Talks on the China-U.S. trade dispute restarted
November 20, 2018 Category Foreign trade, Weekly
China and the United States have restarted discussions over their trade dispute, ending a three-month hiatus, ahead of a planned meeting between Presidents Xi Jinping and Donald Trump at the G20 Summit in Buenos Aires on November 30 and December 1. The two sides are “maintaining close contact” following a November 1 phone call between Xi and Trump, said Chinese Ministry of Commerce Spokesman Gao Feng. China urged the U.S. to strive for “mutually acceptable solutions” on issues of common concern through consultations. But U.S. Vice President Mike Pence said that China should first change its behavior in economic, military and political activities to pave the way for reaching an agreement. Still, U.S. Commerce Secretary Wilbur Ross said he does not anticipate the U.S. and China will secure a full deal by January.
Xi and Pence also expressed divergent views in their speeches to the APEC Summit in Port Moresby, Papua New Guinea, with each laying the blame for the trade war and growing geopolitical rivalry at the other’s doorstep. “We have great respect for President Xi and China, but as we all know, China has taken advantage of the United States for many, many years and those days are over,” U.S. Vice President Pence said, adding: “The U.S. will not change course until China changes its ways.” Neither Xi nor Pence listened to the other’s speech, both of which were delivered from a conference room on a cruise ship moored in Port Moresby harbor. Pence presented the U.S. Indo-Pacific Strategy as an alternative to China’s Belt and Road Initiative. APEC leaders failed to agree on a final communique for the first time in the organization’s history amid sharp differences between the U.S. and China.
President Xi Jinping said China was committed to giving more market access to foreign companies as he criticized protectionism and called on the Asia-Pacific nations to protect the global trade system as he addressed the Asia-Pacific Economic Cooperation (APEC) summit in Papua New Guinea. Xi also defended China’s Belt and Road Initiative, insisting it was neither a closed club nor a debt trap. Xi told delegates: “The world is currently going through big changes, the trend of globalization must go forward, but unilateralism and protectionism are overshadowing economic growth. Mankind will have to choose between cooperation or resistance – opening up for mutual benefits or a zero-sum game.” President Xi Jinping added: “History has shown that confrontation, whether in the form of a cold war, a hot war or a trade war will produce no winners.”
U.S. President Donald Trump said that the U.S. had made progress towards resolving the trade dispute with China after receiving a response from Beijing to his demands, however adding that it was missing four or five big things. “China wants to make a deal, they sent a list of things they are willing to do which is a large list and it is just not acceptable to me yet, but at some point I think that we are doing extremely well with respect to China,” he said. “Hopefully, we will make a deal, and if we don’t, we are doing very well just the way it is right now,” Trump added. The U.S. President’s comments signal the large gap that still remains between the two sides.
China’s exports to the United States are still growing, thanks to a strong American economy and consumers’ preference for Chinese products, The Ministry of Commerce (MOFCOM) said. The delivery of previously placed orders and “front-loading” by Chinese shippers also contributed to a robust performance so far this year, it added. As such, the impact of the U.S. trade war on China’s trade and broad economy will be “limited” with “total risks under control”, the Ministry concluded in a report. China’s exports to the U.S. rose 13.3% in the first 10 months compared with a year earlier while its imports from the U.S. increased by 8.5% in the same period, according to China Customs data. In October alone, Chinese exports to the U.S. rose by 13.2% while its imports from the U.S. fell 1.8%, earning Beijing a trade surplus of USD32 billion last month.
China’s financial condition weakened in October, pointing to a further deceleration in the economy amid the trade war with the United States. While Beijing has been pressing the country’s banks to boost lending to the “real economy”, newly granted loans nearly halved to CNY677 billion in October, from CNY1.38 trillion in September, according to the People’s Bank of China (PBOC). While October is a seasonally weaker month for Chinese credit data, the fall was sharper than all economists’ estimates. Total social financing shrank to CNY728.8 billion in October, or just a third of the CNY2.17 trillion of September. Moreover, the government’s fiscal revenue has dropped 3.1% in October from a year earlier, the first fall in 2018.
Premier Li Keqiang said that the Chinese government has no plans to resort to a “massive stimulus” similar to that of 2008 as a way to manage its slowing economy. Instead, Beijing will focus its policies on “energizing the market, in particular market entities” and creating “fair and equal regulations” to maintain momentum in the economy, Li said in a speech before attending the annual summit of the Association for Southeast Asian Nations (ASEAN) in Singapore. “Despite the downward pressure, we will not resort to massive stimulus,” Li added. A further escalation of the trade war between the United States and China could force Beijing to take more expansive measures to stimulate the Chinese economy, according to asset manager PineBridge Investments.
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