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“It's time for a Trade War” said President Dumb aka Cadet Bone Spurs


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Author Topic: “It's time for a Trade War” said President Dumb aka Cadet Bone Spurs  (Read 558 times)
Kiwithrottlejockey
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« Reply #25 on: April 07, 2018, 05:20:40 pm »


from the print edition of the Los Angeles Times....

There’s no ‘pot of gold’ at the end of a trade war

By DANIEL GRISWOLD | Friday, April 06, 2018

China may put tariffs on $12 billion of American soybeans, more than half of the U.S. export of this product. — Photograph: Associated Press.
China may put tariffs on $12 billion of American soybeans, more than half of the U.S. export of this product. — Photograph: Associated Press.

AMID our escalating trade war with China this week, President Trump's top economic advisor, Larry Kudlow, tried to assure investors that, despite roiling stock markets, a “pot of gold” lies at the end of the dispute. But the brinkmanship on both sides is more likely to cost Americans a pot of gold in disrupted trade and lost economic opportunity.

The spat between the world's two largest trading nations started last month with U.S. tariffs on steel and aluminum; China responded with tariffs on $3 billion worth of U.S. exports. This week's round two — over Chinese appropriation of U.S. intellectual property — marks an exponential escalation, with each side first threatening tariffs on $50 billion of the other's exports. On Thursday, Trump told the U.S. Trade Representative to look for $100 billion more.

The risks for Americans are clear and present. Although the people of China certainly will pay, so too will millions of American farmers, ranchers, manufacturing workers and consumer households. The most immediate casualties will be U.S. exporters. China bought $130 billion worth of U.S. goods in 2017, making it the third-largest market for our exports, behind only Canada and Mexico.

Nobody appreciates that reality more than American farmers. China is poised to slap tariffs on $12 billion of U.S. soybean exports, representing more than half of total U.S. exports of the crop. That will come on top of retaliatory duties China already has imposed on fruits, nuts and wine — actions that hit California producers especially hard.

U.S. industry will also suffer. Already in the crosshairs of Chinese retaliation are U.S. exports of $6 billion in motor vehicles and $16 billion worth of civilian aircraft. In a double whammy to U.S. industry, our own government is threatening to impose 25% tariffs on a range of industrial goods and machinery imported from China. Those imports enable U.S. companies to remain competitive and keep assembly of final products here in the United States. Combined with a 30% jump in domestic steel prices brought on by the administration's earlier steel tariffs, U.S. manufacturing companies are facing a cost squeeze that threatens to disrupt supply chains and employment.

Despite promises from the Trump administration, these tariffs will not “fix” the trade deficit. If the Chinese earn fewer dollars selling into the U.S. market, they will have fewer dollars to buy U.S. exports; both imports and exports will then fall. The Chinese also will have fewer dollars to buy U.S. Treasury bonds, which will lead to higher long-term borrowing costs for Uncle Sam and the rest of us.

A trade showdown won't necessarily fix the underlying complaint about intellectual property either. There is no precedent in U.S. history for using this level of tariff threats to successfully wrest concessions from a major commercial partner. Three decades ago, the U.S. got tough with Japan over similar issues but never came close to threatening the kind of sweeping duties the Trump administration is talking about today. Japan was also a different kind of negotiating partner, a democracy and a more accommodating ally. An authoritarian and nationalistic China is less likely to back down.

A more promising and less risky strategy would be to press the U.S. case in the World Trade Organization, the inter-governmental body formed to resolve trade disputes. The United States has brought a number of WTO cases against China, prevailing in almost all of them, and the Chinese government changed its policies as a result. Japan, the EU and other Western economic powers that share our complaints against China and could join the U.S. in pressing its case. Instead, it's China that has just approached the WTO with its complaint about our steel and aluminum tariffs.

Another more constructive strategy for the United States would be to re-join the Trans-Pacific Partnership. This trade agreement with 11 other Pacific Rim nations contains strong intellectual-property protections that provide a stark alternative to China's lax approach. More broadly, the Trump administration could deescalate its hostile trade rhetoric against our allies such as Canada, Mexico and the EU, making it easier for these countries to unite in demanding Chinese reforms.

Like Japan in the 1990s, China is in transition to a more advanced economic state in which developing and protecting intellectual property will be crucial. If China wants to continue to attract foreign direct investment, it would be in its own interest to reform its domestic laws to protect the intellectual property of all companies, domestic and foreign-owned.

A full-blown escalation of tariffs is not in the interest of either the United States or China. Contrary to the much-referenced tweet by Trump, trade wars are not good nor are they easily won, as we may soon learn at great cost.


__________________________________________________________________________

Daniel Griswold is co-director of the Program on the American Economy and Globalization at the Mercatus Center and George Mason University.

http://enewspaper.latimes.com/infinity/article_share.aspx?guid=6b8dae99-2ab8-47fa-aab4-3b15dc1c5ea1
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« Reply #26 on: April 07, 2018, 05:22:30 pm »


from the Los Angeles Times....

Beijing responds forcefully to Trump's escalating threats,
raising risks of all-out trade war


By DON LEE, JIM PUZZANGHERA and JAMES F. PELTZ | 3:30PM PDT — Friday, April 06, 2018

Chinese Ministry of Commerce spokesman Gao Feng said China would fight the U.S. “at any cost” after President Trump proposed additional tariffs on $100 billion of Chinese goods. — Photograph: Andy Wong/Associated Press.
Chinese Ministry of Commerce spokesman Gao Feng said China would fight the U.S. “at any cost” after President Trump proposed
additional tariffs on $100 billion of Chinese goods. — Photograph: Andy Wong/Associated Press.


WITH President Trump upping the ante in his trade fight and Beijing showing no signs of backing down, the two nations entered a new phase of escalated tensions that already have rocked financial markets and set off deepening worries of a trade war that could undermine global growth.

In what has become a high-stakes game of economic poker, China on Friday responded defiantly to Trump's threat the previous night to slap tariffs on another $100 billion in imported Chinese goods on top of $50 billion in products announced earlier. China's Commerce Ministry quickly vowed to fight the new tariffs “at any cost” with a full slate of unspecified counter-measures.

It was the sharpest and latest in a series of tit-for-tat actions that, so far, have been mostly threats and warnings of retaliation. And officials on both sides left open the possibility of negotiations that could avoid tariffs and other protectionist measures from being erected.

But Treasury Secretary Steven T. Mnuchin on Friday acknowledged the potential of a trade war, and Trump's top economic advisor, Larry Kudlow, said that “Trump is not just using tariffs as a negotiating card” and is prepared to use them.

“I don't like to use tariffs, but sometimes you have to use tariffs to bring countries to their senses,” Kudlow said, even as he sought, unsuccessfully, to calm markets and individuals by emphasizing that the U.S. is still months away from enacting the tariffs against China and that there were “all kinds of back-channel discussions going on” between the two nations.

Trump said on Friday that investors might feel “a little pain” because of his trade actions against China, and the stock market quickly proved him right.

The Dow Jones industrial average plunged 572.46 points, or 2.3%, the Dow's worst percentage drop in two weeks and, at its low Friday, the blue-chip average had plummeted 767 points, or 3.1%.

It ended a seesaw week on Wall Street in which prices gyrated widely as investors grappled with how much the trade dispute could escalate and thus hinder economic growth, corporate earnings and consumer spending.

Trump administration officials insisted that the American economy remained on strong footing, but job growth moderated in March and a trade conflict will almost certainly prove costly for both the U.S. and China, as well as the world economy.

The year had begun with major economies hopeful about what analysts saw as a rare period of synchronized global growth, but there have been recent declines in world manufacturing confidence, noted economists at Barclays Bank.

“Ongoing trade-war uncertainty leads us to recommend shifting away from risk assets,” the economists said.

Trade tensions have been building for weeks, slowly at first with Trump imposing tariffs on Chinese solar panels and then on roughly $4 billion of Chinese steel and aluminum, the latter penalties justified in the name of U.S. national security.

Earlier this week, the Trump administration issued a list of about $50 billion in Chinese products such as semiconductors and machine tools that would be hit with 25% penalties for alleged intellectual property theft and unfair technology transfer policies.

Beijing reacted swiftly by announcing its own list of American-made goods, including cars, aircraft and soybeans, that would be subject to import taxes of a similar amount.

Trump, apparently angered by Beijing's dollar-for-dollar threat of retaliation, said “China has chosen to harm our farmers and manufacturers.”

In a statement, he added, “China's illicit trade practices — ignored for years by Washington — have destroyed thousands of American factories and millions of American jobs.”

Trump's economic team piled on the criticisms throughout Friday.

“The problem here is China, not Trump,” said Kudlow, complaining of what he called decades of “illegal practices” by China that violate World Trade Organization rules. “They're a first-world country now and they have to act like a first-world country and they have to play by the rules,” he said.

U.S. Trade Representative Robert Lighthizer said the president's proposal to increase China tariffs was “an appropriate response,” although he made clear that any additional tariffs, like the earlier ones announced, would not take effect immediately. The tariffs would first be subject to a 60-day public comment and hearing period.

Even so, the intensifying rhetoric and threats from both sides have left many exasperated.

“Hopefully the president is just blowing off steam again, but if he's even half-serious, this is nuts,” said Senator Ben Sasse (Republican-Nebraska). “He's threatening to light American agriculture on fire. Let's absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this.”

House Ways and Means Committee Chairman Kevin Brady (Republican-Texas) called for both sides to resolve their differences in talks. “The deliberation period announced by the president gives the U.S. and China a long-overdue opportunity to resolve this serious trade dispute,'' he said in a statement. "It is in both of our countries' interest — and frankly, the world's — to find a new path forward on unfair trade practices.”

Businesses and investors remained hopeful of negotiations but were nonetheless bracing for a potentially long standoff.

“As both China and the U.S. try to gain concessions from each other in the ongoing trade talks, the back-and-forth between the two countries on tariff threats is not likely to end soon,” said the Fung Group, a Hong Kong-based firm involved in trading, logistics and retailing.

Including Trump's latest threat, China could end up being hit with tariffs on $150 billion of goods, or about 30% of all Chinese exports to the U.S. China will be hard-pressed to match tariffs on that level of goods because it's more than 100% of what China currently imports from the U.S. in merchandise.

But that apparent advantage for the Trump administration could end up being a Pyrrhic victory, especially for U.S. companies that have production or sales in China.

For all of the difficulties and obstacles operating in China, many are there because of the country's large and growing market, and a trade war would do serious damage to their business, particularly if Beijing pulls out its full arsenal by tightening regulations, increasing inspections, and just making life very difficult for them.

Some of the biggest losers on Friday were giant multi-national companies with considerable sales to China. Caterpillar Incorporated fell 3.3%, Boeing Company dropped 3.1% and General Electric Company lost 2.8%.

But the selloff was across the board, with particularly big losses in the aerospace and defense, financial, healthcare and retail industries. The NYSE/FANG+ index, which tracks the market's largest technology stocks, fell 2.4%.

Trump earlier had noted “the market's gone up 40%, 42% — so we might lose a little bit of it — but we're going to have a much stronger country when we're finished.”

He apparently was referring to how the Dow Jones industrials had soared 45% from election day, November 8, 2016, until it hit a record high of 26,616.71 on January 26.

But the Dow now has fallen 10% from that peak, the point at which Wall Street calls a pullback a “correction”.


__________________________________________________________________________

Don Lee and Jim Puzzanghera reported from Washington; James Peltz reported from Los Angeles.

• Don Lee covers the U.S. and global economy out of Washington, D.C. for the Los Angeles Times. Since joining the L.A. Times in 1992, he has served as the Shanghai bureau chief and in various editing and reporting roles in California. He is a native of Seoul, Korea, and graduated from the University of Chicago.

• Jim Puzzanghera writes about business and economic issues from the Los Angeles Times' Washington, D.C., bureau. He joined the L.A. Times in 2006 and won the paper's Editor's Award in 2009 for coverage of the financial crisis. He has worked in the nation's capital since 1998 and is a two-time National Press Club award winner for Washington coverage. A Northwestern University graduate, he previously worked for the San Jose Mercury News, Newsday and the St. Petersburg Times.

• James F. Peltz has covered nearly every aspect of national business news — including corporate America, Wall Street and global economic matters — for more than 25 years in Los Angeles and New York for the Los Angeles Times. He also spent nine years on the L.A. Times' Sports staff, where he mainly wrote about auto racing and major league baseball. Peltz graduated from UCLA and earned a master's degree in journalism from the University of Colorado.

http://www.latimes.com/business/la-fi-trump-china-tariffs-20180406-story.html
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« Reply #27 on: April 08, 2018, 12:33:19 am »


from The New York Times....

EDITORIAL: Putting Trump's Trade Bombast to the Test

The president's rhetoric suggests he's moving America toward a trade war with China.
But what will he actually do?


By THE EDITORIAL BOARD | 7:55PM EDT — Friday, April 06, 2018

Illustration: Michael George Haddad.
Illustration: Michael George Haddad.

PRESIDENT TRUMP's recent threat to escalate his trade skirmish with China into a full-scale trade war is a foolish gambit with little historical precedent. It is also hard to take seriously, given how quickly Mr. Trump changes his mind and how rarely and clumsily he tends to follow through on tough talk.

Mr. Trump said on Thursday that he wants to slap tariffs on an additional $100 billion in Chinese imports in response to Beijing's plan to retaliate against an earlier American proposal that was aimed at $50 billion in Chinese goods. The president also said he was seeking ways to protect American farmers hurt by Chinese retaliation — a move that could result in fresh trade fights with other countries as they seek to defend their farmers from subsidized American grain.

If you're confused or shocked by these announcements, you are not alone. Most experts say that a trade war between the world's two largest economies would hurt American businesses, farmers and workers whose profits and livelihoods depend in part on commerce with China. That's probably why the Standard & Poor’s 500-stock index fell more than 2 percent on Friday.

Historians say there is little precedent for Mr. Trump's direct and forceful targeting of China. The last time a president used trade policy to hurt specific nations was when Thomas Jefferson and Congress restricted trade with Britain and France in the early 1800s, said Douglas Irwin, an economics professor at Dartmouth College who recently published a history of American trade policy. Those trade battles ended up leading to the War of 1812. “We haven't seen anything like this in centuries,” he said.

Even the infamous Smoot-Hawley tariffs that Congress enacted in 1930 were put in place to protect struggling domestic industries and farmers, not to penalize specific countries. Of course, those tariffs did not quite work as intended, because other countries moved to shield their own economies by raising tariffs, too. Experts now believe those trade policies probably exacerbated the Great Depression.

Mr. Trump's bombast is so odd that it has scrambled the usual politics of trade. Many Republican lawmakers, including those who support him on most issues, have come out strongly against him on trade. For example, Pat Roberts, a senator from Kansas, said the impact of the president's threats against China was “disconcerting”, and Senator Charles Grassley of Iowa said American farmers and ranchers “would bear the brunt of retaliation” by China. At the same time, Mr. Trump has won praise from some Democrats, like Senator Sherrod Brown of Ohio, who are opposed to many other Trump policies.

The big question now is what Mr. Trump will actually do. Some officials — like Larry Kudlow, the former cable-TV pundit who recently became the top economic adviser in the White House — are trying to tamp down talk of a trade war, and say the administration is using the threat of tariffs to get China to the negotiating table. To Mr. Kudlow's way of thinking, the Trump strategy is similar to how President Ronald Reagan got Japan to voluntarily limit exports to the United States in the 1980s by threatening to impose steep tariffs.

There is a strong case to be made that the United States needs to do all it can to get Chinese officials to change economic policies that have hurt American businesses and workers. For example, officials in Beijing have forced foreign businesses to transfer technology to local joint-venture partners as a condition of doing business in China. China for many years also artificially depressed the value of its currency, the renminbi, against the dollar to make its clothes, electronics and other products more affordable to American consumers.

But it is hard to see this administration striking an effective and comprehensive deal with China. That's because Mr. Trump and his officials seem incapable of putting in the time and hard work required to hammer out such agreements with other countries or political adversaries. They have also displayed little of the finesse and diplomacy needed to strike international deals.

Consider, for example, the trade deal the administration struck with South Korea last month. Experts say that it will do little to increase American exports to that country and will only modestly reduce imports to the United States. A day after formally announcing that agreement, Mr. Trump said he might delay it in an effort to pressure North Korea to reach a deal on its nuclear weapons. That about-face would no doubt make other countries reluctant to reach an agreement with this president — they could never be sure if a deal was a deal.

Or take the North American Free Trade Agreement, which the Trump administration has been renegotiating for months. American officials have apparently walked back from some of their most aggressive demands in recent talks, The New York Times recently reported. Those changes might make it easier to get agreements with Canada and Mexico. But they could leave many domestic groups disappointed with Mr. Trump — as were many of the workers at Carrier whose jobs he claims to have saved early in his presidency but who were eventually laid off anyway. Some Democratic lawmakers, American labor unions and other groups that theoretically support Mr. Trump's tougher trade policies are worried that their priorities, like a provision requiring Mexico to improve labor rights for factory workers, will not be included in a new trade agreement.

Mr. Trump has dramatically raised the stakes on trade with his brash pronouncements about tariffs. But there's little cause to hope he and his team can deliver the big economic gains that they argue can come only from such a combative approach.


https://www.nytimes.com/2018/04/06/opinion/trump-trade-china.html
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« Reply #28 on: April 08, 2018, 12:39:10 am »


from The New York Times....

More Jobs, Faster Growth and Now, the Threat of a Trade War

Trade War Fears Dull Fed Chief's Focus on Health of Economy: In his inaugural speech,
the new Fed chairman tried to focus on the strength of the economy
even as a spiraling tariff battle with China spooked investors.


By BEN CASSELMAN and JIM TANKERSLEY | 8:16PM EDT — Friday, April 06, 2018

Jerome H. Powell, the new Federal Reserve chairman, on Friday visited a Chicago incubator for industrial start-ups, highlighting the role of manufacturing in the recovery. — Photograph: Lyndon French/The New York Times.
Jerome H. Powell, the new Federal Reserve chairman, on Friday visited a Chicago incubator for industrial start-ups, highlighting
the role of manufacturing in the recovery. — Photograph: Lyndon French/The New York Times.


THE rapidly escalating trade conflict with China has up-ended the prevailing economic dynamic of falling unemployment and faster growth, leaving policymakers and investors scrambling to figure out the way forward.

The threat of a trade war loomed over Jerome H. Powell's inaugural speech as Federal Reserve chairman on Friday in Chicago, even as he tried to focus attention on the fundamental strength of the American economy. Financial markets fell Friday morning after President Trump's latest salvo against China, then tumbled further after Mr. Powell indicated that the Fed saw no imminent need to adjust its outlook. The Standard & Poor's 500-stock index ended the day down 2.2 percent, closing a turbulent week.

And there was uncertainty in Washington, where lawmakers, lobbyists and even White House officials struggled to discern how much of Mr. Trump's move was policy and how much was bluster.

The president acknowledged that the trade friction could take a toll. “I'm not saying there won’t be a little pain,” he said in a radio interview on Friday. “But we're going to have a much stronger country when we're finished.”

The concern over trade was evident at Mr. Powell's appearance before the Economic Club of Chicago. The Fed chief did not mention tariffs in his speech, but in a question-and-answer session afterward, they were the first topic raised.

The Fed chief, who took his post in February, said it was “too early to say” what impact the dueling trade measures would have. “We don't know the extent to which the tariffs will actually come into effect and, if so, how big will that effect be and what will the timing of it be,” Mr. Powell said. But he made it clear that the Fed would watch closely for any sign that the trade dispute was knocking the recovery off course.

The trade tensions complicate what was already a tricky task for the Fed. Hundreds of billions of dollars in tax cuts and spending increases risk fueling inflation, as do wage pressures from a robust labor market. The government's monthly jobs report on Friday, while more subdued than in recent months, still pointed to a healthy employment picture.

Yet policymakers are wary of acting too aggressively to slow the economy at a time when wage growth has been tepid. The Fed's response has been gradual interest-rate increases.

A trade war could act as a drag on economic growth, forcing the Fed to be even more cautious. But tariffs could also raise consumer prices by limiting cheap imports from China and other countries. That could increase the risk that the Fed will lift rates too quickly, choking off the recovery.

“There's an immediate, knee-jerk reaction to tighten policy more,” said Ellen Zentner, chief United States economist for Morgan Stanley.

The latest escalation between the United States and China came on Thursday evening, when Mr. Trump said he was considering tariffs on an additional $100 billion of Chinese imports. That came on top of the tariffs on steel and aluminum imposed last month and those on $50 billion in Chinese goods that he proposed in recent days. China has responded with its own new tariffs.

It is not clear whether Mr. Trump will make good on his latest threats. Larry Kudlow, Mr. Trump's new top economic adviser, has sought to portray the tariffs as an opening bid in a negotiating process with China, and he told reporters on Friday that “there are all kinds of back-channel discussions going on.”

But Mr. Trump's Treasury secretary, Steven Mnuchin, indicated that tensions had reached a more combustible level. “There is the potential of a trade war,” Mr. Mnuchin said during Friday on CNBC. “There is a level of risk that we could get into a trade war.”

The trade upheaval threatens to undermine an American economy that is at its strongest point since the financial crisis struck a decade ago. Employers have added jobs for 90 consecutive months, by far the longest streak on record; the unemployment rate, at 4.1 percent, is the lowest since 2000.

“The labor market has been strong, and my colleagues and I on the Federal Open Market Committee expect it to remain strong,” Mr. Powell said on Friday, referring to the Fed's policy group.


Imported soybeans being unloaded in Nantong, China. In response to President Trump's trade salvos, China proposed new tariffs on American soybeans, which could hurt farmers already struggling with low prices for their crops. — Photograph: Agence France-Presse/Getty Images.
Imported soybeans being unloaded in Nantong, China. In response to President Trump's trade salvos, China proposed new tariffs
on American soybeans, which could hurt farmers already struggling with low prices for their crops.
 — Photograph: Agence France-Presse/Getty Images.


Wage growth, weak for much of the recovery, ticked up in March, and Mr. Powell said he expected the gains to continue in the months ahead. And while workers would, without a doubt, like to see their pay rise more quickly, the gradual pace is comforting for some investors, who have been watching for any hints that the economy is overheating.

In his speech, Mr. Powell said the Fed saw “other signs of economic strength,” citing “steady income gains, rising household wealth and elevated consumer confidence,” which he said would continue to support consumer spending.

Other economists agreed, saying that the recently passed tax and spending measures give the economy added momentum. A full-blown trade war might be enough to short-circuit the recovery, they said, but isolated tariffs — even large ones — most likely are not.

Certain categories are more vulnerable. Among the retaliatory moves announced by China are new tariffs on soybeans, which could hurt American farmers already struggling with low prices for their crops.

The nation's factories, a sector that Mr. Trump has championed, have become a bright spot in the recovery — a development Mr. Powell underlined on his Chicago visit by touring an incubator for industrial start-ups. But Mr. Trump's tariffs could force manufacturers to pay more for materials, and China's countermeasures could hurt their overseas sales.

Just the prospect of tariffs — even before they begin to take a direct bite — could hurt the economy if it makes corporate executives reluctant to invest.

Becky Frankiewicz, president of ManpowerGroup, a staffing firm, said she was already hearing from clients that they are more hesitant to commit to major projects, at least until they see whether this week's skirmishes develop into an all-out trade war.

“We're not seeing the impact directly of tariffs yet, but we would say there's pretty broad conservatism as a result,” she said.

Mr. Powell said Fed policymakers, too, were conscious of concerns from corporate executives.

“We did hear from a number of business leaders around the country that changes in trade policy had become a bit of a risk to the medium-term outlook,” Mr. Powell said in the question-and-answer session.

Continued turmoil in financial markets could begin to hurt spending, especially among higher earners, who are more likely to own stocks. Ms. Zentner said surveys suggested that some high-income consumers had already become more pessimistic as markets have become more volatile.

“It's starting to affect those groups, whose spending is more tied to the stock market,” Ms. Zentner said. “If they simply pause their spending or become more prudent in their spending because of market volatility, it drags down consumer spending in the aggregate.”

The effect of all this on the Fed's thinking won't be clear until the next policy meeting on May 1 and 2. Fed officials raised interest rates by a quarter of a percentage point at their most recent meeting, in March, to a range of 1.5 percent to 1.75 percent. Officials indicated that they considered the economy and labor market healthy, and that they expected to raise rates twice more this year and three times in 2019.

Mr. Powell, like his predecessor, Janet L. Yellen, cast that gradual series of increases as a carefully planned strategy to ensure that the Fed will not need to raise rates abruptly in the event of a steep rise in inflation. But he also cautioned that policymakers could change course if necessary.

“Our views about appropriate monetary policy in the months and years ahead will be informed by incoming economic data and the evolving outlook,” Mr. Powell said. “If the outlook changes, so will monetary policy. Our over-arching objective will remain the same: fostering a strong economy for all Americans — one that provides plentiful jobs and low and stable inflation.”


__________________________________________________________________________

• Ben Casselman writes about economics and other business topics for The New York Times, with a particular focus on stories involving data. He previously served as chief economics writer for the data-journalism web site FiveThirtyEight, and before that as a reporter for The Wall Street Journal. Mr. Casselman won a Loeb Award in 2011 for his coverage of the Deepwater Horizon disaster in the Gulf of Mexico, and was part of a team that was a finalist for the Pulitzer Prize for national reporting. A graduate of Columbia University, Mr. Casselman lives in New York with his wife.

• Jim Tankersley covers economic policy for The Washington Post. Before joining The Post, he wrote for National Journal, covering the breakdown in American job creation, the decline in economic mobility and the failure of policy makers to adapt to an increasingly complex set of global economic challenges. He has also worked at the Tribune Washington Bureau, the Toledo Blade, the Rocky Mountain News and The Oregonian. Jim and a colleague at the Toledo Blade won the 2007 Livingston Award for Young Journalists for their “Business as Usual” series of stories revealing the true roots of Ohio's economic decline. He was also part of the “Coingate” team at the Toledo Blade that was a finalist for the Pulitzer Prize.

https://www.nytimes.com/2018/04/06/business/economy/economy-trade-war-china-trump-tariffs-fed.html
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« Reply #29 on: April 08, 2018, 12:39:22 am »


from The New York Times....

U.S. and China Play Chicken on Trade, and Neither Swerves

How far will trade threats go? It may just be a start — victory could be difficult to verify, much less
achieve, as the U.S. protests Beijing's effort to re-tool Chinese industries for the 21st century.


By KEITH BRADSHER | 8:37PM EDT — Friday, April 06, 2018

China wants to create a commercial aircraft maker to rival Boeing or Airbus. — Photograph: Carlos Lemos/Reuters.
China wants to create a commercial aircraft maker to rival Boeing or Airbus. — Photograph: Carlos Lemos/Reuters.

SHANGHAI — At the heart of the intensifying trade dispute between the United States and China is a fundamental question: Which country is more willing to endure short-term pain for the long-term gain of playing a leading role in high-tech industries.

China has embarked on an aggressive and expensive plan to re-tool its economy for the future as it moves to dominate in robotics, aerospace, artificial intelligence and more. President Trump has said China's approach relies on unfair and predatory practices, and on stolen American technology. And even as Chinese leaders say they want to avoid a trade war, they are staunchly defending their plans and showing little sign of backing down.

Mr. Trump's threat to sharply escalate the administration's tariffs on Chinese imports — a threat he reiterated on Friday — shows that neither side has yet gone far enough to persuade the other to compromise. Bigger and broader tariffs may be necessary to get China's attention.

“The administration, if it's serious, better be prepared for much more,” said Derek Scissors, resident scholar at the American Enterprise Institute.

China's $300 billion plan for government assistance, Made in China 2025, calls for helping cutting-edge industries by providing low-interest loans from state-controlled banks, guaranteeing large market shares in China and offering extensive research subsidies. The goal is to help Chinese firms acquire Western competitors, develop advanced technology and construct immense factories with considerable economies of scale.

It is an agenda that China would probably go to great lengths to protect. “We will not start a war — however, if someone starts a war, we will definitely fight back,” Gao Feng, the commerce ministry spokesman, said at a news conference in Beijing on Friday. “No options will be ruled out.”

For the United States, victory in such a war would be difficult to verify, much less achieve.

China could say it plans to ease back on government support. But that could be difficult to quantify because of the country's opaque political system and the state's control of information.

China could back off from rules that favor local competitors and require American companies to share technology if they want access to the Chinese market. For example, foreign automakers face pressure to transfer electric-car technology to their local partners, and foreign technology companies are increasingly required to submit to security reviews. Foreign businesses have long complained that many of the rules they must follow are unwritten.


China wants to dominate cutting-edge industries like electric cars. — Photograph: Gary Cameron/Reuters.
China wants to dominate cutting-edge industries like electric cars. — Photograph: Gary Cameron/Reuters.

China's government-financed campaign is already paying off in some ways. Drive into downtown Shanghai from Pudong International Airport and you pass a seemingly endless series of huge hangars and vast, glass-walled design centers, all part of the country's effort to create a commercial aircraft manufacturing giant to rival Boeing or Airbus. Travel to factory districts in Shanghai and on the outskirts of many other Chinese cities and you see enormous, newly built factories ready to churn out electric cars, the batteries they use and other components.

Proving that the Chinese government unfairly supports the effort could be difficult, however.

The United States could press its argument with the World Trade Organization, which oversees global trading rules and prohibits big loans from government-controlled banks at artificially low interest rates. But the W.T.O. requires many contracts and government documents to prove cases, evidence that can be hard to get in a tightly controlled country like China.

Even when the W.T.O. rules against China, persuading the country to comply can be challenging. One such ruling, involving China's restrictions on foreign electronic payment systems, was issued nearly six years ago. China is still mulling how it will comply — despite numerous complaints from the Obama administration and more recent nudges from the Trump administration.

So the United States has turned to tariffs. That means it is using a 1980s tool to address an industrial policy issue that is already shaping the 21st century.

Mr. Trump's top trade official, Robert Lighthizer, was a deputy United States trade representative under President Ronald Reagan. The tariffs that Mr. Lighthizer threatened against Japan in those days are among the same ones he is wielding now. But the two periods differ in two big ways.

One is that Japan depended on the United States in the '80s for military protection from the Soviet Union. China, by contrast, is an increasingly assertive global rival, sending naval vessels to the Baltic Sea and building a naval base in East Africa.

The second major difference between then and now is that the European Union deeply resented the tariffs of the 1980s, and Mr. Trump's use of them could make it difficult to persuade European officials to present a united front. In response to American tariffs, Beijing could simply shift business from American companies like Boeing and Ford to European rivals like Airbus and Daimler.

Chinese officials dispute the American accusations about their unfair trade practices. They say Mr. Trump's tariffs violate W.T.O. rules, and they dispute claims that China forces American companies to hand over technology. As for Made in China 2025, Chinese officials say the plan is only guidance, not a government directive — and that foreign companies are free to participate, too.


China is already a major force in solar panels. — Photograph: China Network/Reuters.
China is already a major force in solar panels. — Photograph: China Network/Reuters.

In China's current industrial policy, the Trump administration sees an extension of how the country has already come to dominate one major industry of the future: solar power.

Mr. Trump himself is no fan of solar panels. He has spoken enthusiastically about coal, not renewable energy, throughout his campaign and his presidency. But the solar power industry is one of the biggest success stories so far in China's efforts involving advanced industries.

The United States played a central role in developing solar panels and manufacturing them until a decade ago. Around then, the Chinese government decided to finance a lavish expansion of the sector. State-controlled banks lent tens of billions of dollars at low interest rates despite the high-profile bankruptcies of solar manufacturers.

Chinese firms now produce three-quarters of the world's solar panels. Most American and European companies have closed factories, and many have become insolvent. China's success in producing solar panels has given Beijing a blueprint for seizing the lead in a long list of other high-tech industries.

Many foreign companies are caught between China's industrial ambitions and Washington's efforts to stop them, including major aerospace companies and car-makers. The conflict may spread: Made in China 2025 could create major competitors to General Electric and Intel, and to companies outside the United States like Siemens and Samsung.

Tariffs could hurt such companies if the United States and China follow through on their plans. They also risk losing their competitiveness if Beijing succeeds in subsidizing the creation of large Chinese rivals in their industries.

Boeing, for example, could be hit by American tariffs on civilian aircraft parts it buys from Avic, a state-controlled Chinese military and aviation company — required purchases if the company, which is based in Chicago, wants to sell planes in China. China, in turn, is pushing a consortium that includes Avic to become a Boeing rival. Boeing, like other multi-national companies, has refrained from endorsing or criticizing the tariffs.

“Although our members are unhappy with retaliatory tariffs being used,” said Kenneth Jarrett, the president of the American Chamber of Commerce in Shanghai, “there is a belief that greater pressure has to be brought to bear on China.”


__________________________________________________________________________

Ailin Tang contributed research for this article.

• Keith Bradsher is the Pulitzer Prize-winning Shanghai bureau chief for The New York Times, having reopened the Shanghai bureau on November 14th, 2016. He has previously served as the Hong Kong bureau chief and the Detroit bureau chief for The Times. Before those postings, he was a Washington correspondent for The Times covering the Federal Reserve and international trade, and a New York-based business reporter covering transportation and telecommunications for The Times. Born in 1964, Mr. Bradsher received a degree in economics from the University of North Carolina at Chapel Hill, where he was a Morehead Scholar. He received a master's degree in public policy with a concentration in economics from the Woodrow Wilson School at Princeton University. Prior to joining The New York Times, Mr. Bradsher wrote for the Los Angeles Times from 1987 until 1989.

__________________________________________________________________________

Related to this topic:

 • China's Plan to Build Its Own High-Tech Industries Worries Western Businesses

 • Goldman Sachs's China Deal Prompts Questions About Country's U.S. Investment

 • China's Technology Ambitions Could Upset the Global Trade Order


https://www.nytimes.com/2018/04/06/business/us-china-trade-endgame.html
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« Reply #30 on: April 10, 2018, 01:19:55 am »


from The New York Times....

Europe Caught in the Middle as Trump Threatens China

The United States is Europe's biggest trading partner, but China is closing fast.
If a trade war breaks out, neutrality may not be an option.


By JACK EWING | 12:05AM EDT — Monday, April 09, 2018

Some European companies, like the German carmaker BMW, manufacture in the United States and export to China. Their sales would suffer if China slaps tariffs on American goods. — Photograph: Christof Stache/Agence France-Presse/Getty Images.
Some European companies, like the German carmaker BMW, manufacture in the United States and export to China. Their sales would suffer
if China slaps tariffs on American goods. — Photograph: Christof Stache/Agence France-Presse/Getty Images.


FRANKFURT — One is a good customer, a military ally, and an old friend, although lately its behavior has been erratic.

The other is also a good customer and despite a few spats and some lingering mistrust, it's getting to be a more lucrative and dependable business partner all the time.

Which side would you choose?

That more or less sums up the dilemma confronting Europe as it watches the escalating conflict between its two biggest trading partners, the United States and China.

The United States is Europe's biggest market for exports like cars and other goods, not to mention a NATO ally. But China is big, too — and getting ever bigger.

The Trump administration has also threatened the institutions that govern global relationships, calling NATO obsolete and stoking trade tensions. So China no longer automatically seems like the less reliable partner.

European leaders were largely silent after President Trump threatened to impose another $100 billion in tariffs on Chinese goods. But watching from a safe distance as China and the United States argue is not an option for Europe. Its economy is too deeply entwined with both.

“What can they do in terms of staying out of the crossfire?” said Adam Slater, lead economist at Oxford Economics in Britain. “Not a lot.”

Although Mr. Trump's threats are aimed at China, Europe is certain to suffer collateral damage if the president follows through. A spiraling war of tariffs and counter-tariffs would interfere with the global flow of raw materials and components for manufactured goods, disrupting the European economy. And some European companies, like the German carmaker BMW, manufacture in the United States and export to China. Such companies would see their sales suffer if China were to slap tariffs on American goods.

The mere threat of a trade war has already unsettled financial markets and made it more difficult for companies to raise money, Benoît Coeuré, a member of the executive board of the European Central Bank, said on Friday. “None of this supports growth and employment,” Mr. Coeuré said at a conference in Cernobbio, Italy.


The Piraeus Container Terminal in Athens is operated by the Chinese state-owned shipping company Cosco. In recent years, Chinese investors have snapped up European assets including Greek ports, German machinery companies and a 10 percent stake in the automaker Daimler. — Photograph: Angelos Tzortzinis/The New York Times.
The Piraeus Container Terminal in Athens is operated by the Chinese state-owned shipping company Cosco. In recent years, Chinese investors
have snapped up European assets including Greek ports, German machinery companies and a 10 percent stake in the automaker Daimler.
 — Photograph: Angelos Tzortzinis/The New York Times .


The disruption to world trade comes at an unfortunate time for Europe. Recent economic indicators suggest that the Continent's recovery, after a decade of crisis, is losing momentum. Industrial production in Germany shrank 1.6 percent in February, according to official data published this week.

But European leaders' biggest fear may be that Mr. Trump's belligerent approach to trade will destroy the post-war system for resolving conflicts, which involved getting all the parties together in one room. Mr. Trump has already succeeded in forcing countries to beg for individual exemptions to steel and aluminum tariffs, bypassing the World Trade Organization, the usual forum for trade disputes.

“He has created an environment to divide countries,” said André Sapir, a senior fellow at Bruegel, a research organization in Brussels. “Maybe we will remember that 2017 was the last year of the functioning of the multilateral system.”

It's possible Europe might enjoy a few short-term benefits as China and the United States duke it out. If, for example, China were to raise tariffs on Boeing airliners, its European rival Airbus could step into the breach. But positive effects of that sort are not likely to outweigh the risks.

European companies have invested far more in the United States over the years than they have in China. But increasingly, China is where the action is. Germany's total trade with China, exports and imports together, is already bigger than it is with the United States. And China is the biggest single market for companies like Volkswagen, Europe's largest carmaker.

China is also where more German companies are putting their money.

In a poll published on Thursday, 39 percent of German companies questioned said they planned to invest in China this year, up from 37 percent in 2017. The number who said they planned to invest in North America dropped to 35 percent, from 37 percent, according to a survey by the Association of German Chambers of Commerce and Industry.

Even so, Europe remains wary of China's intentions. Though European leaders use tamer rhetoric, they share some of Mr. Trump's concerns about unfair competition from Chinese companies that receive government subsidies. They worry that Chinese companies are stealing European technology, and accumulating too much economic power.

In recent years, Chinese investors have snapped up European assets including Greek ports, German machinery companies and a 10 percent stake in the automaker Daimler. The Chinese government's “Made in China 2025” campaign, a plan to dominate cutting-edge industry, is a threat to German companies who supply precision machinery that the Chinese companies are not yet able to manufacture themselves.

Leaders in Brussels, Berlin and Paris have called for tighter scrutiny of Chinese acquisitions in Europe, though it is unclear how tough they will be.


A blast furnace in Salzgitter, Germany. Europe's most immediate preoccupation is to resolve its own trade disputes with Mr. Trump. The European commissioner for trade is negotiating with the U.S. commerce secretary about winning a permanent exemption from tariffs on steel and aluminum imports. — Photograph: David Hecker/European Pressphoto Agency/via Shutterstock.
A blast furnace in Salzgitter, Germany. Europe's most immediate preoccupation is to resolve its own trade disputes with Mr. Trump.
The European commissioner for trade is negotiating with the U.S. commerce secretary about winning a permanent exemption
from tariffs on steel and aluminum imports. — Photograph: David Hecker/European Pressphoto Agency/via Shutterstock.


At the same time, Europe and the United States have been through a lot together, most notably the Cold War. Both are multi-party democracies with free market economies, unlike China's one-party autocracy. And European and American historical and cultural ties go back centuries.

Still, a trade war could push Europe closer to China.

Europe's most immediate preoccupation is to resolve its own trade disputes with Mr. Trump. Cecilia Malmstrom, the European commissioner for trade, is negotiating with Wilbur Ross, the United States commerce secretary, about winning a permanent exemption from tariffs on steel and aluminum imports. A temporary exemption to the tariffs expires on May 1.

Ms. Malmstrom and other European leaders have also made plain their unhappiness with what they see as Mr. Trump's crusade to undermine the World Trade Organization as the arbiter of trade conflicts. They may see China as a potential ally in efforts to preserve the W.T.O., of which China is also a member.

“The E.U. believes that measures should always be taken within the World Trade Organization framework which provides numerous tools to effectively deal with trade differences,” a spokesperson for the European Commission said in a statement.

For the moment, there is little Europe can do but hope that Mr. Trump's bluster is just a tactic to win concessions from China, and that no trade war will break out. There are few other good options.

Mr. Sapir of Bruegel argues that, longer term, Europe should push for reforms of the trade body to respond to American criticism that the organization is too slow moving, and has failed to curb unfair competition by China. Mr. Trump is unlikely to take much interest in fixing the global trade regime rather than ignoring it, Mr. Sapir said, but it's still worth a try.

“That is the only structural solution,” Mr. Sapir said. “Otherwise we will always be caught in between.”


__________________________________________________________________________

• Jack Ewing writes about business, banking, economics and monetary policy from Frankfurt, and sometimes helps out on terrorism coverage and other breaking news. Mr. Ewing joined The International Herald Tribune, now the international edition of The New York Times, in 2010. Previously, he worked for a decade at BusinessWeek magazine in Frankfurt, where he was European regional editor. He first came to Europe in 1993 as a German Marshall Fund journalism fellow in Brussels, and wound up staying permanently. Mr. Ewing won a New York Times publisher's award in 2011 for coverage of the European debt crisis. He is the author of Faster, Higher, Farther: The Volkswagen Scandal, published in 2017 by W.W. Norton.

__________________________________________________________________________

Related to this topic:

 • Trump Aims New Threat at China as Mnuchin Warns of Trade War

 • U.S. and China Play Chicken on Trade, and Neither Swerves

 • U.S. Exempts Some Allies From Tariffs, but May Opt for Quotas

 • Wary of China, Europe and Others Push Back on Foreign Takeovers


https://www.nytimes.com/2018/04/09/business/europe-trump-trade-china.html
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« Reply #31 on: April 26, 2018, 04:58:34 pm »


from the print edition of the Los Angeles Times....

Chinese tech initiative now a focus of trade war

U.S. views the Made in China 2025 plan as a central threat.

By JESSICA MEYERS | Wednesday, April 25, 2018

Workers prepare for the World Robot Conference in Beijing last year. “Made in China 2025” aims to transform the country from a labor-intensive economy into one focused on products like robots and electric cars. — Photograph: Fu Ting/Associated Press.
Workers prepare for the World Robot Conference in Beijing last year. “Made in China 2025” aims to transform the country from a labor-intensive economy
into one focused on products like robots and electric cars. — Photograph: Fu Ting/Associated Press.


BEIJING — China unveiled its plan to dominate the world's most crucial technologies with little international fanfare, another vague, guiding principle in the labyrinth of Communist Party bureaucracy.

Three years later, it's at the core of a trade dispute with Washington that threatens to upend the global economy.

Made in China 2025” is a blueprint for transforming the country from a labor-intensive economy that makes toys and clothes into one that engineers advanced products like robots and electric cars. The Trump administration views it as an attempt to steal U.S. technology and control cutting-edge industries.

Officials aimed to temper the initiative this month when they announced potential tariffs on $50 billion in goods. But Chinese leaders consider the plan key to the country's development and refuse to alter its course.

“China is trying to achieve a clear goal and America wants to stop it,” said Andrew Polk, cofounder of Trivium/China, a Beijing research firm. “And that's where the competition is.”

Here's what Made in China 2025 is all about and what it means for the trade war:


What's the objective?

The plan funnels billions into 10 industries, including biopharmaceuticals, aerospace and telecom devices. It calls for 70% of related materials and parts to be made domestically within a decade. A separate document details China's strategy to lead in artificial intelligence by 2030.

Officials modeled Made in China 2025 after a German initiative called Industrie 4.0, which envisions greater automation in manufacturing and “intelligent factories” that operate with wireless sensors. They didn't have much choice. The world's biggest population is aging and rising wages are sending low-tech factories to other countries.

“The labor supply is decreasing,” said Ashley Qian Wan, China economist for Bloomberg Economics in Beijing. “And that's going to be a big problem for China.”


China developed its first bullet train last year, the Fuxing, which can reach a top speed of 248 mph. Engineers have also built the first Chinese jetliner. — Photograph: Visual China Group.
China developed its first bullet train last year, the Fuxing, which can reach a top speed of 248 mph. Engineers have also built the first Chinese jetliner.
 — Photograph: Visual China Group.


Why does China care about this so much?

When President Kennedy vowed in 1961 to send a man to the moon, more than 30 million people in China had just starved to death. People's Republic founder Mao Tse-tung closed universities for a decade whereas researchers in Silicon Valley invented the internet. China sees itself as simply trying to catch up.

The country developed its first bullet train last year, a vehicle with a maximum speed of 248 mph named Fuxing, or rejuvenation. Engineers also built the country's first homegrown jetliner, an initial step toward filling Beijing's crowded airport with planes from China rather than America's Boeing or Europe's Airbus.

Officials portray the initiative as transparent and open to foreign companies. They dispel notions that it will monopolize domestic markets. America's dismissal of the plan reinforces a party narrative that the U.S. seeks to undermine China's resurgence.

“We have good reasons to question the legality and legitimacy of many actions taken by the U.S. on the grounds of national security, like its plan to impose high tariffs on many industries of Made in China 2025,” Chinese Foreign Ministry spokeswoman Hua Chunying told reporters this month. “Clearly, they are targeting something else.”


Why is the U.S. concerned about it?

The Trump administration frets about the way China aims to achieve its 2025 ambitions. American businesses have long complained about the sacrifices they make to operate in the world's largest market, including requirements to partner with domestic companies and hand over trade secrets.

Officials fear these techniques will make it impossible for U.S. companies to compete in the world's most critical fields. They also worry massive Chinese government subsidies will lead to a global glut of products that push down prices and hurt U.S. businesses.

“There are things China listed and said, ‘We're going to take technology, spend several hundred billion dollars, and dominate the world’,” U.S. Trade Representative Robert Lighthizer told senators at a March hearing. “And these are things that if China dominates the world, it's bad for America.”


A bank employee counts 100-yuan notes in Lianyungang, in eastern China's Jiangsu province. — Photograph: Agence France-Presse/Getty Images.
A bank employee counts 100-yuan notes in Lianyungang, in eastern China's Jiangsu province. — Photograph: Agence France-Presse/Getty Images.

A U.S. report on China's intellectual property theft — which led to the most recent potential tariffs — mentioned the plan more than 100 times. Officials are exploring ways to restrict Chinese investment in key industries. The U.S. recently banned ZTE, China's second-largest maker of telecom equipment, from buying U.S. technology.

“Consensus is growing in Washington that the U.S. is in a race with China for technical leadership,” Arthur Kroeber, managing director of Beijing research firm Gavekal Dragonomics, said he recently told clients. And some, he added, think that “economic cold war is the answer.”


Is the Trump administration right?

President Xi Jinping recently told a room full of global investors that China would further open its economy. Officials last week said they would phase out rules that require automakers like General Motors to find a local partner before opening factories in China. They plan to end foreign ownership requirements on electric vehicle makers this year.

This wouldn't mark the first time authorities vowed to shed their protectionist shield. The European Union Chamber of Commerce in China complained last year that foreign businesses were suffering from “promise fatigue”.

The problem is China's high-tech ambitions include “plans to use instruments such as subsidized credit and market access restrictions,” said David Dollar, a senior fellow at the Brookings Institution and former U.S. Treasury official in China. “It makes sense for the U.S. to oppose this practice.”

But Chinese officials see an irony in efforts that try to maintain America's chokehold on innovation. Hua, the Foreign Ministry spokeswoman, likened the U.S. to a “bully — only it can have high tech and others cannot.”

Neither side looks willing to bend. Recent talks to de-escalate the trade dispute reportedly collapsed over the 2025 plan.

“China views the overall system as inherently unfair because it was created by the current dominant power,” Trivium/China's Polk said. “America should stop complaining and start designing its own industrial policy to counter China.”


__________________________________________________________________________

Kemeng Fan, Gaochao Zhang and Nicole Liu in the L.A. Times' Beijing bureau contributed to this report.

• Jessica Meyers is a freelance journalist based in Beijing. She is Asia special correspondent for the Los Angeles Times, the Boston Globe, Politico, the Dallas Morning News and other news media organisations.

http://enewspaper.latimes.com/infinity/article_share.aspx?guid=f4657cb8-1584-44e4-b3a6-af3170c0c0f9
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« Reply #32 on: May 01, 2018, 03:59:39 pm »


from The New York Times....

China Is Set to Take a Hard Line on Trump's Trade Demands

Beijing sees its economy as robust enough to defy U.S. tariff threats, potentially
leaving Washington with no choice but to escalate or back down.


By KEITH BRADSHER | 3:05PM EDT — Monday, April 30, 2018

A container port in China’s eastern province of Shandong. The Trump administration wants Beijing to curb its $300 billion plan to bankroll China's push into advanced technologies. — Photograph: Reuters.
A container port in China’s eastern province of Shandong. The Trump administration wants Beijing to curb its $300 billion plan to bankroll
China's push into advanced technologies. — Photograph: Reuters.


BEIJING — Staking an assertive negotiating stance, China says it will refuse to discuss President Trump's two toughest trade demands when American officials arrive in Beijing this week, potentially derailing the high-level talks.

The Chinese government is publicly calling for flexibility on both sides. But senior Beijing officials do not plan to discuss the two biggest requests that the Trump administration has made over the past several months, according to people involved in Chinese policymaking. Those include a mandatory $100 billion cut in America's $375 billion annual trade deficit with China and curbs on Beijing's $300 billion plan to bankroll the country's industrial upgrade into advanced technologies like artificial intelligence, semiconductors, electric cars and commercial aircraft.

The reason: Beijing feels its economy has become big enough and resilient enough to stand up to the United States.

A half-dozen senior Chinese officials and two dozen influential advisers laid out the Chinese government's position in detail during a three-day seminar that ended here late on Monday morning. The officials and most of the advisers at the seminar gave an overview of China's economic policies, including an in-depth review of the country's trade policy, to make sure China's stance would be known overseas. All of the officials and most of the advisers at the seminar insisted on anonymity because of diplomatic sensitivities.

It is not clear what will happen when the two sides sit down this week or whether either will find a reason to waver. Still, the Chinese and American positions are so far apart that China's leaders are skeptical the two sides can find common ground by the end of this week. They are already raising the possibility that Chinese officials may fly to Washington a month from now for further talks.

“I don't expect a comprehensive deal whatsoever,” said Ruan Zongze, the executive vice president of the China Institute of International Studies, which is the policy research arm of China's Foreign Ministry. “I think there is a lot of game playing here.”

Beijing is frustrated with Mr. Trump's threats to impose tariffs on $150 billion in Chinese goods and dismayed by suggestions in the West that China has a weak bargaining position. Chinese officials think the country's one-party political system and President Xi Jinping's enduring grip on power — particularly after the repeal of presidential term limits in March — mean that China can outlast the United States and Mr. Trump in any trade quarrel.

The Chinese government believes Mr. Trump's background as a businessman means that at some point he will agree to a deal. Seminar participants also reaffirmed previous Chinese trade policy offers to further open the country's financial and automotive sectors, though not in ways that would impact China's industrial modernization program, called Made in China 2025. They also suggested that China would be willing to tighten its intellectual property rules so as to foster innovation within China as well as protect foreign technologies from counterfeiting and other illegal copying.

China is insisting that the parameters of any negotiations be limited, and that the tariff threat be removed before a final deal can be struck.

Chinese officials have reached out to Treasury Secretary Steven Mnuchin, who has reacted positively to China's overtures in the auto and financial sectors. Mr. Mnuchin, a former Goldman Sachs executive who will be on the Trump administration’s team in Beijing later this week, has sought to calm investors worried that the rhetoric between Washington and Beijing could break out into a full-blown trade war.

China's position is that the bilateral trade imbalance arises from differences in savings rates. Households in China save roughly two-fifths of their income. Americans, on average, save almost nothing. So money from China tends to flow to the United States, buying factories, technology companies, real estate and more, and Americans in turn spend much of that money to buy goods from China. Many economists in the United States, including some at the Treasury, share that view.

By contrast, many trade lawyers, lawmakers on both sides of the aisle and Mr. Trump contend that the trade deficit stems to a large extent from unfair practices, including cheap loans by state-controlled banks to exporters.


A worker making carbon fiber on a production line in Lianyungang, in China's Jiangsu province. The material is used in aerospace and other applications. The Chinese government is frustrated with Mr. Trump's threats to impose tariffs on $150 billion in Chinese goods. — Photograph: Agence France-Presse/Getty Images.
A worker making carbon fiber on a production line in Lianyungang, in China's Jiangsu province. The material is used in aerospace and other
applications. The Chinese government is frustrated with Mr. Trump's threats to impose tariffs on $150 billion in Chinese goods.
 — Photograph: Agence France-Presse/Getty Images.


China is ready to discuss shrinking the $375 billion annual trade deficit. But it wants to do so by buying more high-tech American goods. Washington has long blocked such deals because of concerns that they may have military value. China is also willing to buy more oil, natural gas, coal and other goods from the United States, and to help finance the extra pipelines and other infrastructure that would be needed to move them to China.

A senior Chinese government official said that Beijing is unwilling to negotiate with the United States on any curbs on Made in China 2025, which includes large-scale government assistance to favored industries in advanced-technology manufacturing. China perceives the American demands as an attempt to stop China's economic development and technological progress, the senior Chinese official said.

Germany and other countries also have industrial policies, and the United States has not objected to them, he added. American and European officials have argued that those policies elsewhere are much narrower and less ambitious.

Other advisers and officials said that the United States had misunderstood the Made in China 2025 industrial policy. They expressed hope that it might be possible to resolve differences by explaining the program better and making very small tweaks to it — a stance that still may not appease the Trump administration.

The Chinese government is not simply throwing money, land and other resources to favored industries like robotics, artificial intelligence, semiconductors and aircraft manufacturing, they said. China is engaged instead, they contended, in a carefully thought-out program that measures potential profits for each dollar of investment. So China's program bears some resemblance, they said, to private sector investment programs in the West.

One subject was repeatedly and conspicuously avoided by all officials throughout the seminar, even when advisers occasionally speculated about it: whether China might someday try to link trade disputes to national security issues.

China has been deeply involved in international pressure on North Korea to give up its nuclear weapons and ballistic missiles, an issue of high importance to the Trump administration. Beijing also wants to someday assert control of Taiwan, a self-governing democracy that Beijing regards as a renegade territory.

Tsinghua University's new Academic Center for Chinese Economic Practice and Thinking organized the seminar, which was held at Tsinghua and two other venues in western Beijing. President Xi graduated from Tsinghua, which is in Beijing and is China's top university, and he has filled much of the senior ranks of his government with Tsinghua professors and graduates.

In some respects, the hard stance struck by Chinese officials reflects a hardening of public attitudes in China.

In mid-April, the United States barred American companies from selling their wares to a Chinese telecom equipment maker, ZTE. The move is seen as potentially crippling to the Chinese company, which needs American chips and software to power the smartphones and equipment it sells around the world.

Washington officials cited ZTE's repeated violations of sanctions against Iran and North Korea, but many in China saw it as a reminder by the United States that sizable sectors of the Chinese economy still rely on American-made goods. Much of the Made in China 2025 policy is aimed at reducing that dependence.

The ZTE case “has changed a lot of Chinese people's opinion,” said Mr. Ruan, of the China Institute of International Studies. “In the past, people saw us as interdependent.”


__________________________________________________________________________

Chris Buckley contributed reporting to this story.

• Keith Bradsher is the Pulitzer Prize-winning Shanghai bureau chief for The New York Times, having reopened the Shanghai bureau on November 14th, 2016. He has previously served as the Hong Kong bureau chief and the Detroit bureau chief for The Times. Before those postings, he was a Washington correspondent for The Times covering the Federal Reserve and international trade, and a New York-based business reporter covering transportation and telecommunications for The Times. Born in 1964, Mr. Bradsher received a degree in economics from the University of North Carolina at Chapel Hill, where he was a Morehead Scholar. He received a master's degree in public policy with a concentration in economics from the Woodrow Wilson School at Princeton University. Prior to joining The New York Times, Mr. Bradsher wrote for the Los Angeles Times from 1987 until 1989.

__________________________________________________________________________

Related to this topic:

 • White House Considers Restricting Chinese Researchers Over Espionage Fears

 • U.S. Allies Brace for Trade War as Tariff Negotiations Stall

 • The U.S.-China Trade Conflict: How We Got to This Point


https://www.nytimes.com/2018/04/30/business/china-trump-trade-talks.html
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« Reply #33 on: May 05, 2018, 09:45:46 pm »


from The New York Times....

U.S.-China Trade Talks End With Strong Demands, but Few Signs of a Deal

American officials called for shrinking the trade gap with China and curbing
Beijing's plan to use government support to upgrade its economy.


By KEITH BRADSHER | 7:46PM EDT — Friday, May 04, 2018

The United States delegation in Beijing for trade talks on Friday included Treasury Secretary Steven Mnuchin, center left, and Commerce Secretary Wilbur Ross, center right. — Photograph: Nicolas Asfouri/Agence France-Presse/Getty Images.
The United States delegation in Beijing for trade talks on Friday included Treasury Secretary Steven Mnuchin, center left, and Commerce Secretary Wilbur Ross, center right.
 — Photograph: Nicolas Asfouri/Agence France-Presse/Getty Images.


BEIJING — Senior Chinese and American officials concluded two days of negotiations on Friday with no deal and no date set for further talks, as the United States stepped up its demands for Chinese concessions to avert a potential trade war.

The American negotiating team, which included Treasury Secretary Steven Mnuchin and the United States trade representative, Robert E. Lighthizer, headed for the airport after the talks and did not release a statement. But a list of demands that the group took into the meeting called for reducing the United States' trade gap with China by $200 billion over the next two years and a halt on Chinese subsidies for advanced manufacturing sectors.

The demands, which spread on Chinese social media and were confirmed by a person close to the negotiations, suggested that both sides hardened their positions this week despite the two days of talks. Senior Chinese officials and their advisers were also sending a deliberate message to the West that the days of Beijing being conciliatory were over, and that China was staking out its own position in the negotiations.

The person close to the negotiations insisted on anonymity because of diplomatic sensitivities.

The extensive list of United States trade demands was unexpectedly sweeping, and showed that the Trump administration has no intention of backing down despite Beijing's assertive stance in the last few days. “The list reads like the terms for a surrender rather than a basis for negotiation,” said Eswar Prasad, an economics professor at Cornell University.

Here are the highlights of the demands:

China must …


  • Cut its trade surplus by $100 billion in the 12 months starting in June, and by another $100 billion in the following 12 months.

  • Halt all subsidies to advanced manufacturing industries in its so-called Made In China 2025 program. The program covers 10 sectors, including aircraft manufacturing, electric cars, robotics, computer microchips and artificial intelligence.

  • Accept that the United States may restrict imports from the industries under Made in China 2025.

  • Take “immediate, verifiable steps” to halt cyber-espionage into commercial networks in the United States.

  • Strengthen intellectual property protections.

  • Accept United States restrictions on Chinese investments in sensitive technologies without retaliating.

  • Cut its tariffs, which currently average 10 percent, to the same level as in the United States, where they average 3.5 percent for all “non-critical sectors.”

  • Open up its services and agricultural sectors to full American competition.

The United States also stipulated that the two sides should meet every quarter to review progress.

Chinese officials put the talks in a positive light. “The two sides agreed that a sound and stable China-U.S. trade relationship is crucial for both, and they are committed to resolving relevant economic and trade issues through dialogue and consultation,” Xinhua, the official news agency, said soon after the talks ended.

But the negotiations also highlighted key differences — and the American delegation's tight-lipped departure from Diaoyutai, the park-like enclosure of guesthouses where the talks were held, suggested that the two sides had made little headway in solving them.

Before the trade talks began, people involved in China's policy-making said, Beijing was willing to act on some concessions previously laid out by President Xi Jinping. Among the most notable was a willingness to make it slightly easier for foreign automakers and financial services companies to compete in China.

But China has its own demands. Beijing wants the United States to relax restrictions on exports of high-tech commercial products that may have military applications. During the trade talks here this week, Chinese officials also took issue with the penalties that American officials imposed last month on ZTE, a Chinese telecommunications company, for repeatedly violating United States sanctions on Iran.

The Commerce Department banned all shipments of American wares to ZTE, including chips and other equipment that are essential to many of the company's products. The move appears to have strengthened China's resolve to continue its drive for self-sufficiency and to curb imports in various high-tech fields.

China's push to upgrade its technology accounts for many of its disagreements with the United States. The American document reiterated Trump administration calls for a broad halt of Chinese subsidies to manufacturers in advanced technology industries. And Chinese officials have defended the Made in China 2025 program as essential to upgrading the economy and have said they would not agree to any limits on the Made in China program.

Beijing has said it would be willing to reduce some trade barriers, but only if the United States also lowered trade barriers. Chinese officials particularly object to American limits on the export of high-tech goods that have both civilian and military applications, contending that these restrictions prevent sizable potential exports.

They also objected to United States demands for a specific cut in the bilateral surplus. Li Gang, the vice president of the Commerce Ministry's research and training institute, said in a separate interview last month that a $100 billion cut in the surplus was “impossible.” China's surplus has been widening lately as the United States economy grows fairly strongly and takes in more imports.

The Commerce Department announced on Thursday in Washington that the trade imbalance with China had widened slightly in March compared with the same month a year ago, although it narrowed slightly compared with February, possibly for seasonal reasons.

The lack of a deal this week, as well as the failure to schedule further talks right away, does not rule out the possibility that Chinese negotiators will visit the United States next month for further talks. One possibility that American officials have considered is whether China might send Vice President Wang Qishan, who is close to Mr. Xi, on a follow-up trip.

So far, the Chinese side has been led by Liu He, a Politburo member who is also the vice premier for finance, trade and technology.

Trade experts have been saying for weeks that Chinese officials would like to resolve the dispute with the United States so that they can go back to focusing on issues closer to home.

“That's the immediate problem, because it's a headache for them that's distracting from a very pressing domestic agenda,” said Christopher K. Johnson, a former C.I.A. officer who analyzed China and now holds the Freeman Chair in China Studies at the Center for Strategic and International Studies.

The Beijing talks were unlikely to result in a comprehensive deal, but experts said they could still be a first step toward reaching some sort of accord.

“There's no way our team is going to risk signing up to something without getting back here and making sure that Trump is happy with it first,” Mr. Johnson said. “Maybe there's also some optics where Trump wants to be seen standing with Wang Qishan and striking the deal.”

“I think we're still several jumps down the track from that.”


__________________________________________________________________________

Chris Buckley contributed reporting to this story.

• Keith Bradsher is the Pulitzer Prize-winning Shanghai bureau chief for The New York Times, having reopened the Shanghai bureau on November 14th, 2016. He has previously served as the Hong Kong bureau chief and the Detroit bureau chief for The Times. Before those postings, he was a Washington correspondent for The Times covering the Federal Reserve and international trade, and a New York-based business reporter covering transportation and telecommunications for The Times. Born in 1964, Mr. Bradsher received a degree in economics from the University of North Carolina at Chapel Hill, where he was a Morehead Scholar. He received a master's degree in public policy with a concentration in economics from the Woodrow Wilson School at Princeton University. Prior to joining The New York Times, Mr. Bradsher wrote for the Los Angeles Times from 1987 until 1989.

• A version of this article appears in print on Friday, May 5, 2018 in the New York edition of The New York Times with the headline: “No Trade Deal With China As Talks End”.

https://www.nytimes.com/2018/05/04/business/china-us-trade-talks.html
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