Top trade negotiators from the U.S. and China spoke by phone, after an agreement to resume negotiations by Presidents Donald Trump and Xi Jinping at the Group of 20 summit in Osaka in late June, but so far no new date has been set for a resumption of face-to-face talks. White House Economic Adviser Larry Kudlow said the phone conversation was “constructive”, but warned that negotiations would be tough. The United States will allow American companies to sell technology to blacklisted  Huawei where there is no threat to U.S. national security, but China is expected “to move immediately, quickly, while the talks are going on, on promised agricultural purchases, he added.

 At the meeting on the sidelines of the G20 summit in Osaka, Trump pushed for a Chinese commitment to make large-scale purchases of U.S. agricultural products, but Chinese President Xi Jinping made no specific commitment during the meeting. Agricultural products, such as soybeans, are a key battlefield in the trade war. China has traditionally been a large buyer of U.S. soybeans and the trade war has damaged the trade. Moreover, even if China significantly boosted its purchases of U.S. soybeans and corn, the amount would only reduce the trade deficit marginally. China has not yet resumed buying additional U.S. agricultural products, and Chinese media warned that China would not buy more American products if the U.S. “flip-flopped” on its promises.

The U.S. administration announced it would exempt 110 Chinese products, including medical equipment and electronic devices, from a 25% tariff it imposed on USD34 billion worth of Chinese goods in July 2018. But this is still far from what Chinese officials have demanded – that all additional U.S. tariffs on Chinese goods must be lifted and Huawei must be removed from the blacklist – Chinese analysts pointed out.

Huawei would remain on the U.S. Entity List but U.S. companies would receive licenses from the U.S. government to sell certain products Huawei. But the Chinese company said that it has yet to see any benefit from the U.S. government’s promise to relax restrictions on it and called for a direct removal of the company from a security blacklist. In mid-October, the U.S. Commerce Department plans to issue regulations aimed at safeguarding the U.S. telecom supply chain. The Chinese side publicly named three “bottom lines” on which it has no intention of giving in: the U.S. should lift all punitive duties on Chinese imports; China’s purchases of U.S. goods must be decided by real Chinese domestic demand; and the wording of a deal should respect China’s sovereignty – that is, the U.S. should not demand that every single item in the deal be codified into Chinese law, nor should it demand a unilateral enforcement mechanism.

Chinese Vice President Wang Qishan has said Beijing should remain committed to economic globalization despite the challenges posed by the trade war with the United States. “China’s development can’t be separated from the world, and the world’s development cannot be separated from China. Major nations have to shoulder more responsibility and make greater contributions to the stability and peace of the world,” he said. “They should promote common security through seeking common interest, and we oppose the practice of protectionism in the name of national security,” he added.

Meanwhile, the Trump administration criticized a telecom project implemented by ZTE in Argentina. “U.S. words and deeds are totally irrational and irresponsible,” said Geng Shuang, Chinese Foreign Ministry Spokesperson about Washington’s “concern” that China was “exploiting data collected by surveillance systems” in other countries. The U.S. uses video surveillance systems and so could Argentina. It should not be politicized by the U.S. with ulterior motives, he added. Chinese companies cooperate with countries like Argentina to help them improve public security and urban management and such moves are welcomed and recognized by local society, Geng said. In March, ZTE signed a nearly USD30 million contract to install monitoring devices with Jujuy, a northern province in Argentina, which has crime rates slightly above the national average. The U.S. warnings for such a low-profile project show its relentless throwing of mud at Chinese technologies amid the China-U.S. tech race, Bai Ming, Deputy Director of the Ministry of Commerce’s International Market Research Institute said. 

BlackRock, the world’s largest asset manager, downgraded emerging market equities linked to China for the second half of the year, saying markets were “overly optimistic” about China’s ability to boost its economic growth amid the trade war with the United States. The firm, which manages more than USD6.5 trillion in assets, said it now sees “trade and geopolitical frictions as the principal driver of the global economy and markets” and expects China’s economy to experience “a lull” from the effect of U.S. tariffs. As recently as a month ago, New York-based BlackRock had a positive view of emerging market equities, saying “economic reforms and policy stimulus” could support the stocks. It had argued that “improved consumption and economic activity from Chinese stimulus could help offset any trade-related weakness”. But the firm has now changed its viewpoint largely because the year-old U.S.-China trade war has become the single most important factor in the global economy and marketplace, it said in its Midyear 2019 Global Investment Outlook. The U.S. and China are now locked in a strategic competition that is structural and persistent, BlackRock’s researchers said.

Former U..S. Ambassador to China Max Baucus has said the tariff war had become the “new normal” in the countries’ relationship despite the resumption of trade talks. He said that it would be difficult for the world’s two largest economies to cancel their existing tariffs on each other’s products. “We have a new normal that the tariffs will continue in the indefinite future,” Baucus told the South China Morning Post. “It’s very hard to roll back tariffs once they’re imposed. Both countries’ tariffs that exist today will continue for some time. China will also have to wait to see if the U.S. actually allows U.S. hi-tech sales to Huawei. Consequently, further progress will be difficult. The status quo is likely for the rest of the year,” Baucus said.

David Lampton, Professor Emeritus of China Studies at the Johns Hopkins School of Advanced International Studies, agreed that the existing tariffs would not easily be removed. “Trump believes in tariffs. Therefore he will be very reluctant to give up tariffs unless he sees a big gain, which he can sell for his election,” Lampton added.

Zeng Peiyan, who was Vice Premier from 2003 to 2008, said the U.S. should not complain about its trade deficit with China because it was a result of the U.S. dollar’s role as an international currency, domestic consumption in America and its industrial structure. Zeng, who is now Chairman of the China Center for International Economic Exchanges, said it was Washington that had continued to escalate trade frictions with Beijing and it had seriously undermined the growth prospects of the two countries and the world. Zeng said if Washington would  ease the curbs on technology exports to China to the level of restrictions placed on France, it would essentially cut down the trade deficit with China by 35%.

Meanwhile, China’s DJI Technologies, the world’s largest manufacturer of drones, announced that its high-security drones, intended for government use and known as Government Edition, had received clearance from the U.S. authorities. The approval was a rare example of a Chinese technology company winning U.S. government clearance in a climate recently defined by suspicion and restrictions. In May, the U.S. Department of Homeland Security alerted U.S. companies to “be aware” of whether their “unmanned aerial systems” (UAS) data was “being stored by the vendor or other third parties. During 15 months of testing of the two models, U.S. authorities found no indication that data was being transmitted outside the system.

Another issue that could complicate trade negotiations is the sale of U.S. arms to Taiwan. China said it will place sanctions on U.S. companies involved in the latest planned military sale to Taiwan worth an estimated USD2.2 billion, which it said has impaired its sovereignty and national security. The U.S. State Department has already approved the sale. China’s Foreign Minister Wang Yi warned the U.S. against attempts to create new trouble for Sino-U.S. ties. The Chinese sanctions could also block the targeted U.S. companies’ non-military products from entering Chinese markets. The firms include Raytheon, that provides Stinger missiles, General Dynamics, that provides M1A2T tanks, and BAE and Oshkosh that provide tank equipment. China would not only not buy products from these companies, but also freeze the industrial chains related to these companies, and stop providing certain base materials, including rare earths, which are indispensable in making advanced weapons and equipment.

The tariff increases that the United States has placed on Chinese goods affect not only the interests of Chinese companies and consumers, but also their U.S. counterparts and threaten the security of global industrial and supply chains. “We once again urge the U.S. to stop unreasonably suppressing Chinese companies. Chinese companies deserve to invest and operate in a fair and just environment in the U.S. and the world,” Vice Minister of Industry and Information Technology Wang Zhijun said. Concerning the U.S. decision to further increase tariffs on Chinese imports, Wang said that the total impact is “controllable”. The nearly USD200 billion of Chinese goods hit by additional U.S. tariffs on May 10 accounted for 41.8% of China’s U.S. exports in 2018, or 8% of its total exports, and 50% of the enterprises affected by those additional tariffs are foreign funded. Many of them are U.S. companies whose primary market is in the U.S., Wang said.

The Vice Minister said the tariff increases undermined the stable development of the global integrated circuit industry. China’s chip industry has grown on average 20% annually since 2012, with sales revenue reaching CNY653.2 billion in 2018. Wang conceded that there is a significant gap between China and global leaders in the overall design, manufacturing, equipment testing and raw material processing for integrated circuits. The tariff hikes will cause trouble to China’s overseas manufacturing market, but they will not lead to a decline in China’s manufacturing sector, Mei Xinyu, Researcher at the Chinese Academy of International Trade and Economic Cooperation said. “The U.S. no longer accounts for such a significant market share as it did in the old days,” Mei said. He added that the U.S. ban on Huawei and rumored imposition of restrictions on Hikvision will not hamper the growth of China’s tech sector. The U.S. accounts for only a small part of Hikvision’s overseas markets, and Hikvision is not heavily reliant on U.S. components for production, Mei said.

“Huawei’s chip arm HiSilicon has produced 70% of global surveillance chips. In past years, Japanese companies were Hikvision’s main chip suppliers, and now the major supplier is HiSilicon.” Mei added. A recent report by Dongxing Securities said that as the U.S. has imposed restrictions on Huawei’s purchases of U.S. technology, some major domestic chipmakers will step in to offer the supply. Dongxing Securities analysts noted in the report that the ban will set off alarm bells in China, and the Chinese government and domestic companies will accelerate the push for developing core industries, including chips manufacturing, the China Daily reports.

Chinese authorities are working on a negative list management systems for the cross-border service trade. Xian Guoyi, Director General of the Department of Trade in Service and Commercial Services at the Ministry of Commerce (MOFCOM), said the previous foreign investment negative list mainly dealt with the entry permit issue, while the service trade negative list addresses a wider range of issues, including cross-border payment and consumption in overseas markets. China’s total foreign trade in services amounted to CNY5.24 trillion in 2018, up 11.5% year-on-year, making the nation the second largest country in the service trade after the United States. The country’s service trade reached CNY1.29 trillion in the first quarter of this year, up 2.6% year-on-year, while service exports topped CNY463.49 billion, up by 10.3%.

Wang Bingnan, Vice Minister of Commerce, said China values highly the service industry and has embarked on an “unprecedented effort” to stimulate the development of the service sector. Shanghai released a new negative list for the cross-border service trade in October 2018, the first of its kind in China. A total of 159 detailed regulations have been included in the new negative list, which cover 31 sectors. The new list defined cross-border service trade as “commercial activities delivered by overseas service providers to consumers in the China (Shanghai) Pilot Free Trade Zone”. MOFCOM aims to make the service trade the new engine of the country’s foreign trade. China to date has established trade in services with over 200 countries and regions across the world. Beijing will host the 2019 China International Fair for Trade in Services from May 28 to June 1. Launched in 2012 for the first time, the event is aimed at promoting the healthy growth of the sector, showcasing the host city and the country’s emphasis on the services trade, the China Daily reports.

Brussels Airport has launched its official WeChat account and issued the following press release. Brussels Airport has been active on the leading social media channels such as Facebook, Twitter, YouTube and Instagram for years in an effort to keep its passengers as well and as promptly informed as possible about the ins and outs at the airport. It has recently added a channel to this list: WeChat! This app is used mainly in China. Brussels Airport created an account to be able to communicate easier with its Chinese travelers and to help them find their way through the airport.

Unlike in the West, Facebook, Twitter or Instagram are not among the most used apps in China. WeChat (微信,Weixin) is the biggest player there, an app published by the Chinese firm Tencent in 2011. The app is difficult to compare with an app we know here. It comprises various apps such as Facebook, Twitter, WhatsApp, and payment applications in one. With WeChat, you can thus manage accounts and purchase or pay for goods and services, such as an air ticket or a taxi. QR codes also constitute an important feature on the app. These codes are used primarily to add contacts and to pay for your favorite purchases in a shop.

Our Chinese travelers cannot always use our biggest social media channels in their country because of network security. To facilitate our communication with these travelers, Brussels Airport created a WeChat account.

In 2018, WeChat had 1.08 billion daily users. More than 50% of these users spent more than an hour and a half per day on the app. Last year, some 45 billion messages were sent and 410 million calls were made daily. It is high time therefore to jump on the bandwagon of this popular app!

To access Brussels Airport’s WeChat account, scan the QR code below:

There is not enough pork in “the whole world combined” to fill the potential supply shortfall that will hit China later this year, market analysts have warned. Pork exporting countries around the world are scrambling to fill the supply gap in China as an African swine fever epidemic sweeps across the country. Financial services firm Rabobank estimates that China could lose up to 200 million pigs to disease or slaughter during the epidemic, almost three times the pig population in the United States. China is the world’s biggest pork producer, with roughly 433 million pigs, according to the U.S. Department of Agriculture (USDA). The loss of half of the country’s pigs could push prices up by as much as 70%, a Chinese Agriculture Ministry official said.

Rabobank Senior Analyst Pan Chenjun said pork production would fall in China this year and next. “A lot of herd will disappear due to infection and liquidation,” Pan said. “There will be a great shortage. We don’t think any country in the world – or the whole world combined – could cover this supply gap. Even after increasing imports, there remains a supply shortage.” China is estimated to have about 200,000 tons of pork in its reserves, but this is just a fraction of the supply needed to satisfy demand in the world’s biggest pork market. That shortfall is reflected in the number of Chinese buyers turning to the U.S. for pork.

Before the trade war began, U.S. pork exports to China were subject to 12% import duties. Two tranches of tariffs worth 25% each saw that rocket to 62%. Yet, despite the huge added cost, Chinese buyers started putting orders for U.S. pork products again in March in anticipation of the shortage and in the hope that by the time the shipments were to be made, the tariffs would have been relaxed as part of a trade deal. “Actual shipments are not that common at the moment,” Pan said. “What we are seeing is Chinese companies making an offer and trying to hold the shipment for later.”

According to China Customs, in spite of the tariffs imposed last year, China still imported 10,917 tons of pig meat and 12,212 tons of pork offal from the U.S. in the first two months of 2019. However, compared to the same period of last year, the import volumes have decreased by 30.8% and 65.1% respectively. Canada was one of the major suppliers last year, the third highest behind Germany and Spain, and accounting for 13.4% of China’s pork imports in 2018, the South China Morning Post reports.