The U.S. government has decided to delay or set aside some tariffs against China set to take effect on September 1. The United States Trade Representative (USTR) office announced that some categories were being removed from the tariffs list because of “health, safety, national security and other factors” while tariffs on other items would be delayed until December 15. Tariffs on USD155 billion of Chinese imports would be postponed, including on “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing”, the USTR said. The USTR’s statement came after Chinese Vice Premier Liu He in a telephone conversation lodged a complaint about the U.S. decision announced on August 1 to increase tariffs on USD300 billion of Chinese imports to U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. Donald Trump told reporters he was delaying tariffs on Chinese imports to avoid any adverse impact on U.S. shoppers before the Christmas and New Year season.

Still, U.S. stocks fell sharply on August 14 on rising worries that Trump’s move to delay some of the tariffs that were set to be imposed on China in September would not be enough to keep the escalating U.S.-China trade conflict from pushing the world into recession. U.S. Commerce Secretary Wilbur Ross said that the United States and China have not determined when to hold their next round of face-to-face trade talks. Instead, the next step in the long-running negotiations is “perhaps another phone call in a couple of weeks”.

Wang Jun, Chief Economist at Zhongyuan Bank, said postponement of tariffs was more of a gesture rather than a concession from the U.S. side. He doubted whether the decision would stand, given Washington’s flip-flop approach in trade negotiations.

China warned that if the U.S. still imposed 10% tariffs on USD130 billion of the USD300 billion of Chinese exports on September 1, it would retaliate. The warning came after Trump appeared to link the outlook for trade talks with China to a resolution of the Hong Kong protests and suggested another meeting with Chinese President Xi Jinping. Chinese diplomatic observers said the situation in Hong Kong might have given Trump fresh leverage over Beijing, but the chances of Xi agreeing to meet him remained slim. Trump called for Beijing to handle the protests in Hong Kong “humanely” and for the first time appeared to link the outlook for trade talks with China with a resolution of the Hong Kong protests. “Of course China wants to make a deal. Let them work humanely with Hong Kong first!”, Trump tweeted. Shi Yinhong, Director of the Center of American Studies at Renmin University, said: “It is absolutely impossible that Xi would meet Trump over Hong Kong. China’s fundamental position is that Hong Kong is it own internal affair, so agreeing to that would discredit its stance.”

Frank Lavin, Director of the International Trade Administration for the U.S. Department of Commerce under President George W. Bush, said Trump is “taking a step backwards, away from conflict, in the hopes that China might move”. “Is Trump really going to accept an offer or is he going to view an offer as a negotiating ploy, and just want more and more? So there has to be a way for Trump to signal that he realizes it is a good faith offer.”

Joerg Wuttke, President of the European Union Chamber of Commerce in China, said EU companies had to be realistic about the trade war and plan for an extended stand-off. “The path of least resistance is for the two sides to muddle through, avoiding the economic damage of further escalation but not making the political sacrifice to complete a final agreement,” he said. “China needs wide-ranging reforms, and the right amount of strategic pressure can help move things in that direction, but there doesn’t appear to be anything strategic about the latest tariffs,” Wuttke said. “At a time when the U.S.-China economic relationship is badly in need of thoughtful and meaningful repair, this tariff wrecking ball, which will effectively impact everything Americans buy from China, will only empower Chinese voices calling for self-reliance and disengagement,” Wuttke concluded.

A new Pew Research Center poll discovered that 60% of Americans have an unfavorable view of China – up from 47% last year – to the highest proportion since Pew started asking the question 14 years ago. The survey found that 24% of Americans regard China as America’s top threat for the future, the same percentage that said so of Russia. North Korea (12%) was the only other country to draw double-digit concern. Still, the poll finds that only 41% of Americans believe that China’s growing economy is a bad thing for the United States, compared with 50% who called it a good thing.

Meanwhile, the U.S. Department of Commerce’s Bureau of Industry and Security has added four Chinese nuclear power enterprises to its Entity List, restricting them from receiving U.S. exports. The four are China General Nuclear Power Group and its subsidiaries China General Nuclear Power Co, China Nuclear Power Technology Research Institute Co and Suzhou Nuclear Power Research Institute Co. Chinese experts said the new U.S. move is just part of its concerted efforts to hinder China’s fast-growing nuclear industry, but such attempts will be in vain. China has home-grown nuclear power technologies and is able to design and manufacture most of the components and devices domestically, while among the few imported items, very few are from the U.S.

China is actively embracing the burgeoning e-commerce sector, generating CNY4.82 trillion in online retail sales during the first six months of this year. Online retail sales surged 17.8% year-on-year in the first half, accounting for nearly 20% of the overall retail sales of consumer goods.

During the first half, business-to-consumer (B2C) online retail accounted for about 75.8% of the online retail market, a 4.1 percentage points rise from the same period last year. Specifically, sales of consumer goods such as cosmetics, smart home, and healthcare products increased rapidly, with year-on-year growth exceeding 30%. Chinese major e-commerce platforms continued to break records in online sales during this year’s shopping festival from June 1 to 18. JD said sales for the 18-day festival period hit CNY201.5 billion, compared with CNY159.2 billion in 2018. Alibaba also reported strong sales for the annual shopping event, with more than 110 brands on its Tmall platform reporting a turnover of over CNY100 million.

Statistics from the Ministry of Commerce (MOFCOM) showed online retail sales in rural areas reached CNY777.13 billion in the first half of this year, up 21% year-on-year. Agricultural products’ online retail sales amounted to CNY187.36 billion in China in the first half, a year-on-year increase of 25.3%

Cross-border e-commerce maintained rapid growth in China. In the first half, major cross-border e-commerce platforms witnessed an over 20% year-on-year increase in sales of imported goods. The top three countries from which China imported goods through e-commerce are Japan, the United States and South Korea, mainly cosmetics, cereals, oils and foodstuffs, and daily necessities. Large cities have seen a significant jump in retail sales of fresh food, cosmetics and pet supplies. The retail sales of clothing, automotive products and household appliances increased rapidly in small- and medium-sized cities and rural areas. Alibaba Group is upgrading its wholesale business by adding a new sourcing channel to better facilitate cross-border trade, particularly for small- and medium-sized enterprises. According to company figures, Alibaba.com serves 150 million registered users around the world, by giving suppliers the tools needed to reach a global audience, and helping buyers target products and suppliers across 200 economies in an efficient manner. Ant Financial, Alibaba’s financial arm, supports transactions in 22 currencies and can settle local payment in 56 economies. Alibaba.com is also seeking to launch a special digital zone featuring Yiwu, China’s hub for exports of small merchandise, in a bid to smooth cross-border transactions for millions of SMEs, part of the electronic World Trade Platform (eWTP), an initiative Alibaba proposed in 2016 to facilitate trade for global SMEs through digitalization.

According to eMarketer, China’s e-commerce sales are estimated to increase more than 30% to USD1.99 trillion in China this year, accounting for 35.3% of the country’s retail sales. The U.S. lags far behind, with only 10.9% of its real sales occurring online.

Authorities nationwide have beefed up measures to develop the nighttime economy, with steps to encourage post-dusk business activities and later closing hours at museums and art galleries. The moves follow reports that China’s economic growth slowed to 6.2% year-on-year in the second quarter, its weakest pace in at least 27 years, with consumption contributing more than 60% of GDP growth. A number of cities, including Beijing, Shanghai, Tianjin and Jinan have recently rolled out measures to shore up the nighttime economy, also known as after-hours economic activity, with longer operating hours for public transport.

The Beijing Municipal Bureau of Commerce unveiled a string of policies last month, including later closing hours at tourist spots, museums, sports grounds and art galleries. The city will extend the operating hours of several subway lines every Friday, Saturday and Sunday, and 25 night bus lines in key areas will operate more frequently. Seven new bus lines will also open to facilitate night travel for large residential communities in the city’s North. Zhao Ping, who researches the consumption economy at the China Council for the Promotion of International Trade (CCPIT), said the scope of the night-time economy extended far beyond night markets. “The catering sector is only the starting point,” she said. “There is still so much to explore in aspects of culture and tourism.”

The authorities in Shanghai unveiled a list of cultural activities and tour routes. The Municipal Culture and Tourism Bureau said 105 tourist spots, art galleries, museums and memorials across the city had taken measures to meet the growing demand for nighttime leisure activities from Shanghai residents and tourists.

A report by Meituan Dianping, China’s largest provider of on-demand online services, said spending on nighttime dining around the country rose 47% last year, higher than the daytime growth, with Beijing and Shanghai ranking first and second. The report also showed that 16 of the 20 cities with the highest spending on nighttime dining were in South China, and that people between the ages of 20 and 40 accounted for most of the spending. Meanwhile, the State Administration for Market Regulation has called for greater efforts to ensure food safety as local authorities encourage growth of the nighttime catering sector. Fu Yifu, Consumption Analyst at the Suning Institute of Finance, said growth of the nighttime economy will help boost domestic consumption and create more jobs, the China Daily reports.

In Shanghai, a 500-m road in Xintiandi will become pedestrian-only from 8 p.m. on Fridays to 5 a.m. on Mondays through September 9 in a trial to promote Shanghai’s nightlife. Street artists will entertain visitors, while business operators will have stalls on the street. Outdoor movies will be played along with other cultural events and entertainments. Shanghai is aiming to revive its nightlife after shutting down noisy late-night bars and eateries over the past few years in response to residents’ complaints. Shanghai’s Huangpu district has appointed a nightlife Director and five nightlife CEOs.

Foreign investment in China (FDI) accelerated in July despite trade tensions with the United States, contradicting claims from U.S. President Donald Trump of an exodus of investors. In July, FDI into China rose 4.1% from a year ago to USD8.07 billion, a higher rate from the 3% rise in June, according to China’s Ministry of Commerce (MOFCOM). In yuan terms, FDI increased to CNY54.82 billion in July, 8.7% higher compared to a year earlier, also picking up slightly from an 8.5% rise in June. As many as 3,919 new foreign-invested enterprises were incorporated last month.

As foreign investment in China is still rising, U.S. President Trump claimed that “thousands” of companies were fleeing China because of U.S. tariffs imposed by his administration over the last 13 months of the trade war. “They must stem the flow,” the U.S. President tweeted, insisting that Beijing “badly” wanted a trade deal after the latest round of talks in Shanghai in July failed to yield any significant progress and after Trump’s threat to impose 10% levies on USD300 billion of Chinese goods from September. Meanwhile, Trump postponed imposition of some tariffs to December 15.

However, in the first seven months of the year, the aggregated FDI into China rose 7.3% to CNY533.14 billion, or 3.6% to USD78.8 billion, accelerating from 7.2% and 3.5% in the first six months of the year. MOFCOM did not disclose the growth rate of direct investment from the U.S., a figure that has been missing from the data for the last two months. Investment from Germany and South Korea increased by 72.4% and 69.7% respectively between January and July. Pan Gongsheng, Vice Governor of the People’s Bank of China (PBOC), wrote that FDI into China still had great potential for development, as the business environment in the country had further improved. “The liberalization and facilitation of cross-border trade and investment will have a greater improvement,” he said. Xin Guobin, Vice Minister of Industry and Information Technology, said in July that Beijing was not surprised some foreign manufacturing companies had opted to relocate from China, but that there was only a limited number of firms who had left, the South China Morning Post reports.

Meanwhile, the quality of the FDI inflow has optimized with more capital flowing into the high-tech sector. Investment in high-tech industries climbed 43.1% year-on-year to account for 29.3% of total FDI. FDI in the high-tech service sector surged 63.2% year-on-year between January and July, while that in the high-tech manufacturing sector rose by 19% year-on-year. According to a survey by the American Chamber of Commerce in Shanghai, 80% of U.S.-funded enterprises are optimistic about their development prospects in China over the next five years. Shanghai attracted total contractual foreign investment worth USD22.9 billion during the first half of 2019, up 6.3% from a year earlier. The actual use of foreign investment reached USD11.45 billion in the January-July period, up 13.8% year-on-year. During the period, 4,105 new foreign-funded enterprises were established, up 58.3% over the same period in 2018. The high-tech service industry reported an actual use of foreign investment of USD1.7 billion, an annual growth of 29.6%.

New growth momentum has been created by plans to establish six new pilot free trade zones (FTZs) and releasing two shortened negative lists for foreign investment to allow access to more industrial sectors, said Lu Ming, Vice Dean at the Academy of the China Council for the Promotion of International Trade (CCPIT).

But some foreign companies are indeed planning to leave China. South Korea’s Samsung and Japan’s Olympus and Epson have already closed factories in China, and are believed to be considering withdrawing completely from the Chinese market. Retailer Carrefour, along with Tesco and Wal-Mart, are also in the process of selling significant stakes in their Chinese operations.

China unveiled a master plan to build Shenzhen in Guangdong province into a model city, capable to compete on a global scale. Shenzhen is to receive special permission to carry out reform and opening-up policies “from a higher starting point, higher levels and with higher goals.” Favorable policies will be offered in areas including technological innovation, finance and foreign trade. China’s “positive approach” to addressing economic challenges stood in stark contrast to that of the U.S. and some other major economies which have resorted to protectionist moves to tackle problems, said Cheng Dawei, Professor of Economics at Renmin University of China in Beijing.

Officials and experts spent three years to assess the country’s potential and challenges before finalizing the plan. The news pushed stock markets higher, especially the shares of companies based in Shenzhen on hopes that the plan would initiate a new round of high-quality growth and opening-up measures nationwide. Shenzhen will also be supported in building innovation-oriented bodies in fields such as 5G, artificial intelligence (AI), cyberspace and laboratories for life information and biomedicine. Shenzhen will also establish a maritime university and a national deep sea research center, and explore the establishment of a maritime development bank.

Given Shenzhen’s proximity to Hong Kong, where violent protests have seriously damaged the city’s global image, many have cast the plan as a way of replacing Hong Kong’s role as a global financial center, but Chinese analysts called this viewpoint short-sighted. “This is not aimed at pushing Hong Kong aside by any means. If anything, this will help Hong Kong because it will bring many opportunities to Hong Kong firms and residents,” Professor Cheng said. The plan not only includes measures for the internationalization of the yuan and the issuance of a digital currency, but is also intended to be conducive to the Guangdong-Hong Kong-Macao Greater Bay Area development. Some argued Shenzhen cannot replace Hong Kong as a financial center at least in the short term.