"A trip is under consideration," Mnuchin said at a news conference during the International Monetary Fund and World Bank spring meetings in Washington.&nbsp

"I am not going to make any comment on timing, nor do I have anything confirmed, but a trip is under consideration."

Mnuchin also declined to say what he wants from a trade deal with China, adding, "If we have a deal, you'll know what it looks like when we have it."&nbsp

China has threatened retaliation against US&nbspexports if Washington pushes ahead with the tariffs. The row, which comes as the world economy records its strongest growth in years, cast a pall over the semi-annual gathering of the world's finance officials.

IMF Managing Christine Lagarde warned this week that a US-China trade war threatened to damage confidence, investment and growth. On Saturday, she told a news conference there would be no winners from such a conflict.

"It is important that as a global community we keep trade open, we ensure that we work within the multilateral system that we have to make sure if there are disputes, these disputes are resolved," she said.

Mnuchin said he met China`s new central bank governor, Yi Gang, during the IMF and World Bank meetings and discussed the potential for China to open its markets to more foreign competition.

"I did meet with the Chinese here. The discussions were really more around the governor's actions at the PBOC (People's Bank of China) and certain actions they've announced in terms of opening some of their markets, which we very much encourage and appreciate."

In a statement on Saturday to the International Monetary and Financial Committee, Yi said China would "vigorously" push forward the reform and opening of its financial sector, significantly relax market access restrictions, create a more attractive investment environment, strengthen the protection of intellectual properties and actively expand imports.

On Sunday, China's commerce ministry said it would welcome US&nbspofficials to discuss trade and economic issues.

"The Chinese side has received information that the US&nbspside hopes to come to Beijing to discuss economic and trade issues. China welcomes this," the ministry said in a statement on its website.

Beijing announced on Wednesday that it would gradually eliminate ownership caps on foreign manufacturers of autos, aircraft and ships.

Regarding trade with Japan, Mnuchin said the Trump administration wants a bilateral trade agreement and has had discussions with Tokyo about such talks.

Japan wants the United States to rejoin the multilateral Trans-Pacific Partnership trade pact, as it fears opening talks for a bilateral free trade agreement could put it under pressure to open up politically sensitive markets like agriculture.

Adjusting to Trump

A year after US&nbspPresident Donald Trump first rankled multilateral finance meetings with his "America First" trade agenda, some officials are starting to acknowledge he has changed the conversation on trade, even if they disagree with his tariff plans.

"No one can be in any doubt that the US&nbsphas a valid point about intellectual property theft" by China, British finance minister Philip Hammond said on Friday. "It's been going on, on an industrial scale, over many years and we've been targets of it just as the US&nbsphas."

At the same time, Hammond said using tariffs was the wrong way to settle trade disputes, and he was urging China to do more to open its markets to foreign competitors, particularly in services.

A senior Japanese government official drew a clear distinction between Japan's trade issues with the United States and the US-China dispute.

"It's a separate issue," the official said on condition of anonymity. "If Trump can help change China’s behavior, there is room for Japan to benefit."&nbsp

A European official at the meetings said policymakers were trying to reduce trade pressures during the talks, but added that they wanted to "make sure there is a level playing field on trade, that China is in the same framework that others share."

Mnuchin said he was not trying to "recruit" allies to put pressure on China, but having discussions with other countries that have similar issues. "A lot of these issues are not unique to the United States."

A number of officials expressed a desire for clarity on what the United States ultimately wants from China, and whether Trump will settle for lower Chinese auto tariffs, a short-term reduction in the US-China trade deficit or hold out for fundamental changes in industrial policy.

"I hope it is a negotiating strategy. But they need to articulate actions to be taken," said Robert Holleyman, a former deputy US&nbspTrade Representative in the Obama administration.

The United States has threatened to impose tariffs on up to $150 billion of Chinese imports to try to force changes in Beijing's industrial policies, which Washington says are aimed at acquiring American intellectual property

US&nbspTreasury Secretary Steven Mnuchin said on Saturday he may travel to China, a move that could ease tensions between the world's two largest economies, as international policymakers acknowledged Beijing needs to change its trade practices. The United States has threatened to impose tariffs on up to $150 billion of Chinese imports to try to force changes in Beijing's industrial policies, which Washington says are aimed at acquiring American intellectual property. Mnuchin told reporters he was continuing to have discussions with his Chinese counterparts to try to resolve the differences over trade, but said he may go to Beijing. "A trip is under consideration," Mnuchin said at a news conference during the International Monetary Fund and World Bank spring meetings in Washington. "I am not going to make any comment on timing, nor do I have anything confirmed, but a trip is under consideration." Mnuchin also declined to say what he wants from a trade deal with China, adding, "If we have a deal, you'll know what it looks like when we have it." China has threatened retaliation against US&nbspexports if Washington pushes ahead with the tariffs. The row, which comes as the world economy records its strongest growth in years, cast a pall over the semi-annual gathering of the world's finance officials. IMF Managing Christine Lagarde warned this week that a US-China trade war threatened to damage confidence, investment and growth. On Saturday, she told a news conference there would be no winners from such a conflict. "It is important that as a global community we keep trade open, we ensure that we work within the multilateral system that we have to make sure if there are disputes, these disputes are resolved," she said. Mnuchin said he met China`s new central bank governor, Yi Gang, during the IMF and World Bank meetings and discussed the potential for China to open its markets to more foreign competition. "I did meet with the Chinese here. The discussions were really more around the governor's actions at the PBOC (People's Bank of China) and certain actions they've announced in terms of opening some of their markets, which we very much encourage and appreciate." In a statement on Saturday to the International Monetary and Financial Committee, Yi said China would "vigorously" push forward the reform and opening of its financial sector, significantly relax market access restrictions, create a more attractive investment environment, strengthen the protection of intellectual properties and actively expand imports. On Sunday, China's commerce ministry said it would welcome US&nbspofficials to discuss trade and economic issues. "The Chinese side has received information that the US&nbspside hopes to come to Beijing to discuss economic and trade issues. China welcomes this," the ministry said in a statement on its website. Beijing announced on Wednesday that it would gradually eliminate ownership caps on foreign manufacturers of autos, aircraft and ships. Regarding trade with Japan, Mnuchin said the Trump administration wants a bilateral trade agreement and has had discussions with Tokyo about such talks. Japan wants the United States to rejoin the multilateral Trans-Pacific Partnership trade pact, as it fears opening talks for a bilateral free trade agreement could put it under pressure to open up politically sensitive markets like agriculture. Adjusting to Trump A year after US&nbspPresident Donald Trump first rankled multilateral finance meetings with his "America First" trade agenda, some officials are starting to acknowledge he has changed the conversation on trade, even if they disagree with his tariff plans. "No one can be in any doubt that the US&nbsphas a valid point about intellectual property theft" by China, British finance minister Philip Hammond said on Friday. "It's been going on, on an industrial scale, over many years and we've been targets of it just as the US&nbsphas." At the same time, Hammond said using tariffs was the wrong way to settle trade disputes, and he was urging China to do more to open its markets to foreign competitors, particularly in services. A senior Japanese government official drew a clear distinction between Japan's trade issues with the United States and the US-China dispute. "It's a separate issue," the official said on condition of anonymity. "If Trump can help change China’s behavior, there is room for Japan to benefit." A European official at the meetings said policymakers were trying to reduce trade pressures during the talks, but added that they wanted to "make sure there is a level playing field on trade, that China is in the same framework that others share." Mnuchin said he was not trying to "recruit" allies to put pressure on China, but having discussions with other countries that have similar issues. "A lot of these issues are not unique to the United States." A number of officials expressed a desire for clarity on what the United States ultimately wants from China, and whether Trump will settle for lower Chinese auto tariffs, a short-term reduction in the US-China trade deficit or hold out for fundamental changes in industrial policy. "I hope it is a negotiating strategy. But they need to articulate actions to be taken," said Robert Holleyman, a former deputy US&nbspTrade Representative in the Obama administration.

US Treasury chief may visit China as trade tensions simmer

The rupee depreciated 12 paise to 65.11 against the US dollar in opening trade on Wednesday ahead of the release of US Fed meeting minutes scheduled later in the day.

However, weakness in the US dollar against select currencies overseas and a higher opening in domestic equities capped the losses.

Meanwhile, foreign portfolio investors (FPIs) sold equities worth Rs 684.99 crore yesterday, provisional data showed.

Yesterday, The rupee had ended higher by 3 paise at 64.99 against the American currency amid easing US-China trade war fears.

Meanwhile, the benchmark BSE Sensex advanced by 92.26 points, or 0.27 per cent, at 33,972.51 in early deals. 
&nbsp;

However, weakness in the US dollar against select currencies overseas and a higher opening in domestic equities capped the losses

The rupee depreciated 12 paise to 65.11 against the US dollar in opening trade on Wednesday ahead of the release of US Fed meeting minutes scheduled later in the day. However, weakness in the US dollar against select currencies overseas and a higher opening in domestic equities capped the losses. Meanwhile, foreign portfolio investors (FPIs) sold equities worth Rs 684.99 crore yesterday, provisional data showed. Yesterday, The rupee had ended higher by 3 paise at 64.99 against the American currency amid easing US-China trade war fears. Meanwhile, the benchmark BSE Sensex advanced by 92.26 points, or 0.27 per cent, at 33,972.51 in early deals.

Rupee sheds 12 paise against US dollar

Even as the world braces for a trade war between the US and China, President Xi at a forum in Hainan province said he is ready to open China's economy further.

Xi said China would raise foreign ownership limit in the automobile sector "as soon as possible".&nbsp;

On Sunday, US president Trump had taken to Twitter to highlight the imbalance of trade between China and the US while targeting tariffs on auto imports. The US president termed China's auto policy as &nbsp;"stupid trade".

"This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products," Xi informed the delegates at the forum.

"When a car is sent to the United States from China, there is a tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a tariff to be paid of 25%. Does that sound like a free or fair trade? No, it sounds like stupid trade - going on for years!" President Trump had tweeted.

The Chinese president added that the country will ensure wider access to foreign investors and speed up opening up of the insurance sector.

"Economic globalisation is an irreversible trend of the time," Xi said, adding, "the door of China's opening up will not close, it will only open wider and wider."

The US and China have been imposing trade tariffs on each other after President Trump last month announced import tariff worth $60 billion on Chinese goods entering the US.

On Monday, China had said trade talks with the United States was "impossible" under current conditions after President Donald Trump reassured markets by suggesting that the dispute could be resolved.

On Sunday, US president Trump had taken to Twitter to highlight the imbalance of trade between China and the US while targeting tariffs on auto imports.

Even as the world braces for a trade war between the US and China, President Xi at a forum in Hainan province said he is ready to open China's economy further. Xi said China would raise foreign ownership limit in the automobile sector "as soon as possible". On Sunday, US president Trump had taken to Twitter to highlight the imbalance of trade between China and the US while targeting tariffs on auto imports. The US president termed China's auto policy as "stupid trade". "This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products," Xi informed the delegates at the forum. "When a car is sent to the United States from China, there is a tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a tariff to be paid of 25%. Does that sound like a free or fair trade? No, it sounds like stupid trade - going on for years!" President Trump had tweeted. The Chinese president added that the country will ensure wider access to foreign investors and speed up opening up of the insurance sector. "Economic globalisation is an irreversible trend of the time," Xi said, adding, "the door of China's opening up will not close, it will only open wider and wider." The US and China have been imposing trade tariffs on each other after President Trump last month announced import tariff worth $60 billion on Chinese goods entering the US. On Monday, China had said trade talks with the United States was "impossible" under current conditions after President Donald Trump reassured markets by suggesting that the dispute could be resolved.

Amid looming trade war with US, President Xi promises to open China's auto, insurance sector

US stocks dropped about 2 per cent on Friday, with the Dow falling more than 570 points, as US President Donald Trump's latest tariff threat on Chinese imports fuelled increasing concern over a US trade war with China.

Stocks added to losses and hit session lows in afternoon trading after Federal Reserve Chairman Jerome Powell said the US central bank will likely need to keep hiking interest rates to keep inflation under control and said it was too soon to know if rising trade tensions would hit the US economy.

Fears of a trade war since Trump announced tariffs on steel and aluminium imports more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth.

"It's a reaction to concerns about the administration's approach to trade. The market has vacillated between writing it off as just talk and assuming there could be a serious problem," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

He and others said investors also appeared to be reducing risk ahead of the weekend.

"If the market is down it often tends to accelerate on Friday. Investors don't want to take the risk of coming in Monday after having something happen over the weekend," Meckler said.

Trump late Thursday threatened to slap $100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a "fierce counter strike".

US companies seen as more likely to be hit by trade tensions with China were among the biggest drags on the Dow including Boeing down 3.1 percent. The S&P 500 industrials index down 2.7 percent, had the biggest losses among sectors, though selling was broad-based.

Chipmakers, which as a group rely on China for about a quarter of their revenue, also declined. The Philadelphia semiconductor index fell 3.1 percent.

The Dow Jones Industrial Average fell 572.46 points, or 2.34 percent, to 23,932.76, the S&P 500 lost 58.37 points, or 2.19 percent, to 2,604.47 and the Nasdaq Composite dropped 161.44 points, or 2.28 percent, to 6,915.11.

The trade war worries continued to pressure stocks even as Trump administration officials sought to dampen concerns. Trump's top economic adviser Larry Kudlow said in various interviews that he learned of the new tariffs on Thursday night, but also said there are ongoing talks on trade between the United States and China.

US Treasury Secretary Steve Mnuchin in an interview on CNBC said he was cautiously hopeful the United States will reach an agreement with China on trade.

The S&P 500 ended just above its 200-day moving average after trading well below that key support level that is watched by technical analysts.

Powell, who was speaking on the U.S. economic outlook in Chicago, also said the labour market appeared close to full employment. It was his first speech on the economic outlook since taking over as chairman on Feb. 5.

Before the session started, a Labor Department report showed nonfarm payrolls increased by a smaller-than-expected 103,000 last month. While annual growth in average hourly earnings rose to 2.7 percent, it stayed below the 3 percent that economists estimate is needed to lift inflation toward the Federal Reserve's 2-percent target.

"There was a hope that if he had a more dovish tone that that might be a counterbalance to the trade headwinds out there," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

For the week, the S&P 500 was down 1.4 percent, the Dow was down 0.7 percent and the Nasdaq was down 2.1 percent.

Facebook share were down 1.3 percent. It backed for the first time proposed legislation requiring social media sites to disclose the identities of buyers of online political campaign ads and introduced a new verification process for people buying "issue" ads, which have been used to sow discord online.

Declining issues outnumbered advancing ones on the NYSE by a 3.77-to-1 ratio on Nasdaq, a 3.59-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and seven new lows the Nasdaq Composite recorded 40 new highs and 64 new lows.

About 7.2 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Fears of a trade war since Trump announced tariffs on steel and aluminium imports more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth.

US stocks dropped about 2 per cent on Friday, with the Dow falling more than 570 points, as US President Donald Trump's latest tariff threat on Chinese imports fuelled increasing concern over a US trade war with China. Stocks added to losses and hit session lows in afternoon trading after Federal Reserve Chairman Jerome Powell said the US central bank will likely need to keep hiking interest rates to keep inflation under control and said it was too soon to know if rising trade tensions would hit the US economy. Fears of a trade war since Trump announced tariffs on steel and aluminium imports more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth. "It's a reaction to concerns about the administration's approach to trade. The market has vacillated between writing it off as just talk and assuming there could be a serious problem," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. He and others said investors also appeared to be reducing risk ahead of the weekend. "If the market is down it often tends to accelerate on Friday. Investors don't want to take the risk of coming in Monday after having something happen over the weekend," Meckler said. Trump late Thursday threatened to slap $100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a "fierce counter strike". US companies seen as more likely to be hit by trade tensions with China were among the biggest drags on the Dow including Boeing down 3.1 percent. The S&P 500 industrials index down 2.7 percent, had the biggest losses among sectors, though selling was broad-based. Chipmakers, which as a group rely on China for about a quarter of their revenue, also declined. The Philadelphia semiconductor index fell 3.1 percent. The Dow Jones Industrial Average fell 572.46 points, or 2.34 percent, to 23,932.76, the S&P 500 lost 58.37 points, or 2.19 percent, to 2,604.47 and the Nasdaq Composite dropped 161.44 points, or 2.28 percent, to 6,915.11. The trade war worries continued to pressure stocks even as Trump administration officials sought to dampen concerns. Trump's top economic adviser Larry Kudlow said in various interviews that he learned of the new tariffs on Thursday night, but also said there are ongoing talks on trade between the United States and China. US Treasury Secretary Steve Mnuchin in an interview on CNBC said he was cautiously hopeful the United States will reach an agreement with China on trade. The S&P 500 ended just above its 200-day moving average after trading well below that key support level that is watched by technical analysts. Powell, who was speaking on the U.S. economic outlook in Chicago, also said the labour market appeared close to full employment. It was his first speech on the economic outlook since taking over as chairman on Feb. 5. Before the session started, a Labor Department report showed nonfarm payrolls increased by a smaller-than-expected 103,000 last month. While annual growth in average hourly earnings rose to 2.7 percent, it stayed below the 3 percent that economists estimate is needed to lift inflation toward the Federal Reserve's 2-percent target. "There was a hope that if he had a more dovish tone that that might be a counterbalance to the trade headwinds out there," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. For the week, the S&P 500 was down 1.4 percent, the Dow was down 0.7 percent and the Nasdaq was down 2.1 percent. Facebook share were down 1.3 percent. It backed for the first time proposed legislation requiring social media sites to disclose the identities of buyers of online political campaign ads and introduced a new verification process for people buying "issue" ads, which have been used to sow discord online. Declining issues outnumbered advancing ones on the NYSE by a 3.77-to-1 ratio on Nasdaq, a 3.59-to-1 ratio favored decliners. The S&P 500 posted two new 52-week highs and seven new lows the Nasdaq Composite recorded 40 new highs and 64 new lows. About 7.2 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Wall Street ends down 2 per cent as US-China trade fears intensify

The global economic recovery could be hit if the trade war between the US and China escalate, renowned economist and former Reserve Bank of India Governor Raghuram Rajan said today. 
 
&quot;There are very worrisome scenarios here. I think we should not take this lightly,&quot; he said here. 
 
&quot;I do hope that better sense sort of prevails and we move off from a full-fledged process of one country doing it and the other country reacting and so on,&quot; he said. 
 
Raghuram Rajan, Professor, Finance, University of Chicago, Booth School of Business, advised that one should stay away from trade war particularly at a time when the economy the world over was in the process of recovery. 
 
&quot;I don&#39;t want to use the word trade war. I don&#39;t think they are there yet. But I do think that it is very important that we stay away because it could harm the current recovery which has been beneficial all over the world significantly. 
 
&quot;And for it to do that at a time when the US is quite strong and has got full employment is going quite reasonably, it seems to me that this is not the time that we should do it,&quot; the former RBI governor told reporters in response to a question related to trade war. 
 
He was here to address the two-day Global Digital Summit (#Future) organised by the Kerala government.

Raghuram Rajan advised that one should stay away from trade war particularly at a time when the economy the world over was in the process of recovery

The global economic recovery could be hit if the trade war between the US and China escalate, renowned economist and former Reserve Bank of India Governor Raghuram Rajan said today. "There are very worrisome scenarios here. I think we should not take this lightly," he said here. "I do hope that better sense sort of prevails and we move off from a full-fledged process of one country doing it and the other country reacting and so on," he said. Raghuram Rajan, Professor, Finance, University of Chicago, Booth School of Business, advised that one should stay away from trade war particularly at a time when the economy the world over was in the process of recovery. "I don't want to use the word trade war. I don't think they are there yet. But I do think that it is very important that we stay away because it could harm the current recovery which has been beneficial all over the world significantly. "And for it to do that at a time when the US is quite strong and has got full employment is going quite reasonably, it seems to me that this is not the time that we should do it," the former RBI governor told reporters in response to a question related to trade war. He was here to address the two-day Global Digital Summit (#Future) organised by the Kerala government.

Economic recovery could be hit if US-China trade war escalates: Raghuram Rajan

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