Tag: Beijing

India ships more cotton to China as 25 percent tax spoils US supply

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India‘s cotton shipments to China could grow five-fold to 5 million bales (850,000 tonnes) in the next crop year as exporters rack up orders amid a trade war that is forcing the world’s top consumer to look for other sources of supply.

The United States, the world’s biggest exporter of the fibre, has cornered the bulk of Chinese imports for at least a decade. But China‘s decision to impose a 25 percent import tax from July 6 on American farm commodities, including on cotton, in retaliation for tariffs enacted by the administration of US President Donald Trump will allow India to grab a bigger share of the Chinese market.

“In the last few weeks we are getting good inquiries from China for the new season crop,” said Arun Sekhsaria, managing director of D. D. Cotton, an exporter that earlier this month sold cotton to China for shipments in November and December.

“If the 25 percent duty stays there as announced, then India could export 5 million bales to China,” he said.

India has already signed contracts to ship 500,000 bales (85,000 tonnes) of their new season harvest to China, officials said last week, in rare advance deals.

In response to US tariffs on $50 billion in Chinese goods, Beijing slapped import taxes on cotton, as well as on other commodities and products from the United States, even as its own state reserves of the fibre are depleting.

“Everybody is worried about the trade war nowadays so everyone is switching from the US to other origins,” said a Chinese trader.

Once the world’s top cotton importer, China has seen its imports shrink from more than 5 million tonnes in 2011/12 to around 1 million tonnes last year, mainly due to efforts to reduce its state stockpiles.

But, as the inventories work down, China has begun allowing more imports. Last week, China approved 800,000 tonnes of additional cotton import quotas for 2018, the first time it has given any additional quota in five years.

China is set to return as a major cotton importer, taking 10 million to 15 million bales (2 million to 3 million tonnes) a year by 2019/20, compared with 5 million bales this year, according to Tim Bourgois, head of the cotton platform at Louis Dreyfus Company.

“Chinese demand is huge. This is an opportunity for India to raise exports,” said Atul Ganatra, president of the Cotton Association of India.

Strong demand from China could help lift India‘s overall exports to as much as 10 million bales in 2018/19, highest in five years, as demand from traditional buyers like Bangladesh, Vietnam and Pakistan also remains healthy, said Ganatra.

For the 2017/18 crop year ending on Sept. 30, India is likely to export around 1 million bales to China, Ganatra said.

Quality Concerns

Chinese buyers would first try to replace US cotton with machine-picked, non-contaminated fibre from Australia and Brazil, and then they would go for Indian cotton, said a Beijing-based trader with an international company.

Indian cotton is not free of impurities such as bits of leaves and empty bolls, but if buyers have no other origin to choose from, they will pay extra to get rid of the contaminants, another China-based trader said. The extra cost would still be cheaper than paying a 25 percent duty on U.S. cotton imports, the trader said.

China is familiar with Indian cotton, and previously would buy as much as 6 million bales a year, said Nayan Mirani, partner at cotton exporter Khimji Visram & Sons.

At present, India also benefits from a depreciating rupee and nearness to China as compared with other competitors.

Along with lower freight rates, shipments from India reach China in about two weeks compared to an average of three to six weeks from other producers Australia and Brazil, dealers said.

“India will benefit not only because of the tariffs, but because emerging nations’ currencies have generally lost value against the dollar in the last couple of months,” said Gabriel Crivorot, an analyst at Societe Generale in New York.

“This makes Indian cotton look much more attractive than it did a short while ago, relative to American cotton.”

US cotton futures have lost 9 percent since the China duty was announced on Friday, while Indian cotton futures have dropped 4 percent.

Indian exports would largely depend on surplus output, said Vinay Kotak, a director at Kotak Commodities, a Mumbai-based brokerage.

“If India manages to produce a bigger surplus, then it can certainly export more as the demand is there.”

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China slams US ‘blackmailing’ as Trump issues new trade threat

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.

Trump‘s latest move, as Washington fights trade battles on several fronts, was unexpectedly swift and sharp.

It was retaliation, he said, for China‘s decision to raise tariffs on $50 billion in US goods, which came after Trump announced similar tariffs on Chinese goods on Friday.

“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” Trump said in a statement on Monday.

The comments sent global stock markets skidding and weakened both the dollar and the Chinese yuan on Tuesday. Shanghai stocks plunged to two-year lows.

China‘s commerce ministry said Beijing will fight back with “qualitative” and “quantitative” measures if the United States publishes an additional list of tariffs on Chinese goods.

“Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions,” the ministry said in a statement.

“The United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the US, but of the world.”

US business groups said members were bracing for a backlash from the Chinese government that would affect all American firms in China, not just in sectors facing tariffs.

Jacob Parker, vice president of China operations at the US-China Business Council in Beijing, said China would undoubtedly “begin looking at other ways to enforce action against US companies that are operating in the market.”

Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for US goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said.

Washington and Beijing appeared increasingly headed toward open trade conflict after several rounds of talks failed to resolve US complaints over Chinese industrial policies, lack of market access in China and a $375 billion US trade deficit.

US Trade Representative Robert Lighthizer said his office was preparing the proposed tariffs and they would undergo a similar legal process as previous ones, which were subject to a public comment period, a public hearing and some revisions. He did not say when the new target list would be unveiled.

“As China hawks, like Lighthizer and (Peter) Navarro, appear to have gained power within the Trump administration lately, an all-out trade war now seems more inevitable,” said Yasunari Ueno, chief market analyst at Mizuho Securities in Japan.

Tit-for-tat

On Friday, Trump said he was pushing ahead with a 25 percent tariff on $50 billion worth of Chinese products, prompting Beijing to respond in kind.

Some of those tariffs will be applied from July 6, while the White House is expected to announce restrictions on investments by Chinese companies in the United States by June 30.

“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong,” Trump said.

Trump said if China increases its tariffs again in response to the latest US move, “we will meet that action by pursuing additional tariffs on another $200 billion of goods.”

Trump said he has “an excellent relationship” with Chinese President Xi Jinping and they “will continue working together on many issues.”

But, he said, “the United States will no longer be taken advantage of on trade by China and other countries in the world.”

Cooling Chinese Economy

The intensifying trade row threatens to put more pressure on the already cooling Chinese economy, risking an end to a rare spell of synchronized global expansion and collateral damage for its export-reliant Asian neighbours.

China‘s central bank unexpectedly injected 200 billion yuan ($31 billion) in medium-term funds into the banking system on Tuesday in a move analysts said reflected concerns about liquidity but also the potential economic drag from a full-blown trade war.

China imported $129.89 billion of US goods last year, while the US purchased $505.47 billion of Chinese products, according to US data.

Derek Scissors, a China scholar at the American Enterprise Institute, a Washington think tank, said that means China will soon run out of imports of US goods on which to impose retaliatory tariffs.

China was unlikely change its industrial policies in response to the US trade threats, he said. That could take a long and painful trade fight.

“As I’ve said from the beginning, China will back off its industrial plans only when US trade measures are large and lasting enough to threaten the influx of foreign exchange. Not due to announcements,” he said.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What can Beijing do if China-US trade row worsens?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China and the United States sank into a deepening trade conflict that roiled financial markets Tuesday after US President Donald Trump threatened to impose tariffs on an additional $200 billion of Chinese products, prompting Beijing to accuse Washington of starting a trade war.

Trump said Monday his threat was retaliation for China’s decision to raise tariffs on $50 billion of US goods over the weekend, a move that itself was in response to additional US tariffs on Chinese products announced Friday.

The sheer size of Trump’s latest threat makes it impossible for an in-kind response from China since the value of the goods involved exceeds by $70 billion the total value of US imports to China last year, US data shows.

China could be prompted to react in other ways. Here are some possible scenarios.

More Tariffs

After threatening on Friday additional tariffs of 25 percent on $50 billion of American products, China can raise tariffs on more US goods, such as aircraft.

It could also increase the size of the tariffs on the goods that it is targeting.

But it can only go so far.

China imported $129.89 billion of US goods last year, compared with US purchases of $505.47 billion of Chinese products, according to US data. The figures differ from those provided by Chinese customs, which showed China imported $153.9 billion of US goods and the US purchased $429.8 billion of Chinese products.

Either way, even if Trump goes on to impose tariffs on $300 billion or even $400 billion of Chinese goods, Beijing could only levy duties on a total of $100-plus billion of US products.

To escalate the trade war, China would have to turn to non-tariff measures.

Business Bottlenecks

China could create costly bottlenecks for US imports.

In May, importers and industry sources told Reuters that China had intensified inspections of goods shipped from the United States, compared with more random checks in the past. The products affected ranged from pork and vehicles to fresh apples and cherries.

China could also impose new regulations on US products and companies to either limit their presence in the world’s second-largest economy or even ban them altogether.

For years, US firms such as Facebook (FB.O) and Alphabet’s Google (GOOGL.O) have long been blocked from offering their products in China.

Getting licenses to operate in certain sectors could also get more difficult.

Jacob Parker, vice president of China operations at the US-China Business Council, said China would undoubtedly begin looking at other ways to enforce action against US companies operating in the market.

“One thing that we’ve heard specifically from companies is that the Chinese government has been holding meetings with domestic private and state-owned enterprises where they talk about diversifying away from the procurement of US products and services and shifting those contracts to European, Japanese or domestic Chinese companies,” Parker said.

Reduced Chinese access for US businesses could be a boon to other foreign companies in a year when China says it will further open its door to overseas investors and firms.

“That could have an enormous impact because many of our companies operating in China have significant market share built up over decades. If that is immediately eroded, it is almost impossible to get back,” Parker said.

Deals

Chinese clearance for US deals may also become more difficult.

China has, for example, yet to approve US chipmaker Qualcomm Inc’s (QCOM.O) proposed $44 billion acquisition of NXP Semiconductors (NXPI.O), a deal that has already got a nod from eight of the nine required global regulators.

Currency Moves

China could allow its yuan currency CNY=CFXS to drift lower against the dollar, making US goods more expensive and making Chinese exports cheaper. In fact, the yuan has been falling against the greenback since mid-April, after consistent gains since January 2017.

But some economists say Chinese policymakers would be wary of letting the yuan slide sharply against the dollar. The 2015 yuan devaluation led to months of capital outflows that Chinese authorities fought to stem, a memory that is not too distant.

Treasury Pile

China could also trim its massive holdings of US Treasuries. As of March, China held $1.188 trillion of US government bonds, the highest since October 2017.

But since China holds such a huge volume of US Treasuries in its portfolios, some economists say Beijing would not want to cause its investments to plummet in value.

As such, many economists think China is more likely to turn up the heat on US firms than risk creating havoc in the markets that might burn Beijing instead.

Boycotts

US goods may also be boycotted by Chinese consumers. South Korean goods were shunned when Beijing’s ties with Seoul turned chilly last year after South Korea deployed the U.S.-made Terminal High Altitude Area Defence (THAAD) anti-missile system despite Chinese objections.

The highest profile corporate casualty was South Korea’s Lotte Group, which saw its plans for shopping complexes indefinitely suspended and nearly all of its Lotte Mart stores in China shut for much of the year over alleged fire safety issues.

Chinese tourism to the United States may also suffer as tour operators reduce US-bound offerings. Around 3 million Chinese visit the United States annually spending tens of billions of dollars.

When Tsai Ing-wen was elected Taiwan’s president in 2016, Chinese tourist numbers to the island that China views as a wayward province slumped. Though Tsai says Taiwan wants peace with China, Beijing suspects she seeks formal independence.

Travel services accounted for almost two-thirds of US services exports to China in 2015, according to the US International Trade Commission. Travel services also formed the largest category of US services exports to China.

Embargo on US Goods

An extreme Chinese response would be a trade embargo on a swathe of U.S. goods, but that would be inconsistent with China’s rhetoric and actions if Beijing initiated such a move.

Such a move would represent a massive deterioration in bilateral ties and cause an upheaval in the global trade system.

The United States imposed a trade embargo on China from 1950 to 1972.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

In several ways, China can retaliate against US in a trade war, says ThomasLloyd’s Nick Parsons

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There are several ways in which Beijing can retaliate US companies operating in China, said Nick Parsons, head of research and strategy, ThomasLloyd.

Speaking to CNBC-TV18, Parsons said, “Over the last two and a half to three months, we have seen the dollar rallying, the dollar index is back up towards 95. So as the dollar is doing very well, the anti-dollar commodities are doing poorly. I think that relationship is likely to continue over the next few months.”

“Dollar can carry on rallying from here, continue to weigh on gold unless and until US President Trump sends a tweet from his bedside one morning and says that the dollar has gone far enough, the dollar is expensive,” he said.

Speaking about crude oil, Parsons said, “The West Texas Intermediate crude this morning is trading at $65 per barrel. $60-70 per barrel is a fair range.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

North Korea’s Kim visits Beijing; South Korea, US halt military drill

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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North Korean leader Kim Jong Un arrived in Beijing on Tuesday, where he will likely brief Chinese President Xi Jinping on his summit with US President Donald Trump last week, as Washington and Seoul agreed to suspend a major joint military exercise.

This is Kim’s third trip to China this year, coming a week after he met Trump in Singapore for historic talks.

Trump agreed to work with Kim toward complete denuclearisation of the Korean peninsula, committed to provide the North’s regime with security guarantees and pledged to end “war games”, which Pyongyang and Beijing have long seen as provocative.

South Korea and the Pentagon announced they would halt the annual Freedom Guardian military drill scheduled for August.

In an unusual move, Chinese state media announced Kim’s visit and said he would stay for two days. Previously China would only confirm Kim had visited after he had left the country.

“We hope this visit can help to further deepen China-North Korea relations, strengthen strategic communication between both countries on important issues and promote regional peace and stability,” China’s foreign ministry spokesman Geng Shuang said at a regular briefing. He did not elaborate.

A Kim trip to China to discuss his summit with Trump had been widely anticipated in diplomatic circles. China is North Korea’s most important diplomatic and economic backer but has been angered by its nuclear and missile tests.

Police tightened security along Beijing’s main Changan Avenue, which leads to the Great Hall of the People where Chinese leaders usually meet visiting heads of state, and also outside the Diaoyutai State Guest House, where Kim stayed with his wife during a visit in March.

Outside the east gate of the Great Hall, where foreign leaders are officially welcomed, authorities had erected a screen running the full length of the road, cutting off the view.

South Korea’s foreign ministry spokesman said South Korea and China shared the strategic goal of completely denuclearising the Korean peninsula.

“Our government hopes China will play a constructive role in resolving this problem,” ministry spokesman Noh Kyu-deok told a regular briefing.

“We hope Chairman Kim Jong Un’s visit will contribute to that.”

“Dual Suspension”

China has welcomed the warming of ties between the United States and North Korea, and offered to help.

China has been particularly pleased by Trump’s decision to suspend military drills with South Korea.

China has long proposed a “dual suspension”, whereby North Korea stops weapons tests and the United States and South Korea stop military drills, to encourage talks.

“South Korea and the United States have agreed to suspend all planning activities regarding the Freedom Guardian military drill scheduled for August,” South Korea’s defence ministry said in a statement.

The Pentagon confirmed the suspension, adding in a statement there would be a meeting of the secretaries of defence and state as well as Trump’s national security adviser on the issue this week.

Last year, 17,500 American and more than 50,000 South Korean troops participated in the Ulchi Freedom Guardian drills, although the exercise is mostly focused on computerized simulations rather than live field exercises that use weapons, tanks or aircraft.

The US-South Korean exercise calendar hits a high point every spring with the Foal Eagle and Max Thunder drills, which both wrapped up last month.

The decision to halt military exercises in South Korea has bewildered many current and former US defence officials, who only learned about it when Trump announced it in Singapore, after the summit with Kim.

Japan’s Chief Cabinet Secretary Yoshihide Suga said there would be no changes to joint drill plans between the United States and Japan, both of which regularly practise to deter North Korea.

“The United States is in a position to keep its commitment to its allied nations’ defence and our understanding is there is no change to the US commitment to the Japan-US alliance and the structure of American troops stationed in Japan,” Suga told a regular briefing.

Cost of Drills?

The Pentagon has yet to publicly release the cost of previous and future joint military exercises with South Korea, a week after Trump cited their “tremendously expensive” cost as a reason for halting them.

Spending data for previous military exercises in Korea and elsewhere, however, suggest that the cost of a single exercise would be in the low or perhaps tens of millions of dollars in a US military budget this year of nearly $700 billion.

In response to repeated requests for cost data, Pentagon spokesman Lieutenant Colonel Christopher Logan, said: “We are currently evaluating the costs of the exercises.”

Calculating the cost of military exercises is a complicated process, often requiring data from different branches of the military and spread over several budgets over different years.

Troops who would have been involved in the exercises would still require training and certification, which would cost money, said Abraham Denmark, a former deputy assistant secretary of defence for East Asia under President Barack Obama.

“To me, the idea of this as a cost saving measure doesn’t really make much sense,” Denmark said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China warns US trade deals off if tariffs go ahead

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China warned Sunday after another round of talks on a sprawling trade dispute with Washington that any deals they produce “will not take effect” if President Donald Trump’s threatened tariff hike on Chinese goods goes ahead.

The warning came after delegations led by US Commerce Secretary Wilbur Ross and China’s top economic official, Vice Premier Liu He, wrapped up a meeting on Beijing’s pledge to narrow its trade surplus. Ross said at the start of the event they had discussed specific American exports China might purchase, but the talks ended with no joint statement and neither side released details.

The White House threw the meeting’s status into doubt Tuesday by renewing a threat to impose 25% tariffs on $50 billion of Chinese high-tech goods in response to complaints Beijing steals or pressures foreign companies to hand over technology. The event went ahead despite that but Beijing said it reserved the right to retaliate.

Tuesday’s announcement revived fears the conflict between the two biggest economies might dampen global growth or encourage other governments to raise their own barriers to imports.

“If the United States introduces trade sanctions including a tariff increase, all the economic and trade achievements negotiated by the two parties will not take effect,” said the Chinese statement, carried by the official Xinhua News Agency.

The negotiating process should be “based on the premise” of not fighting a “trade war,” the statement said.

The American Embassy in Beijing didn’t immediately respond to a request for comment.

Trump is pressing Beijing to narrow its politically volatile trade surplus with the United States, which reached a record $375.2 billion last year.

Tensions eased after China promised on May 19 to “significantly increase” purchases of farm goods, energy and other products and services following the last round of talks in Washington. US Treasury Secretary Steven Mnuchin said the dispute was “on hold” and the tariff hike would be postponed.

That truce appeared to end with Tuesday’s surprise announcement. It said the White House also will impose curbs on Chinese investment and purchases of US high-tech goods and on visas for Chinese students.

Analysts suggested Trump might be trying to appease critics of his administration’s deal to allow Chinese telecom equipment giant ZTE Corp. to stay in business. They said those political pressures mean the technology-related tariff hikes are likely to go ahead.

Members of Congress criticized the agreement to lift a ban on sales of U.S. components to ZTE, which admitted violating rules on exports to Iran and North Korea. In exchange, the company is to remove its management team, hire American compliance officers and pay a fine.

Trump has threatened to raise tariffs on a total of up to $150 billion of Chinese goods. Tuesday’s announcement gave no indication whether the other increases might also go ahead.

China has threatened to retaliate by raising import duties on a $50 billion list of American goods including soybeans, small aircraft, whiskey, electric vehicles and orange juice. It criticized Tuesday’s announcement but refrained from repeating its earlier threat.

Beijing has resisted US pressure to commit to a firm target of narrowing its annual surplus with the United States by $200 billion.

Private sector analysts say while Beijing is willing to compromise on its trade surplus, it will resist changes that might threaten plans to transform China into a global technology competitor.

Ross was accompanied by agriculture, treasury and trade officials for the meeting at the Diaoyutai State Guesthouse, a leafy compound on Beijing’s west side. Liu’s delegation included China’s central bank governor and commerce minister.

Ross and Liu held a working dinner Saturday ahead of their talks.

“Our meetings so far have been friendly and frank, and covered some useful topics about specific export items,” said Ross at the opening of Sunday’s meeting.

The U.S. pressure over technology policy reflects growing American concern about China’s status as a potential competitor and complaints Beijing improperly subsidizes its fledgling industries and shields them from competition.

Foreign governments and businesses cite strategic plans such as “Made in China 2025,” which calls for state-led efforts to create Chinese industry leaders in areas from robots to electric cars to computer chips.

Trade analysts had warned Ross’s hand might be weakened by the Trump administration’s decision Thursday to go ahead with tariffs on steel and aluminum imports from Canada, Europe and Mexico.

That might alienate allies who share complaints about Chinese technology policy and a flood of low-priced steel, aluminum and other exports they say are the result of improper subsidies and hurt foreign competitors.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Going it alone: US alienates allies before taking on Beijing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Trump administration’s decision to slap tariffs on its top allies could weaken Commerce Secretary Wilbur Ross’ hand as he landed in Beijing on Saturday to try to fend off a trade war with China.

That, at least, is the view of many longtime trade analysts and China watchers.

“This is really the US going it alone,” said Philip Levy, senior fellow at the Chicago Council on Global Affairs who was a trade adviser in the George W. Bush administration. “By assaulting all our allies, we leave ourselves standing unprotected and by ourselves in a way we really never have been.”

“We are alienating all of our friends and partners at a time when we could really use their support,” added Wendy Cutler, a former US trade negotiator who is now vice president at the Asia Society Policy Institute.

After briefing reporters on the administration’s decision to slap tariffs on imported steel from Canada, Mexico and the European Union, Ross arrived in Beijing for negotiations aimed at resolving a dispute over China’s aggressive attempts to challenge US technological supremacy.

Trade analysts say the Trump team should be enlisting its allies to present a united front to China. After all, US friends like Japan and the European Union share many of the same gripes about China. They decry rampant theft of intellectual property and Chinese overproduction, which has flooded world markets with cheap steel and aluminum.

And in fact, US Trade Rep. Robert Lighthizer, Japan’s economics minister, Hiroshige Seko, and EU Trade Commissioner Cecilia Malmstrom did issue a vague statement from Paris on Thursday urging unidentified countries to do more to protect intellectual property and to reduce overcapacity.

But the US undermined the alliance on Thursday by slapping key allies and trading partners — Canada, Mexico and the EU — with tariffs of 25% on steel and 10% on aluminum. All vowed to retaliate by penalizing American products.

Canadian Prime Minister Justin Trudeau, noting that Canadians and Americans have been allies for 150 years and fought and died together in World War II and in Afghanistan, took a shot at the Trump team:

“Americans remain our partners, friends, and allies,” Trudeau said. “This is not about the American people. We have to believe that at some point their common sense will prevail. But we see no sign of that in this action today by the US administration.”

Now, the US is turning to Beijing and to a standoff that has taken some confusing turns.

Last month, the administration proposed tariffs on $50 billion of Chinese imports to punish China for forcing US companies to hand over technology in exchange for access to its market. President Donald Trump later ordered his top trade negotiator to seek up to an additional $100 billion in Chinese products to tax.

China responded by targeting $50 billion in US products, including soybeans — a shot at Trump supporters in America’s heartland. Rising tensions between the world’s two biggest economies alarmed investors and business leaders.

But they breathed a sigh of relief earlier this month when the US and China declared a cease-fire after talks in Washington. Treasury Secretary Steven Mnuchin said then that the trade war was “on hold.” And the tariffs were suspended after China agreed to “substantially reduce” its trade surplus with America by buying more US products.

The truce didn’t last long. Trump, facing criticism from some in Congress for cozying up to Beijing, on Tuesday renewed his threat to impose the tariffs on China. His hardline trade adviser, Peter Navarro, charged Wednesday that Mnuchin’s conciliatory comments about China were “an unfortunate sound bite.”

Critics say the administration should be picking its trade fights far more judiciously.

“This is dumb,” said Republican Sen. Ben Sasse of Nebraska. “Europe, Canada and Mexico are not China, and you don’t treat allies the same way you treat opponents.”

“There’s still a risk that this escalates into a trade war,” Levy said. “Our allies and partners are going to be pressured by China to take their side. In this environment, it’s hard for them for to be very pro-US”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Airlines caving to Beijing despite White House protest

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Global airlines are obeying Beijing’s demands to refer to Taiwan explicitly as a part of China, despite the White House’s call this month to stand firm against such “Orwellian nonsense.” The Associated Press found 20 carriers, including Air Canada, British Airways and Lufthansa, that now refer to Taiwan, the self-ruled island that Beijing considers Chinese territory, as a part of China on their global websites.

There are just three days left for dozens of foreign airlines to decide whether to comply with Beijing’s orders, or face consequences that could cripple their China business, including legal sanctions. Many have already sided with Beijing.

The spread of “Taiwan, China” on the drop-down menus and maps of airline websites represents another victory for China’s President Xi Jinping and his ruling Communist Party’s nationalistic effort to force foreign companies to conform to their geopolitical vision, even in operations outside of China. Critics say China’s incremental push to leverage its economic power to forge new international norms — in this case regarding Taiwan’s status — creates worrying precedents.

Beyond fiery missives there is little Washington can do to unify a fractured global response and effectively push back against Beijing’s demands.

“What’s at stake is that we’re allowing a revisionist regime with a terrible track record on freedom of speech to dictate what we say and write in our own countries,” said J. Michael Cole, a Taipei-based senior fellow with the China Policy Institute and the University of Nottingham’s Taiwan studies program. “If Beijing does not encounter red lines, it can only keep asking for more.”

For Beijing, there is only one China and Taiwan, which has been a democracy since the 1990s, is part of it. The People’s Republic of China and Taiwan separated during a civil war in 1949. Washington officially recognizes Beijing rather than Taipei, but despite the lack of formal ties, the US is legally bound to respond to threats to Taiwan and is the island’s main supplier of foreign military hardware.

“We strongly object to China’s efforts to bully, coerce, and threaten their way to achieving their political objectives,” Taiwan’s Ministry of Foreign Affairs said in a statement to the AP. “We call on all countries around the world to stand together to uphold the freedom of speech and freedom to do business. We also call on private firms to collectively reject China’s unreasonable demands to change their designation of “Taiwan” to “Taiwan, China.”

Xi has warned a Taiwanese envoy that the issue of unification cannot be put off indefinitely, and the People’s Liberation Army has sent fighter planes near Taiwan’s coast. As China steps up efforts to isolate Taiwan diplomatically, the list of multinationals that have bent to Beijing’s will is long — and growing.

US clothing retailer The Gap apologized this month for selling T-shirts with a map of China that omitted Taiwan and pulled the offending merchandise from stores around the world. In January, Delta Airlines, Marriott, Zara and medical equipment maker Medtronic all publicly apologized for referring to Taiwan as a country.

“You can’t just say ‘no,'” said Carly Ramsey, a regulatory risk specialist at Control Risks, a consultancy in Shanghai. “Increasingly, for situations like this, non-compliance is not an option if you want to do business in and with China.”

The day after Delta apologized for “emotional damage caused to the Chinese people,” the Civil Aviation Administration of China published a notice on its website saying it requires foreign airlines operating in China to avoid referring to Taiwan, Hong Kong and Macau as countries.

Some foreign carriers began changing drop-down menus on their websites from “country” to “country/region.”

But Beijing wanted more.

On April 25, the Civil Aviation Administration of China sent a letter to 36 foreign airlines ordering them to explicitly refer to Taiwan as a part of China. The regulator did not respond to requests for comment.

In a strongly-worded statement 10 days later, the White House called that demand “Orwellian nonsense.”

“China’s efforts to export its censorship and political correctness to Americans and the rest of the free world will be resisted,” it said.

China’s foreign ministry hit back the next day, saying Taiwan, Hong Kong and Macau are “inalienable” parts of China’s territory and foreign companies operating in China “should respect China’s sovereignty and territorial integrity, abide by China’s laws and respect the national sentiment of the Chinese people.”

A growing number of airlines have heeded Beijing’s call.

The AP found that Air Canada, Lufthansa, British Airways, Finnair, Garuda Indonesia, Asiana Airlines, and Philippine Airlines all have changed the way they refer to Taiwan to bring their global websites in line with the Chinese Communist Party’s vision. SAS airlines, Swissair, Malaysia Airlines, Cebu Pacific Air, Aeroflot, Italy’s Alitalia, Austrian Airlines, Air Mauritius, Etihad Airways, Spain’s Iberia, Israel’s EL AL, MIAT Mongolian Airlines and Russia’s S7 Airlines all also refer to Taiwan as part of China, but it was not immediately clear how long they had been using that formulation.

Lufthansa, British Airways, Air Canada and Finnair said they abide by laws and regulations internationally and in the jurisdictions in which they work.

“This includes taking customs of the international clientele into consideration,” Lufthansa said in a statement, adding that we “seek your understanding for the situation.”

Finnair said a decision was taken to amend the website earlier this year and “in line with the general view taken in Europe, Taiwan is not shown as an independent country in our list of destinations.”

Major US carriers have not yet caved. United Airlines, American Airlines, Delta and Hawaiian Airlines, as well as Australia’s Qantas Airways — all of which received April letters from the regulator — did not refer to Taiwan as part of China on their websites as of Tuesday.

The airlines told AP they were reviewing the request.

But the sweep of concessions will likely make it harder to resist Beijing’s call.

“If they make individual corporate decisions, they will likely accede, individually but entirely, to Chinese demands,” said Robert Daly, the director of the Kissinger Institute on China and the United States at the Woodrow Wilson International Center for Scholars. What Washington could do, he added, is “launch and sustain a global discussion of the implications of Beijing’s insistence on the worldwide jurisdiction of Chinese law. That kind of effort would require a commitment to global leadership and strong alliances that this administration has not yet demonstrated.”

In one apparent exception to Beijing’s rules the national flag carrier Air China seems not to have gotten the regulator’s memo. On its US site, Taipei is a part of “Taiwan, China.” But its Taiwan website lists it as “Taipei, Taiwan.”

Air China did not immediately respond to requests for comment.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow