Tag: Washington

US, China trade meeting ends with sharp response to Trump

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

Listen to the Article (6 Minutes)

Talks between US and Chinese trade officials seeking ways to end a year-long trade war lasted barely half a day before ending on Wednesday with a terse response from China’s Foreign Ministry to US President Donald Trump’s warning not to stall.

As the US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin landed in Shanghai on Tuesday, Trump accused Beijing on Twitter of stalling and warned of a worse outcome for China if it continued to do so.

This week’s meetings, the first in-person trade talks since a G20 truce last month, amounted to a working dinner on Tuesday at Shanghai’s historic riverfront Fairmont Peace Hotel and a half-day of negotiations on Wednesday. Neither team made immediate public comments.

Chinese Vice Premier Liu He, who leads the Chinese delegation, waved off Lighthizer, Mnuchin and other US officials as their motorcade pulled away from Shanghai’s Xijiao State Guest Hotel following a group photo session that concluded around 1:45 pm, about 30 minutes before it was originally scheduled to begin.

A US government official told Reuters that the US officials were headed to the airport.

The trade war between the world’s two largest economies has disrupted global supply chains and shaken financial markets as each side have slapped tariffs on billions of dollars of each other’s goods.

An official Chinese government survey released on Wednesday showed China’s factory activity shrank for the third month in a row in July, underlining the growing strains the row has placed on the Number 2 economy.

The Shanghai talks were expected to centre on “goodwill” gestures, such as Chinese commitments to purchase US agricultural commodities and steps by the United States to ease some sanctions on Chinese telecoms equipment giant Huawei Technologies Co Ltd, a person familiar with the discussions told Reuters earlier.

Those issues are somewhat removed from the more core US complaints in the trade dispute, including Chinese state subsidies, forced technology transfers and intellectual property violations.

‘NO DEAL IS FINE’

As talks were just beginning on Tuesday, Trump said on Twitter that China appeared to be backing off on a pledge to buy US farm goods, and he warned that if China stalled negotiations in the hope that he wouldn’t win re-election in the November 2020 U.S. presidential contest, the outcome will be worse for China.

“The problem with them waiting … is that if & when I win, the deal that they get will be much tougher than what we are negotiating now … or no deal at all,” Trump said.

Chinese Foreign Ministry spokeswoman Hua Chunying, responding to a question about those tweets, said she was not aware of the latest developments during talks, but that it was clear it was the United States who continued to “flip flop”.

“I believe it doesn’t make any sense for the US to exercise its campaign of maximum pressure at this time. It’s pointless to tell others to take medication when you’re the one who is sick,” Hua told a news briefing.

Trump and Chinese President Xi Jinping agreed in June at the G20 summit in Osaka, Japan, to restart trade talks that stalled in May, after Washington accused Beijing of reneging on major portions of a draft agreement — a collapse in the talks that prompted a steep US tariff hike on $200 billion of Chinese goods.

The US Commerce Department put Huawei on a national security blacklist in May, effectively banning US firms from selling to Huawei, a move that enraged Chinese officials.

Trump said after the Osaka meeting that he would not impose new tariffs on a final $300 billion of Chinese imports and would ease some US restrictions on Huawei if China agreed to make purchases of US agricultural products.

But so far, US semiconductor and software makers are still mostly in the dark about the administration’s plans.

In Sao Paulo on Tuesday, US Commerce Secretary Wilbur Ross said decisions on license applications by US firms to resume some sales to Huawei could come as early as next week.

Hu Xijin, editor-in-chief of China’s state-run Global Times tabloid, wrote on Twitter that the negotiators had “efficient and constructive” exchanges.

“The two sides discussed the increasing purchase of US farm products and the US side agreed to create favourable conditions for it. They will hold future talks,” Hu said, without elaborating.

Earlier, the Global Times said if Washington still holds the illusion that Beijing will somehow cave in and compromise on issues concerning sovereignty, “then no deal is fine”.

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

Chinese companies looking to buy US farm products

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

Listen to the Article (6 Minutes)

Some Chinese companies are seeking new purchases of U.S. agricultural products, China’s official Xinhua news agency said on Sunday, citing authorities, as Beijing and Washington look for ways to end a protracted trade war.

US President Donald Trump and Chinese President Xi Jinping agreed at last month’s G20 summit in Osaka to restart trade talks that stalled in May.

Trump said at the time he would not impose new tariffs and US officials said China agreed to make agricultural purchases. But Trump said on July 11 that China was not living up to promises to buy US farm goods.

Chinese businesses have made inquiries with US exporters to buy crops and agricultural products and applied for the lifting of tariffs, Xinhua said, citing Chinese authorities.

China’s Customs Tariff Commission will arrange for experts to appraise the Chinese companies’ tariff exclusion applications, Xinhua said.

“Relevant Chinese departments expressed hope that the United States would meet China halfway, and earnestly implement the United States’ relevant promises,” the news agency said, without elaborating.

The world’s two largest economies have been embroiled in a tariff battle since July 2018, as the United States presses China to address what it sees as decades of unfair and illegal trading practices.

China has countered that any trade deal needs to be fair and equitable, leaving the two sides apparently still far from an agreement to end the back-and-forth that has rocked global supply chains and upended financial markets.

Hu Xijin, the editor in chief of China’s nationalist Global Times newspaper, tweeted in English earlier on Sunday that Chinese importers have started arrangements for purchasing US agricultural products, and suggested that the United States and China could soon resume in-person trade talks.

“This is a prominent part from [the] Chinese side as the two countries have signalled goodwill to each other recently. It also indicates China-US trade consultations will restart soon,” Hu said.

Trump said on Friday that Treasury Secretary Steve Mnuchin had a very good talk with his Chinese counterpart the day before. He has also touted US economic performance, and said China is “not doing very well”.

China has confirmed that Vice Premier Liu He and Commerce Minister Zhong Shan spoke by phone on Thursday with Mnuchin and Trade Representative Robert Lighthizer regarding “further consultations, as well as the implementation of the presidential consensus reached in Osaka”.

China made its biggest purchase of US sorghum since April earlier this month, according to US Department of Agriculture data issued on Thursday.

China, which is the world’s top soybean importer, also cancelled purchases of 9,853 metric tons of US soy this month, according to Thursday’s USDA data. It was China’s first weekly net cancellation of soybeans since April.

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

US Senate urges helping India develop capabilities as major defence partner

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

Listen to the Article (6 Minutes)

The US Senate has urged the government to “strengthen and enhance its major defence partnership with India” and help develop its capabilities.

The proposals for enhancing defence and strategic ties between India and the United States were included in the $750 billion defence budget passed by the Senate on Thursday. Formally known as the National Defence Authorisation Act (NDAA), it is yet to be passed by the House of Representatives, which is scheduled to consider it this month.

The defence budget passed by the Senate said: “It is the sense of the Senate that the United States should strengthen and enhance its major defence partnership with India” and listed six specific actions it wanted US President Donald Trump’s Administration to take.

It wanted the administration to strengthen and expand the scope of India’s designation as a major defence partner. India was accorded the status in 2016 by former President Barack Obama and built upon by Trump. That status is shared by the North Atlantic Treaty Organisation (NATO) countries and other close US allies like Japan and Australia.

The Senate asked Washington to explore “additional steps to implement the major defence partner designation to better facilitate interoperability, information sharing, and appropriate technology transfers” and to undertake “strategic initiatives to help develop the defence capabilities of India”.

It also urged for “increasing the frequency and scope of exchanges” between senior civilian officials and military officers “to support the development and implementation of the major defence partnership”.

While India and the US have been holding joint exercises in the Pacific and Indian Ocean regions, the Senate urged to increase them and also conduct them in the Persian Gulf.

The suggestion of expanding joint exercises to the Persian Gulf is significant as the area has emerged as a hotspot with rising tensions between the US and Iran and attacks on oil tankers in recent weeks. India has independently deployed two naval vessels in the region to protect its shipping interests.

While the US is pursuing negotiations with the Taliban for a peace accord, the Senate suggested taking “cooperative efforts to promote stability and security in Afghanistan”.
Amid increased attacks by the terror group in Afghanistan, India has expressed unease with the pace of US-Taliban negotiations and urged Washington to be cautious.

In a recognition of the shared democratic values and commitment to free navigation, another suggestion in the budget document is to increase engagement with India in multilateral frameworks “to promote regional security and defend shared values and common interests in the rules-based order”. It said the quadrilateral dialogue among the US, India, Japan and Australia should be enhanced.

The budget proposals related to India were introduced by the Senate India Caucus Co-Chairs, Senators John Cornyn and Mark Warner.

Hindu American Foundation Managing Director Samir Kalra said the organisation commended them for their “hard work in advancing the US-India strategic partnership.”

An amendment along the lines of the Senate provisions for India has been proposed for the House version of the defence budget by Representative Brad Sherman and others.

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

India’s retaliatory tariffs on 28 US products worries Washington apple industry

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

Listen to the Article (6 Minutes)

The export-dependent Washington state apple industry is a worried lot after India hiked duties on the fruit, saying it is “very hard” to sell products to other markets when “you lose a reliable and established market”.

India announced a hike in customs duties on as many as 28 US products, including almond, apple, pulses and walnut, in response to higher tariffs imposed by Washington on Indian products like steel and aluminium.

India imported a record 7.8 million 40-pound boxes of the fine quality 2017 Washington state apple crop as of mid-June last year, Yakima Herald reported. India would ultimately pass Canada as Washington’s No. 2 export market, reaching 8 million boxes by the season’s end, it said. Currently, Mexico is the No. 1 export market.

However, India had imported far fewer boxes of the 2018 crop. As of June 15, Washington state had shipped about 2.6 million boxes to India. It is expected to slow down even more with India slapping a 20 per cent retaliatory tariff on apples, bringing the total duty to 70 per cent, the report said.

Washington state usually exports about 30 per cent of its apple crop, it said. Mark Powers, president of the Northwest Horticultural Council, which represents the region’s tree fruit industry in public policy issues, last week discussed several key issues with the Trump administration in Washington DC, including the US trade dispute with India. “Frankly, we didn’t hear any rays of optimism on that front,” he said.

President Trump is scheduled to meet Prime Minister Narendra Modi on the sidelines of the G20 summit in Osaka, Japan next week. Once the dominant variety, most ‘Red Delicious’ apples now are exported. They made up 90 per cent of the apples shipped to India last year, Powers said.

China, which has a large population, could have been another destination, had it not been involved in a trade war with the US, too, he said.

If the industry is not able to find alternative export markets, those apples could end up in the domestic market and depress prices for all growers, Powers said. “When you lose a reliable and an established market, it’s very hard to force that product to other markets,” he added.

The Washington state apple industry began shipping to India in 1999. Still, India maintained a high tariff rate — 50 percent — for any World Trade Organization member that ships apples to the country. The tariff on US apples now provides an opportunity for other apple-producing countries, including New Zealand and Chile, the report said.

The record 2017 Washington apple crop shipments to India happened after New Delhi stopped importing apples from China, said Tori Lynn Adams, spokeswoman for the Washington Apple Commission. Even the prospect of a tariff had hurt Washington apple exports to the India market this year, she said, adding that it caused “some waves in the market”.

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

Vietnam to crack down on Chinese goods relabeled to beat US tariffs

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

Listen to the Article (6 Minutes)

Vietnam has said it will crack down on goods of Chinese origin illegally relabeled “Made in Vietnam” by exporters seeking to avoid US President Donald Trump’s tariffs on Chinese imports.

Vietnamese customs have found scores of such cases amid the ongoing US-China trade dispute, the department said in a statement posted to a government website on Sunday.

“The faking of origin and the illegal transhipment of goods happens most often in the sectors of textiles, seafood, agricultural products, tiles, honey, steel and iron, aluminium and timber products,” the department said in the statement.

Some importers had been illegally re-packing goods from China in “Made in Vietnam” packaging and then applying for a Vietnamese certificate of origin with which to export to the United States, Europe and Japan, Vietnam customs said.

In one such example, which the statement said was uncovered by US customs, a Vietnam-based manufacturer of timber products was found to have been importing Chinese timber which it then relabeled and exported to the United States.

Vietnam’s customs department is developing a process to better identify and impose penalties on businesses which carry out such violations, the statement said.

Vietnam has emerged as one of the largest beneficiaries of the trade war between Beijing and Washington as some businesses are shifting their supply chains away from China in order to avoid tariffs. An analysis of trade data by Japan’s Nomura Holdings Inc earlier this month showed Vietnam had easily benefited more than other countries.

The Southeast Asian country relies heavily on China for materials and equipment for its labour-intensive manufacturing. Meanwhile, the United States is its largest export market.

Foreign minister Pham Binh Minh said in a speech to Vietnam’s national assembly last week that the government has created a steering committee in response to the trade war.

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 threatens corporate hit-list on eve of new tariffs on US imports

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

Listen to the Article (6 Minutes)

China threatened on Friday to unveil an unprecedented hit-list of “unreliable” foreign firms, groups and individuals that harm the interests of Chinese companies, as a slate of retaliatory tariffs on imported US goods was set to kick in at midnight.

The commerce ministry did not single out any country or company, but the threat could further heighten tensions after Washington this month put Huawei on a blacklist that effectively blocks US firms from doing business with the Chinese telecoms equipment giant.

Beijing’s “unreliable entities list” would apply to those who violate market rules and the spirit of contracts, block supplies to Chinese companies for non-commercial reasons, “seriously damage the legitimate rights and interests” of Chinese companies and harm China’s national security, the ministry said.

A deluge of sharply worded commentaries, criticism and warnings from China in the last two weeks has intensified a battle of words with the United States that could complicate the run-up to any meeting between their respective leaders next month.

Earlier this month, Washington slapped additional tariffs of up to 25 percent on $200 billion of Chinese goods, accusing Beijing of reneging on its previous promises to make structural changes to its economic practices. That prompted Beijing to hit back with additional levies on the majority of US imports on a $60 billion target list – due to take effect on Saturday.

US President Donald Trump has said he plans to meet his counterpart, Xi Jinping, during the G20 summit, set for June 28-29 in Osaka, though China has not formally confirmed this.

Xi and Trump are likely to find it “difficult” to make major progress towards ending the trade war, a former top Chinese official said.

The US approach to trade talks had been “bullying and America First”, whereas the principles of China’s approach to negotiations were equality and cooperation, said Dai Xianglong, who headed the People’s Bank of China from 1995-2002 and remains an influential figure in China.

“I expect that at next month’s meeting of the leaders in Japan it will be difficult to achieve major progress,” Dai said, later adding that he was not confirming that the meeting would take place, but that he hoped it would.

Dai also said he did not rule out stronger retaliation by China. He said heavy sales of US Treasuries by China were a less likely option for retaliation as they would hurt China’s own interests.

PUBLIC RELATIONS BATTLE

Since the latest round of US tariffs, which caught Beijing by surprise, Chinese state media has gone on the offensive.

The People’s Daily, the ruling Communist Party’s flagship newspaper, warned that China was ready to use its dominance of rare earths, crucial minerals used in electronics, to strike back in the trade war.

Speaking at a separate briefing, Chinese Foreign Ministry spokesman Geng Shuang took umbrage at Trump comments on Thursday that China was becoming a “very weakened nation” due to companies leaving China because of the tariffs.

“This is neither the first nor second time the US side has said these lies,” Geng said. “But the US side seems to be very persistent, even obsessed with it, and is still repeating these lies.”

At the Beijing seminar on Friday, former Chinese vice commerce minister Wei Jianguo said initiating a trade war with China might be the biggest strategic mistake made by the United States since World War II or even its founding.

There was a need to prepare for the likelihood for the trade war to ratchet up tensions to geopolitical areas including the South China Sea, said Wei, adding that the trade conflict might last for 30 years or even half a century.

He suggested that China had many countermeasures it could take, including rare earths and against Boeing Co. or US software.

“There are lots of Chinese countermeasures, and, speaking honestly, we hope not to use them, because we always negotiate with the United States with sincerity and hope to achieve results,” Wei said.

Dong Yang, a former executive director at the China Association of Automotive Manufacturers, said at the seminar that US auto parts suppliers could also be hit.

“US car components companies have presence in China, and set China as a global manufacturing base. The escalation of the trade war between China and the United States will seriously affect their development in China and the world,” Dong said.

Other parts suppliers from countries such as Germany, Japan, South Korea and France could also provide strong substitutes for US components, he said.

All those who spoke at the seminar were former, albeit senior, officials. The government has not organised media appearances for top leaders or trade negotiators to answer questions on the trade talks. Chinese officials rarely take questions from foreign media.

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

Provoking trade disputes is ‘naked economic terrorism,’ says China

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

Listen to the Article (6 Minutes)

Provoking trade disputes is “naked economic terrorism”, a senior Chinese diplomat said on Thursday, ramping up the rhetoric against the United States amid a bitter trade war that is showing no signs of ending soon.

Trade tensions between Washington and Beijing escalated sharply earlier this month after the Trump administration accused China of having “reneged” on its previous promises to make structural changes to its economic practices.

Washington later slapped additional tariffs of up to 25 percent on $200 billion of Chinese goods, prompting Beijing to retaliate.

Speaking to reporters in Beijing, Chinese Vice Foreign Minister Zhang Hanhui said China opposed the use of “big sticks” like trade sanctions, tariffs and protectionism.

“We oppose a trade war but are not afraid of a trade war. This kind of deliberately provoking trade disputes is naked economic terrorism, economic homicide, economic bullying,” Zhang said, when asked about the trade war with the United States.

Everyone loses in a trade war, he added, addressing a briefing on Chinese President Xi Jinping’s state visit to Russia next week, where he will meet Russian President Vladimir Putin and speak at a major investor forum in St Petersburg.

“This trade clash will have a serious negative effect on global economic development and recovery,” Zhang added.

“We will definitely properly deal with all external challenges, do our own thing well, develop our economy, and continue to raise the living standards of our two peoples,” he said, referring to China and Russia.

“At the same time, we have the confidence, resolve and ability to safeguard our country’s sovereignty, security, respect and security and development interests.”

From combative missives in state media and patriotic fervour on social media to mobilisation of ambassadors around the world to get its message out, China has intensified its criticism of Washington since the United States this month moved to increase tariffs on Chinese imports and blacklisted tech giant Huawei Technologies Co Ltd.

On Thursday, a broadcaster from Chinese state television and a Fox Business host staged an unprecedented live debate about the China-US frictions on the US cable network.

Over the past two weeks, China has hinted that it may use its dominant position as an exporter of rare earth to the United States as leverage in the trade war. Rare earth is a group of 17 chemical elements used in everything from high-tech consumer electronics to military equipment.

On Thursday, the state-run China Daily newspaper said “it would be naive to think that China does not have other countermeasures apart from rare earths to hand”.

“As Chinese officials have reiterated, they have a ‘toolbox’ large enough to fix any problem that may arise as trade tensions escalate, and they are ready to fight back ‘at any cost’,” it said in an editorial.

China has consistently rebuffed US complaints about lack of access to its economy for foreign companies, forced technology transfers and intellectual property protection, and repeatedly promised further economic reforms.

Speaking at a separate forum in Beijing, Wang Zhaoxing, a vice chairman of China’s banking and insurance regulator, said the last four decades of the country’s economic reforms have shown that “openness brings progress, shutting off brings backwardness”.

“It is undeniable that the current economic globalisation has indeed encountered some new problems and new challenges,” Wang said.”However, the solution is not to return to protectionism and unilateralism.”

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

Blacklist mess: Huawei’s $105 billion business at stake after US broadside

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

Listen to the Article (6 Minutes)

The latest US broadside against Huawei that puts the Chinese firm on an exports blacklist threatens to rattle the global tech supply chain, linked closely to the $105 billion business of the world’s top supplier of telecoms network equipment.

The Trump administration has said it would add Huawei Technologies and 70 affiliates to its “Entity List” – a move that will likely ban the firm from acquiring US components and technology without government approval, adding another incendiary element to the US-China trade war.

The ban is not yet effective.

A similar US ban on China’s ZTE Corp had almost crippled business for the smaller Huawei rival early last year before the curb was lifted.

Such sanctions on Huawei are, however, likely to have ramifications beyond the company itself, analysts said.

It would disrupt Huawei’s business at a minimum and all but put it out of business in an extreme, while its US suppliers would also be hit, they said.

Out of $70 billion Huawei spent for component procurement in 2018, some $11 billion went to US firms including Qualcomm, Intel Corp and Micron Technology Inc, and they could see that revenue disappear.

On the other hand, US companies like Apple face the risk of severe retaliation from China, a key market.

“This is going to be very messy,” a China-based source at a US tech company said.

It will be tough for Huawei too, the person said, noting none of its US suppliers “can be replaced by Chinese ones, not within a few years, at least. By then, they are already dead”.

Revenue for the company, also the world’s second-biggest maker of smartphones, touched 721 billion yuan ($105 billion) last year, eight times ZTE’s and half the annual sales of South Korea’s Samsung Electronics Co.

But its business has come under pressure over the past year given mounting international scrutiny, led by US allegations that its equipment could be used by Beijing for spying, a concern the company has said is unfounded.

STOCKPILING

A range of Asian and European suppliers would also be hurt if Huawei was forced to curb production, while telecom carriers that rely on Huawei, and have largely resisted US calls to bar the company, would be left scrambling just as countries race to roll out next-generation 5G mobile networks.

“Huawei being unable to manufacture network servers, for example, because they can’t get key US components would mean they also stop buying parts from other countries altogether,” said an executive at a Huawei chip supplier.

“They can relatively better manage component sourcing for mobile phones because they have their own component businesses for smartphones. But server and network, it’s a different story,” the executive said.

According to brokerage Jefferies, the sanctions would mean a “nightmare for China’s 5G” too. The country, which is targeting a nationwide rollout next year, will very likely slow down its 5G push as a result, it added.

However, industry participants pointed out that Huawei had been stockpiling components such as chips to ease disruptions.

Its initial target was to build inventories of six to nine months, and it has recently been raised to 12 and, in some cases, 24 months, Jefferies said.

Shares in Huawei suppliers fell across in Asia on the news of the US blacklist.

South Korea’s Samsung dropped 2.4 percent, SK Hynix fell 3.5 percent, while China’s Luxshare Precision Industry fell as much as 6.1 percent. Shares in ZTE also tumbled.

Huawei has said it is “ready and willing to engage with the US government and come up with effective measures to ensure product security”.

Its rotating Chairman Eric Xu also told Reuters in a recent interview that “in case of unforeseen events … we definitely have our contingency plan. What we have prepared has already been used in some of our products in the Chinese market”.

Huawei has spearheaded China’s campaign to develop its own high-end technologies to reduce reliance on imports and such efforts have taken on urgency after US sanctions on ZTE.

The ZTE case led to some “benefits” and “external pressures have developed into internal drivers” in China, said Wan Gang, vice chairman of China’s parliamentary advisory body.

TRADE TALKS

The pain for Huawei’s supply chain would be redoubled if the trade war put a damper on the Chinese technology industry.

“The bigger concern would be US allies that used to buy Huawei’s components may not continue businesses with Huawei, because of fear of possibly upsetting the United States,” said Doh Hyun-woo, an analyst at NH Investment & Securities in Seoul.

The Trump administration’s rhetoric toward China had cooled in recent days after another round of tariffs between the world’s top two economies and a selloff on global stock markets.

Tensions escalated on Wednesday after US President Donald Trump signed an executive order barring American companies from using telecommunications equipment made by firms deemed to pose a national security risk.

While the president’s order did not specifically name any country or company, US.officials have previously labelled Huawei a “threat”.

“The US seems to have already decided to nail Huawei down,” said the China-based US tech company source.

“The problem is that because there doesn’t seem to be a prospect for a trade deal in the near future, the US has expedited the process of killing Huawei.”

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

Lack of innovation is ‘Achilles heel’ for China’s economy, says President Xi Jinping

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

Listen to the Article (6 Minutes)

A lack of innovation is China’s “Achilles heel”, President Xi Jinping warned in an article given high prominence by state media on Thursday, where he also bemoaned the economy for being big yet without being strong.

Xi’s comments, carried in the latest issue of the ruling Communist Party’s influential bimonthly theoretical journal Qiu Shi, were made in a speech in January 2016, and originally published a year later in a collection of Xi’s speeches.

In the piece, re-published as the economy faces strains during protracted trade war with the United States, Xi takes an unvarnished look at the problems the country faces.

“Though our economy has vaulted to second place in the world, it is big and not strong, and its bloatedness and frailty are quite prominent,” Xi said.

“This is mainly reflected in the lack of strength in innovation ability, which is the ‘Achilles heel’ of this lug of an economy of ours.”

China’s technological prowess is still at the low end of the global value chain, and the “reserves” the country has for science and technology are far from enough, he added.

“The environment in which we open up and develop today is generally more favourable than ever. At the same time, the contradictions, risks, and games we face are unprecedented. If we are not careful, we may fall into the traps set by others.”

Xi has repeatedly promised to open up the Chinese economy, including a vow at a key party meeting in 2013 to let markets play a “decisive” role in the economy, but has also called for stronger, bigger state firms.

Lack of market access for foreign firms has been one of the causes for the current U.S. trade dispute with China, a complaint echoed by the European Union, China’s largest trading partner.

The reprinting of the speech came as the Trump administration hit Huawei with severe sanctions on Wednesday, banning the Chinese telecoms giant from buying components and technology from U.S. firms without prior U.S. government approval.

The article was on Thursday widely picked up by other state media outlets, most likely on orders of the propaganda ministry to ensure maximum impact and readership.

In an explanatory piece to accompany the reprinting of the speech, Qiu Shi also made direct reference to the trade war with the United States, which has seen both countries level tariffs on each other’s imports, and suggested there was no cause for alarm, a message China has repeatedly put forward.

“The whole party must be prepared to make more arduous and harder efforts and carry out a great struggle,” the bimonthly publication said.

“China’s economy is full of strength and resilience. The long-term positive trend has not changed and will not change. We are sure to be able to cope with various risks and challenges, including Sino-U.S. economic and trade frictions.”

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

Trade war flare-up spurs biggest outflows from emerging markets since October, says Institute of International Finance

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

Listen to the Article (6 Minutes)

Emerging markets saw the heaviest capital flight since last October in recent weeks as trade tensions between China and the United States escalated, the Institute of International Finance (IIF) said in a report on Wednesday.

US President Donald Trump surprised global markets last week by hiking tariffs on Chinese goods in the midst of trade negotiations, saying China had backtracked on earlier commitments. Beijing retaliated on Monday.

The emerging market exodus was led by Chinese equities, which saw outflows of $1.5 billion on Monday, after investors took $2.5 billion off the table last week, according to the IIF.

Outflows from Taiwan hit $400 million on Wednesday, and other emerging Asian countries, such as South Korea, India and Indonesia, “have mirrored China’s trend, highlighting the risks to the broader EM complex from increased US-China trade tensions,” said IIF economists Jonathan Fortun and Greg Basile.

But bond inflows remained steady, with Thailand recording its highest daily inflows in nearly three months this week, at over $240 million.

IIF said recent outflows came to around $1 billion, largest since last October’s $1.1 billion.

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